China will likely invest in a $2.5-billion project to pipe oilsands crude from Alberta to a B.C. port, says the head of a Calgary-based oil and gas firm.

Enbridge Inc. CEO Patrick Daniel told a business audience in Vancouver recently that negotiations with Chinese companies have been going on since May of this year.

The 1,200-kilometre Gateway pipeline will carry so-called synthetic crude from Edmonton to either the port of Prince Rupert or Kitimat in northern B.C.

Enbridge would be willing to sell a 49-per-cent interest in Gateway and a deal with one or two Chinese companies is expected by the middle of 2005, Daniel said following a luncheon speech to the Vancouver Board of Trade.

Patrick Daniel

Daniel noted that investors in South Korea and Japan are also interested in investing in Canada's multibillion-dollar energy sector.

"Potential Asian-Pacific customers are seriously looking at possible investment in the pipeline, in oilsands production, in tankers and in refineries," he said. "With over $50 billion in investment already targeted for project development, oilsands volumes are expected to increase significantly in the next few years."

Synthetic oil from the region already exceeds the conventional oil volumes from Western Canada, he noted, and will continue to grow.

The opportunity exists to supply existing Canadian and U.S. markets with a secure long-term supply from the oilsands, but there also is the potential to start supplying some of the growing demand of Asian countries, Daniel said.

The Enbridge chief called the Gateway project a win-win situation for both Alberta and B.C., adding he doesn't expect a lot of opposition to the project in this province because the company has been working closely with local communities.

"Far too often, a single community or special interest group can derail an energy project that is much needed elsewhere," Daniel said, adding many energy projects never get out of the starting gate because the "not-in-my-backyard (NIMBY) attitude is prevalent throughout North America.

"NIMBYism is preventing energy suppliers from bringing necessary new supplies onstream to solve those issues of high prices and price volatility," he said. "Regulators and governments need to provide the leadership that ensures special interests and NIMBY objections don't consistently override genuine needs in other jurisdictions."

Regional and provincial politics are also delaying projects and adding costs to projects that could help solve the problems of supply, Daniel said. Despite regional need and widespread provincial support, a liquefied natural gas project that Enbridge is involved with in Quebec may well flounder due to local opposition, he added.

But Daniel stressed the development of new stable energy supplies is crucial given today's supply-and-demand equation. Conventional oil and natural gas reserves are drying up, while the world's dependable oil markets are operating at top capacity.

Unfortunately, he added, the regulators "today act too much like policemen instead of enablers of new solutions to energy problems. Without cross-border co-operation, streamlining of approvals and a genuine commitment to develop those energy resources, additional supply is not going to be available in time to prevent shortages."

Add to that the fact that the world today faces a new kind of energy crisis, Daniel said. In the past, supply shortages were generally the result of temporary supply restrictions due to war or political strife, but "the situation we face today is due to unprecedented demand - demand that continues to grow - and a fundamental change to our ability to meet that demand with our own oil and gas."

Daniel also urged the creation of a national energy strategy.

"We need a national energy debate to create a national energy strategy," he said. "It must consider our current state, our transition, but most importantly our desired state 50 years from now. It must consider the environment, individual rights and overall societal needs. It must make realistic energy choices and some very, very tough decisions."

(George Froehlich can be reached at george@businessedge.ca)