Media reports say that Japan Petroleum Exploration (Japex) has given final investment approval to build a liquified natural gas receiving terminal and storage facility at the Soma Port in Shinchi, Fukushima Prefecture to receive Canadian LNG, probably from Prince Rupert.
The company will also build a 40 kilometre connecting pipeline to move the natural gas to Japex’s main pipeline which will then connect with natural gas storage facilities in Natori in Miyagi Prefecture and another facility in Niigata Prefecture on the Sea of Japan.
The Soma port was severely damaged in the March, 2011, earthquake and tsunami.
“We want to help areas affected by the disaster to create employment and secure a stable supply of energy,” Shoichi Ishii, Japex senior managing director, was quoted by the Japanese newspaper Ashai Shimbum at a news conference on Nov. 27.
Japex owns 10 per cent of the planned Petronas LNG export terminal at Prince Rupert, which is expected to have an annual capacity of 12 million metric tons.
Japex plans to import 1.2 million tonnes of LNG made from Canadian shale gas a year starting in 2018. The construction of the new LNG terminal in Shinchi, is scheduled for completion in 2017 and will start in 2014, at a cost of $587 million US.
The reports say with LNG import facilities on both the east and west coasts, that means Japan is ensuring a stable supply of LNG. If an earthquake or tsunami hits one coast, the other would likely be spared.
Ashai Shimbum also reports that Japex is considering building at an LNG fired power plant near the planned import and storage facilities to sell power to the struggling and controversial Tokyo Electric Power Co, owner of the nuclear power plant in Fukushima Prefecture that was destroyed in the March, 2011, earthquake and tsunami.
The newspaper says that because Japex does not have experience operating a thermal plant, it intends to work with other companies to run the new powerhouse.
A second floating liquified natural gas terminal may be planned for Kitimat, Northwest Coast Energy News has learned.
According to multiple sources in Kitimat, Altagas, the parent company of Pacific Northern Gas plans the terminal at the old log sort site on Douglas Channel, where the barge carrying the liquifaction equipment would likely be moored next door to the already planned BC LNG/Douglas Channel Partners LNG project which would be served by gas delivered by the PNG pipeline system.
Pacific Northern Gas has filed an application with the BC Environmental Assessment Office to construct and operate an approximately 525 kilometre, 610 millimetre (24 inch) diameter natural gas pipeline from the natural gas hub at Summit Lake, near Prince George, to Kitimat that would loop or twin the existing PNG existing natural gas pipeline.
The application to the BCEAO says: “The proposed Project would supply natural gas to proposed liquefied natural gas (LNG) export facilities as well as the Proponent’s existing customers. The proposed Project would include the replacement of four existing compressor stations and would have an initial capacity of 600 million standard cubic feet per day.”
PNG Pipeline Looping Project Open House at Tamitik. Nov. 26, 2013. (Robin Rowland/Northwest Coast Energy News)
On Tuesday, November 26, Pacific Northern Gas held a sparsely attended open house at Tamitik Arena as part of the BCEAO public comment procedure.
A 38 day public comment period on the application information requirements started on November 25 and will end on January 2, 2014.
At the open house, PNG officials explained that “looping” means that there would be a second or twin pipeline that would mostly be on a parallel route to the existing pipeline. Since both pipelines would begin at the Summit Lake terminal and end at the Kitimat terminal that is where the term “looping” comes in.
The PNG officials said that the pipeline was initially designed to service the first floating LNG terminal at the old log sort site on Douglas Channel south of Kitimat, but north of the KM LNG site at Bish Cove.
It would be operated by BC LNG Energy Cooperative, through Douglas Channel Energy Partnership, a partnership with the Haisla Nation and LNG Partners, the energy investors mainly from Texas,
Unlike the bigger project Kitimat LNG or KM LNG, a partnership between Chevron and Apache (and according to reports possibly Sinopec) or the Shell-led partnership LNG Canada, the BC LNG project would allow smaller companies to provide LNG to Asian customers.
At the open house, the PNG officials said the two pipelines could also service “another Kitimat floating LNG project” but declined to give details for confidentiality reasons. The same officials also said the proponent of that project was also looking at Prince Rupert as a possible site for the second floating terminal.
Kitimat sources have confirmed that AltaGas has told them that the company is also considering Prince Rupert as a site for a floating LNG terminal.
