It may be roiled by fierce competition and face delayed or even cancelled projects, but Canada's pipeline industry remains well positioned to confront its challenges and move forward as the Canadian oil and gas sector expands, says an industry expert.

Doug Haughey, president of Duke Energy Gas Transmission and chair of the Canadian Energy Pipeline Association, says despite disputes between natural gas transporters on the Alaskan Highway pipeline, or delays to the proposed Mackenzie Valley line due to demands for compensation by some First Nations groups, the industry is experienced enough to work out the problems and get the deals done.

"Some of the challenges we're seeing with Mackenzie and Alaska, we've got some of the best people in the world working on them, so I think the outlook is quite positive," Haughey told Business Edge after a forum in Calgary last week sponsored by the Canadian Association of Petroleum Producers (CAPP).

"Canadian (pipelines) are the best run, most secure you'll find, so we'll find a way to push all of these projects though."

Pat Daniel has heard pipeline decision from Ottawa is near.

The leaders of four of Canada's largest but not always friendliest pipelines sat side by side at the annual investment forum, fielding questions from the country's investment community on pressing issues dogging the sector.

One of the theatres of operations in the pipeline wars is the $20-billion US Alaska line that sees TransCanada Pipelines Ltd. slugging it out with Enbridge Inc. for the right to build the Canadian leg.

Enbridge CEO Pat Daniel revealed he's heard murmurs that the federal government will soon decide who will have the right to construct the Canadian portion of the 5,600-kilometre line that aims to carry around five billion cu. ft. per day to U.S. markets.

"It's only a rumour now," Daniel told reporters following the session. "We have waited quite a while and we think the federal government has considered all the alternatives and should be in a position to make the decision.

"I would suggest our federal government does a very good job of finding common ground. That is the Canadian way, and we think they will see fit to allow open competition - and the best man wins."

A spokesman for Natural Resources Minister John Efford said the minister had no comment on the matter.

Earlier this year, TransCanada claimed the right, under the Northern Pipeline Act (NPA) of 1978, to build the Canadian portion of the pipeline. Under the NPA, TransCanada acquired the rights-of-way and other permits needed for the project when it was first proposed almost three decades ago.

The company has stated it already spent large sums of money on preliminary stages of the line in southern Canada, and it argues any shift would require legislative change.

But Enbridge has countered that the project should be open to anyone to bid on and built under the more modern regulatory process of the National Energy Board and the Canadian Environmental Assessment Agency.

TransCanada CEO Hal Kvisle said flowing Alaskan gas production into its already-extensive pipeline system will mean lower tolls for everyone down the road.

"The key thing for Alberta is whether the gas will integrate with existing pipeline systems," which, based on an economy of scale, could mean toll savings "in the order of $1 billion per year to the industry," said Kvisle.

On another front, Enbridge remains confident its proposed Gateway pipeline - a project to take oilsands production to the West Coast and on to markets in Asia and California - will get the nod from regulators, producers and end-users over a proposed expansion of Terasen Inc.'s Trans Mountain pipeline.

In April, Enbridge and China's largest oil company, PetroChina, signed a memorandum of understanding for a $2.5-billion oil pipeline for 200,000 barrels a day (b/d) of heavy crude, or roughly half the line's capacity. The other 200,000 b/d would likely feed markets in California.

Gateway would be a 1,200-kilometre pipeline transporting oilsands crude from Edmonton to a British Columbia deep water port, either at Kitimat or Prince Rupert. Regulatory approvals, environmental issues, agreements with First Nations and commercial contracts are just a few of the challenges the company must work out between now and when construction is slated to begin in 2008.

Terasen wants to add capacity to its Trans Mountain pipeline, saying it has strong support from a number of parties, including new and existing customers.

Terasen's proposed line would rely more on markets in the U.S. Company president Rich Ballantyne pointed out that Canadian heavy oil would be competing with crude from other parts of the world.

"I think that ... Canada's oil-supply growth has to compete with the supply growth in Kazakhstan, Siberia and other places," Ballantyne said.

"Also, the Chinese have to compete with the United States in terms of ... Canadian supplies."

Enbridge's Daniel, while agreeing that the neighbours to the south remain the main market for Canadian crude, said there is enough economic expansion occurring in China to accept crude oil from many sources.

"Canada is only one of many suppliers to China, but the prospects of moving heavy oil to China are outstanding - I think it's inevitable," Daniel said in the panel discussion. "And they do have refineries that are not only able to take Canadian heavy, they are designing and adding refineries to take Canadian heavy oil. So there's absolutely no doubt in my mind that we can move Canadian heavy into China."

The pipeliners also said they share the same concerns on the shortage of skilled trades and technical workers, especially given the prospect of billions of dollars of new pipelines and expansions in the coming years.

"We simply don't see the educational infrastructure to meet the challenges" a labour shortage brings, Duke's Haughey told the CAPP luncheon. "The average age of our skilled tradesmen in our company right now is 53 years old and I'm not sure exactly where those replacement workers will come from."

On that point, Daniel said development in Alberta or elsewhere in Canada shouldn't be hindered by restricting participation of foreign labour, and also urged the Alberta government to allocate more money for education to ease a possible human-capital meltdown.

"I strongly encourage the Alberta government to pour the dollars into skills development and don't worry about intervention in the market," Daniel said.

(John Ludwick can be reached at ludwick@businessedge.ca)