Enbridge pipeline deal with native group fraying

CALGARY, Alberta Tue Dec 6, 2011 7:21pm EST

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CALGARY, Alberta (Reuters) - A deal with a native chief that Enbridge Inc held up last week as an example of rising support of their planned oil pipeline to the Pacific appears to be unraveling as the community battles over who has the authority to negotiate.

Enbridge touted the Gitxsan agreement to take an equity stake in the Northern Gateway pipeline as the first public display of what it says is substantial support for the C$5.5 billion ($4.5 billion) project among British Columbia's First Nations, the aboriginal groups whose traditional territories make up vast swaths of the province.

Enbridge signed the deal with Hereditary Chief Elmer Derrick, chief negotiator for the Gitxsan Treaty Society (GTS), an embattled organization that is facing a legal challenge to its authority from four of the five community bands that make up the first nation.

Some other hereditary chiefs, community members and the three clans that form the complex structure of Gitxsan First Nation oppose the deal and met on Monday to try to shut down the treaty office and fire Derrick and other staff.

"Many of the hereditary chiefs said that they had not been directly posed the question of 'Do you want to sign this deal with Enbridge?'" said Doug Donaldson, who represents the region in the British Columbia legislature. "From a Gitxsan governance point of view, that's not the way decisions are made, as far as not consulting everyone."

Many first nations have voiced firm opposition to Northern Gateway, which would carry crude to the Pacific Coast, where it could be shipped to Asia on supertankers.

The line is supported by the Canadian energy sector and the Conservative federal government, who seek to diversify Canadian oil exports after Washington decided last month to delay approving the Keystone XL pipeline that would carry oil sands crude to the U.S. Gulf Coast.

Public hearings into the project are slated to start in the West Coast port town of Kitimat, British Columbia, on January 10 and run until final arguments in April 2013, the Joint Review Panel hearing the application said on Tuesday. It said it could make a final go-ahead decision by the end of that year.

Chief Councilor Majorie McRae of the Gitanmaax band, one of those suing the treaty society, said she does not believe Derrick had the authority to make a deal with Enbridge without broad consultations with other chiefs and band councils, and she thinks Enbridge made a mistake in negotiating with Derrick in the first place.

"I'm still a bit perplexed that Enbridge didn't do their homework," McRae said.

"You can't tell me they didn't know that there were four bands out of five who disapproved of the GTS process, model and structure," McRae said.

Derrick could not be immediately reached for comment, but Enbridge said the deal built on an agreement signed two years ago at a meeting of the Gitxsan hereditary chiefs.

"Enbridge Northern Gateway Pipelines has spent several years consulting with the Gitxsan Nation and working to understand and respect their traditional government," spokesman Paul Stanway said in an emailed statement. "It's our belief Chief Elmer Derrick and the Gitxsan Treaty Office represent the consensus view of a majority of that leadership and is recognized as an authoritative voice of the Gitxsan people."

Last week more than 60 British Columbia first nations said they were uniting to oppose oil pipelines across the Pacific province of British Columbia as well as increased tanker traffic in coastal waters, citing fears of oil spills.

Enbridge says it expects to win support from a majority of the native communities along Northern Gateway's 1,177 km (731 mile) route from Edmonton, Alberta, to a deepwater port at Kitimat on British Columbia's northern coast.

The company said last week it had signed other deals some aboriginal groups for an overall 10 percent equity stake in the project, but declined to offer specifics, citing confidentiality agreements.

As its hallmark deal frays, Enbridge suffered another setback late on Monday, as the National Energy Board ruled that its plan to reverse the flow direction of a pipeline in Eastern Canada must go before a public hearing in the autumn of 2012, pushing the company's timeline out by at least several months.

Enbridge had applied for a streamlined review process for its C$17 million Line 9 reversal, which would bring Western Canadian oil to refineries in the East, saying that the project would require no land disturbance.

It had hoped to start the work on reversing the flow of the 240,000 barrel a day pipeline next spring, with a planned startup in September.

The company said the application was just for a section of the line between Sarnia and Westover, Ontario, and reversal of the section between Westover and Montreal would be decided later.

But the board sided with environmental groups, who complained the project was just the start of a larger plan to move oil sands-derived crude to the Atlantic seaboard to be exported to U.S. refineries and should be subject to a full hearing. ($1=$1.01 Canadian)

(Editing by Janet Guttsman, Gary Hill)

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