A test case has told the natural gas industry it can venture offshore of Canada’s west coast — if it is willing to wade through seas of environmental protest and local political resistance in British Columbia.

Nearly three years after the sensitivity of the Canadian counterpart to California prompted the federal government in Ottawa to order it, a special environmental inquiry has ended in a recommendation to approve the Georgia Strait Crossing (GSX) sea-floor gas pipeline project.

The sponsors of GSX, BC Hydro and Williams Gas Pipelines Ltd., declared intentions to go ahead on the project with a target date for completion of October, 2005 — two years later than their original objective. The U.S. share — 33.5 miles of pipeline in Washington from a connection with the Duke-Westcoast system at Sumas to the coast and 14 miles on the adjacent seabed to the international boundary — was approved last September by the Federal Energy Regulatory Commission.

FERC withheld its construction certificate until approval could be obtained for the Canadian share — 45 miles of pipe on the seabed and 10 miles on Vancouver Island. Getting that has been a struggle and it’s not yet over. Still to come is a ruling on non-environmental aspects by the National Energy Board (NEB). Although small by industry standards — a 100 MMcf/d line projected to cost C$340 million — GSX ignited Canadian regulatory proceedings on the scale of the continent-spanning Alliance Pipeline in the late 1990s.

The findings of the inquiry — a Joint Review Panel of the NEB and the Canadian Environmental Assessment Agency — filled a 229-page book that reviewed a library of evidence and testimony at hotly-contested hearings in February and March.

The decision boiled down to two conclusions encouraging for gas ventures. Canadian authorities are satisfied that the industry can successfully manage its environmental impact in sensitive offshore territory, and they will confine their rulings to issues involved in particular projects rather than be influenced by rival energy philosophies current on the BC scene.

The 26 recommendations made by the ruling for conditions to the project focused on surveys, monitoring, mitigation and low-impact technology and construction methods that GSX largely committed itself to using before or during the inquiry.

The review panel told BC interveners that while it heard them out when they vented strongly-held views on the politics of energy and environmental conservation at length, it could only record and pass on the ideas to the governments concerned. The panel refused to be swayed by objections that ranged from demands to help halt growth in fossil-fuel consumption and greenhouse-gas emissions by rejecting the pipeline, to appeals to make it unnecessary by upgrading a regional system of subsea electricity transmission cables.

Gas carried on GSX will primarily be consumed as fuel by power generation plants on Vancouver Island, where the provincial government and BC Hydro expect steady demand growth. Protests against the approach being taken to satisfy the BC market continue in other regulatory arenas.

The review panel urged West Coast political leaders to consider actions to take some of the time-consuming heat out of the BC energy scene.

The GSX report said “it was clear to the panel that the perceived absence of a clear transparent process to incorporate public input into the province’s energy decisions has resulted in a high degree of frustration and anger.” Concerns over gas-fired power “and a genuine desire to be involved in such policy decisions resulted in many parties seeking to use this panel review process as a substitute for a proper provincial process.” The GSX tribunal said “these concerns are important” and that it hoped its report on them “will be read and considered by the Minister of the Environment and other provincial and federal government departments.”

The message was delivered at a critical time for BC and federal policy-makers. The GSX environmental review was widely regarded as a dress rehearsal for a much larger case, an inquiry into proposals to lift a moratorium against drilling offshore of Canada’s West Coast into targets projected to yield new reserves of 42 Tcf. The new inquiry is expected to be set up this fall with retired NEB chairman Roland Priddle, a resident of the BC capital of Victoria on Vancouver Island, appointed to lead the panel. The BC government has set a target of having an offshore gas industry up and running in 10 years, and federal authorities have pledged to co-operate.

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