(Fixes spelling of Kitamaat in dateline and conforms throughout)
* Haisla chiefs fear spill, oppose project
* Hearing process slated to take two years
* Ottawa sees Northern Gateway as nation-building project
By Jeffrey Jones
KITAMAAT VILLAGE, British Columbia, Jan 10 (Reuters) - Aboriginal leaders opposed to a C$5.5 billion ($5.4 billion) oil sands pipeline backed by Canada's government warned on Tuesday that the project could devastate fishing and traditional life on the rugged Pacific Coast and called for it to be stopped.
As hearings into Enbridge Inc's proposed Northern Gateway pipeline opened with drumming and native singing, hereditary chiefs and elders of the Haisla First Nation told the regulatory panel their greatest fear was the potential impact of oil spills on their community of 1,500.
At stake, they said, are salmon, halibut and crab fishing and fur trapping that have sustained the Haisla for generations.
"It worries me to think that all of these will be lost and destroyed when there is a spill - mark my words - when there is a spill. Experience shows it will happen," Hereditary Chief Sam Robinson, 78, told the panel hearing Enbridge's application.
The oil industry and Ottawa are pushing hard for the project, especially after Washington delayed the $7 billion Keystone XL pipeline to Texas, as they seek new markets for the Alberta oil sands, the world's third-largest crude deposit.
The proceedings, expected to last two years, began at the community center in Kitamaat Village on the Pacific Coast's Douglas Channel, the terminus of the proposed pipeline. Battle lines have already been drawn between supporters on one side and environmental groups and aboriginals in the province of British Columbia on the other.
The pipeline would ship 525,000 barrels of oil sands crude a day 1,170 km (730 miles) from Alberta, across the Rocky Mountains to the Pacific, where it would be loaded onto tankers and shipped to rich Asian markets. An adjacent line would carry light hydrocarbons called condensate back to Alberta, where it would be blended with the thick oil.
Suncor Energy Inc, Sinopec Corp, Total SA and Cenovus Energy Inc are among oil sands developers that have put up tens of millions of dollars to help Enbridge move the project through the regulatory process.
Janet Holder, Enbridge vice-president in charge of the project, would not comment directly on any of the concerns expressed by the elders. She and four others from the company were in attendance.
"All I can say is we are here to listen and we are listening. We respect this process as we believe all Canadians respect this process," Holder said.
"NATION-BUILDING PROJECT"
Opening up a supply line to Asia is expected to boost returns for the oil derived from the tar sands, allowing it to be priced against more valuable Brent-based international crudes. It spells a big boost for the Canadian economy and hence is "a nation-building project," Natural Resources Minister Joe Oliver has said.
But the Haisla people stand between billions of dollars in oil sands developments and thirsty world markets. It also puts them a position of "staring down a double-barrel gun" in terms of putting resources at risk, Chief Kenneth Hall said in his testimony.
Robinson told reporters that his community would not support the development under any circumstances, but stressed it would restrict its opposition to the negotiating table and the courts. That said, opposition is not so cut and dried from the community's standpoint, Ellis Ross, chief councillor of the Haisla elected body, told Reuters. He urged his people to let the hearings proceed before making up their minds. This issue is likely to go to a vote at some point, as was the case with other projects, including a liquefied natural gas plant last year.
"The Haisla Nation council wants to ensure that we get through the Joint Review Panel process as planned first, and then we'll decide what happens at that stage, depending on the decision," Ross said.
The arms-length makeup of the panel had been expected to mean a less hotly political process than the U.S. State Department's review of Keystone XL. Officials with Prime Minister Stephen Harper's Conservative government said they would not comment on the project specifically, other than to say they support diversifying Canada's oil trade.
PRESSURE MOUNTS
Even so, Harper and his ministers have ratcheted up the rhetoric in recent days, charging that environmental groups that oppose Northern Gateway are tools of wealthy U.S.-based foundations bent on disrupting the proceedings and the economy.
"Unfortunately, there are environmental and other radical groups that would seek to block this opportunity to diversify our trade," Oliver said on Monday.
That elicited a barrage of criticism, with some aboriginal leaders and opposition lawmakers alleging that the Conservatives government seeks to influence the proceedings.
Ross said some of the Haisla elders' comments were prompted by anger over government remarks.
"They're trying to bully this panel. We've got a quasijudicial process here that's rapidly losing its integrity as these ministers and this prime minister come out and try and re-instruct them," said Art Sterritt, who leads a coalition of aboriginal groups called the Coastal First Nations that is opposed to Northern Gateway .
Bob Rae, the interim leader of the opposition Liberals, said in Ottawa on Tuesday that Harper and Oliver should "keep quiet" on the project with the hearings underway.
"It is absolutely unacceptable and it shows a government that does not understand its limits, that does not understand the rule of law, that does not respect due process, Rae said.
There appeared to be few representatives from major environmental groups at the hearings on Tuesday.
The applications are being heard by a three-member joint review panel representing the National Energy Board and the Canadian Environmental Assessment agency.
Once the oral hearings portion of the proceedings are complete, the panel will prepare a report listing its conclusions on the environmental and socioeconomic impacts of the project. It then goes to the government for a response.
The panel then must make its decision on whether the project can proceed and what conditions to impose. The government can either accept or reject the decision, but it cannot make changes.
($1=$1.02 Canadian) (Editing by Frank McGurty and Rob Wilson)