However, the current documentation and maps filed with the BCEAO show the PNG looping pipeline terminating at Kitimat, not Prince Rupert.
Detail of the PNG Pipeline Looping proposal. The existing pipeline is shown at the dashed line, the new pipeline is shown in purple. (PNG)
According to the maps filed with the BCEAO and made available at the open house, the new pipeline would not be twinned completely along the existing route across the mountains west of Smithers to Terrace, but would head north at Telkwa parallel to Highway 16 before making its own way through the mountains, crossing the existing pipeline at the Zymoetz River east of Terrace and then taking a westerly route toward Lakelese Lake before joining the existing pipeline corridor along Highway 37. AltaGas took over Pacific Northern Gas in the fall of 2011.
The problems currently faced by the Texas group have no affect, at this point, on the Haisla Nation investment in the BC LNG Energy Cooperative. There is already speculation in Kitimat that if the LNG Partners get into further financial difficulty, AltaGas may step in and take over. The would raise the question whether or not there would still be two floating LNG terminals on Douglas Channel, or just the one, as originally planned, but under new ownership.
In it’s project proposal PNG says
The Project will generate approximately 1800-2400 direct person years of employment during construction. Additionally, tax benefits will be generated for Kitimat and the regional districts crossed by the pipeline. PNG anticipates the project will also result in a significant reduction in natural gas transportation rates for its existing customers.
Natural gas transportation costs are a major issue in the northwest, for those costs appear to keep going up while the price of natural gas in North America is generally going down. Natural gas transportation costs in Kitimat spiked after the closure of the Methanex plant and have continued to be quite high, which is just one of the increasing burdens for residents of Kitimat on fixed or low incomes, who are not benefiting as others from the current boom town economy.
The PNG filing with the BCEAO promises consultation with both the Wet’suwet’en Council, and the Office of the Wet’suwet’en, which represents the hereditary chiefs and matriarchs, as well as other First Nations along the proposed route.
PNG Open houses for the project are scheduled for:
Vanderhoof
Friendship Centre Hall
Thursday, November 28, 2013
Terrace
Best Western Inn
Monday, December 2, 2013
Smithers
Hudson Bay Lodge
Tuesday, December 3, 2013
Burns Lake
Chamber of Commerce
Wednesday, December 4, 2013
Summit Lake
Community Hall
Thursday, December 5, 2013
The Wall Street Journal is quoting sources that Sinopec, China’s largest petroleum refining company, “is in early talks with U.S.-based oil-and-gas producer Apache to buy a minority stake in a liquefied natural gas project on Canada’s Pacific coast.” And since Apache is a partner with Chevron in KM LNG, that means the project commonly known as Kitimat LNG.
Sinopec is looking at several of the at least 13 LNG projects in the northwest BC region. The reports say that Sinopec management has not yet signed off any investment and say that any Sinopec investment would go toward the rising costs of the KM LNG project’s costs, which Apache now estimate will be about $15 billion US.
“Apache is moving forward with the project, and we’re looking for partners,” says an Apache spokesman, according to the reports. It appears that Apache is once again recalculating the cost of the Kitimat project.
A poll released this morning by Insights West, and already being heavily promoted by Enbridge Northern Gateway claims to show: “Opposition to the proposed Enbridge Northern Gateway Pipelines has subsided over the past 10 months in British Columbia, with the province’s residents now being staunchly divided on the project…”
It goes on to report:
In the online survey of a representative sample of British Columbians, support for the proposed Northern Gateway Pipelines stands at 42%, a seven-point increase since an Insights West poll conducted in February. Conversely, opposition to the project has dropped by 14 points, from 61% at the start of 2013 to 47% today.
It is important to note that the level of “strong opposition” to the project has fallen to 29% (down 9 points since February), while “strong support” increased to 16% (+5).
What the press release doesn’t tell you is that opposition to the Northern Gateway, according to the poll, is at 65 per cent in Northern British Columbia, with 50 per cent strongly opposed and 15 per cent somewhat opposed.
The Insight Poll assumes the findings of the online poll are within the usual margin of error
We have assumed that the same margins of error apply as if it were a true unweighted random probability sample with a margin of error of +/- 3.7 percentage points, nineteen times out of twenty.
The problem with the Insight West poll, like all other polls on the Northern Gateway, is that it is weighted toward the population heavy Lower Mainland. The tables released by Insight West show that the online poll had 504 respondents in Vancouver and 25 in Northern BC.
