The federal government has approved the Enbridge Northern Gateway pipeline, subject to 209 conditions. Here are some questions and answers about what is next in store for the Northern Gateway pipeline project.

Who benefits most from Northern Gateway?

Most of the benefits of the Northern Gateway pipeline go to the oil producers in Alberta that make use of the pipeline. The government of Alberta also gains through increased royalties. While there are some jobs created during the construction of the pipeline, long-term job gains will not be substantial. British Columbia's economic benefits will be significantly smaller than those in Alberta.

What are the economic benefits of the Northern Gateway?

Canadian oil is currently selling at a discount in North America. International oil prices, measured by the Brent index, have been as much as US$30 per barrel higher than the West Texas Intermediate index, which tracks North America prices. In June 2014, the gap between international and North American prices has shrunk to under $10.

The benefits of getting Canadian oil to international markets via the Northern Gateway are formidable. This route could carry up to 190 million barrels per year overseas, so even a $10 per barrel gap would amount to a difference of nearly $2 billion per year. If the gap were to rise to $30 again, the benefits would be three times as large.

From a national perspective, the cost of the pipeline, originally estimated at $5.5 billion, could pay for itself in as little as one year. On the other hand, if the gap between international and Northern American oil vanishes, so do most of the benefits of the Northern Gateway pipeline unless increased Alberta oil production requires additional pipeline capacity.

What are the next steps if the federal government gives its approval?

A go-ahead from Ottawa does not mean that shovels will hit the ground immediately. Enbridge still needs to clear numerous technical, administrative, legal, and political hurdles. Technical preparations are not complete yet. Dozens of provincial permits are also required for various construction activities, and BC Hydro needs to provide electricity to run the pipeline's pumps.

It is expected that several First Nations communities in northern B.C. will challenge the project in court because of unsettled land claims and alleged procedural shortcomings in the government's constitutional "duty to consult and accommodate." Several lawsuits have already been filed challenging the findings of the Joint Review Panel. Lastly, the pipeline will remain a political issue in British Columbia, where the government has stipulated five conditions that must be met.

Does the British Columbia government have an effective veto?

How strictly the government in Victoria will interpret its five conditions will depend on how strong the opposition turns out to be in British Columbia, and whether opposing the Enbridge proposal can be offset by supporting the planned expansion of the Kinder-Morgan pipeline. In political terms, it's a rare opportunity to have your cake and eat it too. B.C.'s government will be reluctant to upset northern communities, which they rely on for developing B.C.'s liquefied natural gas (LNG) industry. It is likely that Victoria will give Enbridge a grace period to rally support for its project—and find novel ways to meet British Columbia's benefit-sharing requirement. At the end of the day, the key to Northern Gateway lies in Victoria, not in Ottawa.

What about the pipeline's potential impact on climate change?

Many environmentalists have voiced concerns that building Northern Gateway—or any new pipeline—will increase the production of oil in Alberta and thus increase Canada's overall carbon footprint. Concerns about climate change were outside the scope of the Joint Review Panel, but they play an important role in public discussions in Canada and abroad. The U.S. administration has been delaying a decision about the proposed Keystone XL pipeline because the economic benefits to the U.S. are waning and environmental opposition remains formidable.

Will Northern Gateway survive long delays?

Markets can change. For example, by the time the Mackenzie Valley gas pipeline was approved by the federal government, prices in the natural gas markets had collapsed and the pipeline project was no longer profitable. Northern Gateway could face a similar fate if other pipelines are built more quickly. In addition to Northern Gateway, Kinder Morgan's proposal would increase pipeline capacity to Canada's West Coast, TransCanada's Keystone XL pipeline would transport oil to the U.S. Gulf Coast, and TransCanada's Energy East project would connect Alberta and Saskatchewan with refineries in Eastern Canada. The Northern Gateway pipeline faces considerable competition, and some of these projects may get to the finish line earlier.