TORONTO (AP) — Canada's government on Tuesday approved a controversial pipeline proposal that would bring oil to the Pacific Coast for shipment to Asia, a major step in the country's efforts to diversify its oil exports if it can overcome fierce opposition from environmental and aboriginal groups.
Approval for Enbridge's Northern Gateway project was expected as Canada needs infrastructure in place to export its growing oil sands production. The project's importance has only grown since the U.S. delayed a decision on TransCanada's Keystone XL pipeline that would take oil from Alberta to the U.S. Gulf Coast.
The northern Alberta region has the world's third largest oil reserves, with 170 billion barrels of proven reserves.
Enbridge's pipeline would transport 525,000 barrels of oil a day from Alberta's oil sands to the Pacific to deliver oil to Asia, mainly energy-hungry China. About 220 large oil tankers a year would visit the Pacific coast town of Kitimat and opponents fear pipeline leaks and a potential tanker spill on the pristine Pacific coast.
Conservative Prime Minister Stephen Harper has said Canada's national interest makes the pipelines essential.
He was "profoundly disappointed" that U.S. President Barack Obama has delayed a decision on the Texas Keystone XL option, and spoke of the need to diversify Canada's oil industry. Ninety-seven percent of Canadian oil exports now go to the U.S.
Meanwhile, China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested more than $40 billion in Canadian energy in the past few years.
"They are watching this very, very closely," said Wenran Jiang, an energy expert and special adviser to Alberta's Department of Energy.
"They told us as recently as a couple of weeks ago that further investment will depend on whether there will be at least opportunities to ship some of this crude to China. Currently all of their investment and production goes into the U.S. They are currently living with that," he said.
Jiang said Canada ships all its oil to the U.S. so it's vital that Canada diversify its energy exports. Canadian oil is sold at a discount compared to the prices elsewhere.
The Harper government declined requests for comment on Tuesday, only issuing a statement.
Canadian Natural Resources Minister Greg Rickford said in a statement that Enbridge must meet the 209 conditions Canada's regulator imposed on the pipeline. The company has previously said it would.
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