Northwest Coast Energy has spoken to pollsters both on the record and on background and it is clear that the polling entire province distorts the issue along the pipeline route.
The problems with these polls are two fold:
First is the standard polling definition of Northern British Columbia, which is based on Census data. “Northern BC” actually begins at Williams Lake, although most people believe Northern BC begins around Prince George.
Second the polls, due to small population and sample size, do not usually divide northwestern British Columbia, where the opposition is strongest to the Northern Gateway project, and northeastern British Columbia, where the energy industry is a major employer and support for the project is likely stronger.
The tables released by Insight West shows that poll surveyed just 25 people in “Northern British Columbia” but 504 in “Metro Vancouver.”
In a 2012 Ipsos Reid poll conducted on behalf of Enbridge, public affairs spokesperson Kyle Braid said their survey covered 168 people in “Northern British Columbia.” As Northwest Coast Energy News reported at the time:
Braid says the 168 people represents 17% of the sample. These interviews would have been weighted down to about 7% in the overall results to reflect the actual population of the North in BC. The margin of error in the North is about +/-7.6%, 19 times out of 20.
So with a total sample of 749 in the Insight West online poll and just 25 people in Northern BC surveyed, that means the Insight West poll survey of Northern BC covers just 3.3 per cent of the total sample. In contrast, 504 people in Vancouver were surveyed, accounting for 67.2 per cent of the sample.
The Insight West survey does acknowledge that:
British Columbians continue to be of two minds on the Northern Gateway,” continues Canseco. “There is a large proportion of the population that remains concerned with the possibility of oil spills and environmental problems, but the argument about economic benefits has gained traction over the past few months.
The actual tables show that of the 25 people surveyed in Northern BC, 50 per cent “strongly oppose,” (13 out of the 25 people surveyed) 15 per cent “somewhat oppose” Northern Gateway. Twelve per cent “somewhat support” the project, four per cent (one person) “strongly support” the project.
Those numbers, although small, are likely an accurate reflection of the sentiments in northern BC, although a breakdown between the western and eastern parts of Northern BC would have been helpful.
As for the residents of Vancouver, the poll shows that area is divided (as the Insight West news release says) with 22 per cent strongly supporting (119 people) and 27 per cent somewhat supporting the project and 19 per cent somewhat opposed and 27 per cent strongly opposed (123 people).
The “growing support” for the pipeline project that Enbridge is promoting from the poll likely shows that their advertising campaign is having some impact on the Lower Mainland but is ineffective in the north.
It is possible to do more accurate polling on energy issues in Northern British Columbia. Earlier this year, a significant number of Kitimat residents reported that they had received calls from a polling company representing TransCanada which will be building the Coastal GasLink pipeline project for LNG Canada, a project where Shell will operate the terminal in Kitimat.
On Monday, when TransCanada officials appeared before District of Kitimat council, they did acknowledge that they have been polling people along the pipeline route so they can understand their concerns. So far, TransCanada has not released the results of that poll.
At least one of the two large liquified natural gas projects in Kitimat is, at least at this point, planning to self-generate the power required using a gas-fired, steam-driven electrical generation system.
The job, which requires 20 years and more experience, would be located in Calgary for eighteen months, then move to Kitimat for the remainder of a four year contract paying from $1650 to $1850 per day.
By Fircroft describing the job as a “mega-project” means that the client is either Shell’s LNG Canada project or the Chevron and Apache KM LNG project, since the much smaller BC LNG project could not be described as a “mega-project.”
As well as the standard qualifications for a senior engineer, the job posting lists:
• Power Plant design, operation and construction experience required.
• Boiler design, construction, operation, and commissioning experience required.
• Heat Recovery Steam Generation (HRSG) design, processes, construction, operation, and commissioning experience required.
• Integrates inherent safety in design and operability in concept selection and development for gas resource opportunities.
Providing the power for the Kitimat and other northwestern LNG projects is becoming controversial. The power is needed to cool the natural gas so it can be loaded onto tankers for shipment to customers.
The BC government recently announced a $650,000 study of the cumulative effect on air quality for the planned industrial expansion in the Kitimat area, including the Rio Tinto Alcan Kitimat modernization project, which would increase the amount of sulphur dioxide emissions, combined with as many as three LNG projects and the associated increase in tanker traffic, as well as the possible and even more controversial Enbridge Northern Gateway project.
