Enbridge Inc's sole public deal with a native group along the route of the proposed C$5.5 billion ($5.42 billion) Northern Gateway pipeline collapsed after chiefs of the Gitxsan First Nation rejected the offer, but a spokesman for the company said on Wednesday new talks are expected.

According to local media, Gitxsan hereditary chiefs voted 28-8 against accepting the agreement signed last month between Enbridge and the Gitxsan treaty office. The deal would have seen the First Nation take a slice of a 10 percent equity stake in the pipeline the company has offered to native groups.

We're obviously disappointed, but they've chosen to rethink (the agreement), said Paul Stanway, a spokesman for Canada's No. 2 pipeline company. That is their right and we respect that.

While the agreement was the sole deal made public, Stanway said about 20 other First Nations groups have agreed to the company's offer to take an equity stake in the planned line, which would take Alberta crude to a deepwater port on British Columbia's Pacific Coast. None of those agreements have been released.

Still, the collapse is a setback for the controversial line and comes as regulators stage public hearings to decide if it should be approved.

The line is opposed by environmentalists and most of British Columbia's aboriginal groups. However, the oil industry and the Canadian government are pushing hard for the project, and pressure to approve the line may build after the Obama administration's rejection on Wednesday of TransCanada Corp's request to build the $7 billion Keystone XL pipeline, which would have carried Alberta oil to Texas.

Stanway said the company still hopes to have further talks with the northern British Columbia First Nation despite the chiefs' rejection.

We expect to be entering into new negotiations with the Gitxsan, he said.

The Northern Gateway pipeline would ship 525,000 barrels of oil sands crude a day 1,170 km (730 miles) from Edmonton, across the Rocky Mountains to Kitimat, 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 to make it easier to ship via the pipeline.

($1=$1.01 Canadian)

Canada