A three-person review panel said opening Pacific markets to Canadian oil is important to the economy and thus supported Enbridge's controversial pipeline. There are 209 conditions, but no major potential stumbling blocks such as a route change.
Natural Resource Minister Joe Oliver said the government will review the report and consult with affected aboriginal groups before making a decision. Prime Minister Stephen Harper's Conservative government has staunchly supported the pipeline after the United States delayed a final decision on TransCanada's Keystone XL pipeline that would take oil from Alberta to the U.S. Gulf Coast.
The Northern Gateway 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.
There is fierce environmental and aboriginal opposition and court challenges are expected. Opponents fear pipeline leaks and a potential Exxon Valdez-like disaster on the pristine Pacific coast. About 220 large oil tankers a year would visit the Pacific coast town of Kitamat.
Harper has said Canada's national interest makes the US$7.4 billion pipeline essential. He was "profoundly disappointed" that U.S. President Barack Obama 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.
The Keystone XL pipeline and the Northern Gateway project are critical to Canada, which needs infrastructure in place to export its growing oil sands production. The northern Alberta region has the world's third largest oil reserves, with 170 billion barrels of proven reserves.
The Joint Review Panel of energy and environmental officials spent two years canvassing opinion along the 1,177-kilometer (731-mile) route of the Northern Gateway pipeline.
"We are of the view that opening Pacific Basin markets is important to the Canadian economy and society," The report says. "We find that the environmental burdens associated with project construction and routine operation can generally be effectively mitigated."
The National Energy Board's panel's conditions, which will be considered by the Harper government over the next six months, cover everything from protecting caribou habitat to research into how the oil would behave in the ocean. The panel said Enbridge must carry liability coverage of $950-million.
Enbridge CEO Al Monaco said he's pleased the panel found the project is in the public interest but said they are not celebrating because regulatory approval is just one step.
"We know more work needs to be done with some aboriginal communities," Monaco said. "We've been listening very carefully to both British Columbians and aboriginal groups to address concerns."
The fear of oil spills is especially acute in the pristine corner of northwest British Columbia, with its snowcapped mountains and deep ocean inlets. Canadians living there still remember the Exxon Valdez oil spill of 1989. British Columbia Environment Minister Mary Polak said the province is not yet in a situation to support the pipeline because its own conditions need to be met.
Environmentalists and First Nations — a Canadian synonym for native tribes — could delay approval all the way to the Supreme Court, and First Nations still hold title to some of the land the pipeline would cross. That means the government will have to move with extreme sensitivity.
"The Northern Gateway Project is being vehemently opposed by Indigenous Peoples who will not put their territories, waters and communities at risk," Grand Chief Stewart Phillip, President of the Union of B.C. Indian Chiefs. "We are prepared to go to the wall against this project. We have no choice."
Meanwhile, China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested billions in Canadian energy in the past few years.
"They follow this quite closely," said Wenran Jiang, an energy expert and special adviser to Alberta's Department of Energy.
He said Canada's regulator hasn't put any major conditions on the approval.
"There are no major conditions such as changing the route" he said. "One major hurdle is over and there are many small battles ahead to win this thing."
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