At the time of the BC announcement, the Globe and Mail reported:
If natural gas is used either for direct-drive or combined-cycle electricity generation to produce the energy required for the proposed Shell LNG facility at Kitimat, approximately 300 million cubic feet of natural gas would be burned. The proposed Chevron Apache LNG facility could burn approximately 140 million cubic feet of natural gas.
The other alternative for powering the LNG plants is to use hydro-electricity, and BC Hydro at the moment doesn’t have the capacity to supply the LNG projects with power. One possibility is the controversial Site C dam project in the Peace River basin, which is also under review by the BC government.
Although the job is restricted to Canadian citizens or permanent residents, it is clear that the engineer will have to also answer to the project’s overseas partners since one requirement is to conduct: “Overseas VIP workshops, including Value Engineering, Process Simplification, Process Optimization and Design to Capacity.”
Seaspan ULC, the large BC-based marine transportation and shipbuilding company is keeping its on eye on future opportunities in Kitimat and along Douglas Channel, chief executive officer Jonathan Whitworth said Tuesday.
Jonathan Whitworth, CEO of Seaspan ULC, at the RCM SAR 63 boathouse. (Robin Rowland)
Whitworth was in Kitimat to meet members of the Royal Canadian Marine Search and Rescue Unit 63, which operates from the Nechako Dock.
He also met with members of the Haisla Nation while he was in town.
Kitimat SAR 63 is one of six stations which will receive $8,500 a year for three years, to help cover operating expenses, from the Dennis and Phyllis Washington Foundation, based in Missoula, MT. Seaspan is part of the Washington group of companies, that has holdings on the west coast of Canada and the United States, owned principally by Dennis Washington.
At the moment, Whitworth said, Seaspan operates the HaiSea in partnership with the Haisla Nation. “It’s a boat that you will see up and down the Channel, she does a lot of work for RTA as well as some of the others, mainly from the construction and the up and coming constrution from the new projects. We take a lot of time and effor to make sure our equipment looks good as well as operates well. That’s the kind of pride our crew puts in the vessels and the company supports.” he said. Seaspan barges are also used for the construction projects currently under way in Kitimat.
Whitworth said that while Douglas Channel is not yet “packed on the water,” shipping will likely increase in the coming years. “There are two big dominoes to fall, the first one is any of these big projects being talked about that are going to increase shipping in the Douglas Channel, be
it Chevron or Shell or the BC LNG project. They need to get approval first, that hasn’t happened yet. We understand it may be within the next six to twelve months before we hear some announcements. When that goes ahead, we can start looking at building new boats, be it escort tugs, or docking vessels, or additional vessels… That will help up us to know the time for when we need to deliver new boats for the Douglas Channel.”
Seaspan has always had a close relationship with the Canadian Coast Guard, Whitworth said and that relationship is even closer now that the Seaspan’s Vancouver Shipyards, was chosen by the federal government for the National Shipbuilding Procurement Strategy for non combat vessels. In February, the federal government announced (pdf) a series of preliminary contracts valued at a total of $15.7 million for the joint support ships, the CCGS John G. Diefenbaker polar icebreaker and the offshore fisheries science vessels.
The Washington Foundation is giving a multi-year donation of $1.1 million to three British Columbia marine and port community charitable organizations. Partnering with Sail and Life Training Society (SALTS), Vancouver Maritime Museum (VMM) and Royal Canadian Marine Search & Rescue (RCM-SAR).
Royal Canadian Marine Search and Rescue received $300,000 over three years. “Half of it $150,000 when to Royal Canadian Marine Search and Rescue Sooke training facility on Vancouver Island, that benefits all of the different stations in BC, they all get a chance to go train and at that training centre,” Whitworth said. “The remaining funds, the $150,000 was spread between six stations that are closely associated with Seaspan, so two in Vancouver harbour, North Vancouver, West Vancouver, two on the Fraser River, one at Delta and one at Richmond, one at Victoria and one right here in Douglas Channel in Kitimat.” The $8,500 covers approximately 35 per cent of the operating costs for Kitimat’s SAR 63 station every year for three years.
The Dennis and Phyllis Washington Foundation’s charitable donations are the organization’s first direct donation of their kind in Canada. Since its inception, the Washington Foundation has donated more than $144 million in the United States to hundreds of organizations that focus on education, health and human services, arts and culture, and community service.
Mike Halligan, Executive Director of the Washington Foundation, says today’s announcementis the start of an exciting inaugural collaboration with Canadian charitable organizations in British Columbia.
Members of RCM SAR Unit 63, on board “Snowflake Responder” with Seaspan CEO Jonathan Whitworth. (Robin Rowland)
Kitimat’s SAR 63 operates along Douglas Channel and down the Inside Passage as far as Butedale. Training takes place every Wednesday evening at the SAR 63 boathouse at the Nechako Dock. The unit will be recruiting new members in September. Anyone interested can contact training officer Duncan Peacock.
The Gorgon LNG project in Western Australia. Chevron says Gorgon Project work continues to progress with the installation of the second of three amine absorbers, two condensate stabilization modules and a recycled gas compression module. (Chevron Australia)
Kitimat LNG is in a “horse race” with an LNG project in Western Australia–and at this point, according to the Australian media–Kitimat is winning, even though the Australian Gorgon project is much further ahead while the Kitimat LNG project at Bish Cove hasn’t really started.
The Brisbane Times is quoting Chevron as saying that expansion of the Gorgon “will be in direct competition with exports from North America, which have a cost advantage.”
Chevron has a 47.3 per cent stake in Gorgon. Shell which is developing its own project at Kitimat, LNG Canada, has a 25 per cent stake in Gorgon. ExxonMobil holds 25 per cent.
”In the case of Gorgon train four … we are happy to see both of them move forward,” Chevron vice-chairman George Kirkland told analysts late last week, referring to the competition with Kitimat. ”[There is] a bit of a horse race between them at this point.”
Shipping gas to north Asia from Canada is cheaper than exports from Australia, he said, although the challenge is to find markets for the gas. ”The development cost at Kitimat … may end up being less than in the case of Gorgon,” he said, which ”has the benefit of [being a] brownfield development on the plant side”.
”We’re going to offer volumes … and interest in the plant as a combination,” Mr Kirkland said of the Kitimat marketing plans. ”We think that’s a big advantage.
”Our goal is to maintain our … first-mover advantage … We have had some initial discussions with Asian buyers.”
The Gorgon project in the northwestern area of Western Australia. (Chevron Australia)
According to Wikipedia, the Gorgon area of Western Australia is the site for a number of liquified natural gas projects. The projects are off shore and close to the export terminals, much different from British Columbia where the gas fields are in the Peace River district in the northeast of the province.
The Gorgon field is centered about 130 kilometres (81 mi) off the north-west coast of Western Australia, where the water depth is approximately 200 metres (660 ft). Other fields in the group lie to the north, such as Jansz-Io, which covers an area of 2,000 square kilometres (770 sq mi), in a water depth of 1,300 metres (4,300 ft).
It is one of the world’s largest natural gas projects and the largest single resource development in Australia’s history.
The Gorgon Project is developing the Gorgon and Jansz-Io gas fields, located within the Greater Gorgon area, between 130 and 220 kilometres off the northwest coast of Western Australia.
It includes the construction of a 15.6 million tonne per annum (MTPA) liquefied natural gas (LNG) plant on Barrow Island and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.
Gorgon LNG will be off loaded via a 2.1 kilometre long loading jetty for transport to international markets. The domestic gas will be piped to the Western Australian mainland.
The Gorgon joint venture is investing approximately $2 billion in the design and construction of the world’s largest commercial-scale CO2 injection facility to reduce the project’s overall greenhouse gas emissions by between 3.4 and 4.1 million tonnes per year. The Australian Government has committed $60 million to the Gorgon Carbon Dioxide Injection Project as part of the Low Emissions Technology Demonstration Fund.
A view of construction on the 2.1-km (1.3-mile ) LNG wharf with 24 caissons in place. (Chevron Australia)
In May, Reuters reported that the $52 billion Gorgon liquefied natural gas (LNG) development was 60 per cent complete. At the time, Reuters said Chevron planned to start engineering and design work for an expansion by the end of the year.
Parts of the Gorgon project are in an environmentally sensitive area, Barrow Island, which has been a nature reserve in Australia since 1910.
Wikipedia says
Barrow Island’s ecology. The island is a Class A nature reserve, and home to theflatback turtle (classified as a vulnerable species) and numerous other animals not found on the Australian mainland. Other concerns are related to the adequacy of quarantine procedures on Barrow Island to protect against the introduction of non-endemic species, and risks associated with geological sequestration of CO2.It was reported in November 2011 that native animals on Barrow Island had been accidentally killed daily with a known total of 1550 since construction began.
Chevron says
The Gorgon Project is being undertaken in accordance with strict environmental standards to preserve the island’s ecology.
Central to the Gorgon Project’s commitment to protect the conservation values of Barrow Island is the Quarantine Management System (QMS), which directs
the Project’s quarantine operations. The QMS is the largest non-government quarantine initiative in the world and was considered to be “likely world’s best practice” by the Western Australian Environmental Protection Authority. The Project’s gas processing facilities are being constructed within a 300 hectare ground disturbance limit, which represents 1.3 percent of Barrow Island’s uncleared land area.
The Shell LNG Canada project officially opened its Information Centre at the old Methanex site offices in Kitimat on Tuesday, June 25, 2013. About 180 people attended the event, which included a barbeque, kids activities with face painting, a tour of the office/information centre and a chance to community to meet the LNG Canada project team. Shell’s partners in LNG Canada are Mitsubishi, PetroChina and Korea’s Kogas.
Samuel “Sammy” Robinson, Chief Jassee of the Haisla Nation, offered an opening prayer and welcoming remarks on behalf of the Haisla for the project in Haisla traditional territory (Robin Rowland)
LNG Canada project Director Rob Seeley makes opening remarks. “We are confident that the Shell-led LNG Canada Project Team has the combined expertise to safely and successfully design and operate this project. We thank you for welcoming us to your community and look forward to working together to develop a project that we can all benefit from and be proud of.” (Robin Rowland)
LNG Canada’s Craig Jackson explains shipping issues to Kitimat residents touring the LNG Canada open house. (Robin Rowland)
LNG Canada’s Seiichi Tsurumi speaks to Kitimat residents touring the information centre. (Robin Rowland)
Kitimat residents touring the information centre watch a video on LNG tankers. (Robin Rowland)
The LNG Canada information centre and office building during the open house. (Robin Rowland)
Kinder Morgan has filed a last minute objection to the Northern Gateway Joint Review Panel’s preliminary conditions for the Enbridge project.
One of the objections from Kinder Morgan is the provision in the JRP’s proposed Gateway conditions for “purpose built tugs” to escort tankers (a measure that Enbridge has proposed for the Gateway project). Another provision Kinder Morgan objects to is “secondary containment facilities at marine terminals” likely to become an issue if the Vancouver terminal is expanded by Kinder Morgan.
Overall, Kinder Morgan warns that if the JRP imposes some of the proposed conditions on the Northern Gateway, it could adversely affect future pipeline projects in British Columbia.
As well, Kinder Morgan, it appears, is already concerned that if the proposed oversight of Northern Gateway goes ahead, the Kinder Morgan plan to twin the pipeline from Alberta to Vancouver and expand terminal operations in Vancouver could face ongoing scrutiny and possible delays.
The Kinder Morgan document, from the company’s Calgary lawyer, Shawn Denstedt, of Osler, Hoskins and Harcourt, filed May 31, appeared among all the final arguments filed on Friday by intervenors and governments to the Joint Review Panel on Northern Gateway.
Kinder Morgan’s letter to the JRP comes long after the final deadline for such comments.
Kinder Morgan is a registered intervenor in the Northern Gateway hearings, but has only filed four previous documents during the entire multi-year process. The company does not appear on the list of intervenors scheduled to appear for oral final arguments in Terrace beginning on June 17.
On April 12, 2013, the JRP issued a preliminary list of 199 conditions for the planning, construction and operation of the Northern Gateway project.
Now Kinder Morgan is worried. Denstedt’s letter notes:
we believe a number of the proposed conditions may have a material impact on pipeline and infrastructure development in Canada and consideration should be given to the conditions from this perspective.
Diplomatically, Denstedt goes on to tell the panel:
Our comments are intended to assist the JRP in understanding the potential outcomes of the proposed conditions if they become generally applicable to industry.
Commercial considerations
Under what Detstadt calls “Commercial considerations”, Kinder Morgan says “we observe that several of the proposed conditions are likely to affect the manner and risks involved in procuring pipeline facilities and services.
The list points to
Three layer composite coating or high performance composite coating is required for the entire pipeline although other pipeline coatings are commonly used in the pipeline industry depending upon ground conditions encountered
.
Complementary leak detection systems must be identified that can be practically deployed over extended distances of pipeline.
The construction of purpose-built tugs involves significant cost and lead time
A volume is prescribed for the secondary containment facilities at the marine terminal without reference to existing codes.
The letter goes on to say that if the conditions proposed by the JRP for the Northern Gateway come into effect, in Kinder Morgan’s opinion, it could adversely affect other pipeline projects in the future.
If broadly applied to industry, such conditions may limit the ability of pipeline companies to obtain competitive quotes because there are few sources of the required materials or services. The effect of conditions that require the use of a particular material or service may be to grant commercial benefits to certain suppliers through the regulatory process beyond the requirements of existing codes. Since several export pipelines are currently proposed, there will be a heightened demand for labour and materials in the coming years. The commercial effect of conditions that may exacerbate shortages of labour and materials should be a relevant consideration for the JRP.
Timing
One of Kinder Morgan’s objections is to the timing the JRP proposes for the Northern Gateway project if it applies to other pipelines.
Several of the proposed conditions contain NEB approval requirements and filings deadlines several years prior to operations. For example, plans related to the marine terminal and research programs must be filed for NEB approval three years prior to operations.
We are concerned that requiring reports to be filed for approval several years before operations can create significant schedule risks for infrastructure development projects. For example, a project with a two year construction schedule could take three years to complete with such conditions. Any changes to the construction schedule and anticipated date of operations would affect the filing deadline. Project proponents need sufficient schedule certainty in order to plan major expenditures on labour and materials.
To mitigate such risks, it is relevant for regulators to consider whether the filing deadlines and approval requirements prescribed in conditions could materially alter a project’s schedule. Filing deadlines should be set at a reasonable time before operations in order to minimize the risk that such deadlines materially affect the critical path for a project.
Many of the conditions require NEB approval, and in some cases the participation of other parties in the approval process, in order to be satisfied. Fulfillment of those conditions will require additional time, a Board process and potentially litigation. For example, certain reports must be filed with the NEB for approval prior to commencing construction activities. Other conditions require reports to be filed for approval by the NEB prior to construction with a summary of how concerns from other government agencies and Aboriginal groups were addressed.
So Kinder Morgan says:
In our view, conditions that require subsequent board approvals and that attract the potential for additional regulatory processes should be the exception and not a new standard or norm. There must be clear, well understood rationales given as to why additional approvals are in the public interest.
And so Kinder Morgan asks:
As an alternative, the NEB may utilize its existing powers and processes to ensure that when filings are made to satisfy imposed conditions an additional approval process is not required.
Overall the company sees the rules for Northern Gateway as a step back to the days before deregulation.
A number of the conditions may be interpreted as reflecting a return to a prescriptive approach to regulation. These conditions prescribe detailed audit requirements instead of setting a goal oriented approach to allow the proponent flexibility in mitigating any adverse effects. Such conditions tend to focus on operational aspects that are covered by existing codes and regulations rather than setting goals for the proponent to mitigate any significant adverse effects.
Denstedt, again diplomatically, concludes by saying:
Kinder Morgan wishes to thank the JRP for the opportunity to present these high level perspectives regarding its proposed conditions. Our comments are intended to ensure that the wider implications of the proposed conditions on the pipeline industry and infrastructure development are given appropriate consideration in the deliberations and final recommendations of the JRP.
A study by two scholars at Simon Fraser University says that the Enbridge Northern Gateway project is much more hazardous to Kitimat harbour, Douglas Channel and the BC Coast than Enbridge has told the Joint Review Panel.
The study by Dr. Thomas Gunton, director of the School of Resource and Environmental Management at SFU and Phd student Sean Broadbent, released Thursday May 2, 2013 says there are major methodological flaws in the way Enbridge has analyzed the risk of a potential oil spill from the bitumen and condensate tankers that would be loaded (bitumen) or unloaded (condensate) at the proposed terminal at Kitimat.
Enbridge Northern Gateway responded a few hours after the release of the SFU study with a statement of its own attacking the methedology used by the two SFU scholars and also calling into question their motivation since Gunton has worked for Coastal First Nations on their concerns about the tanker traffic.
Combination of events
One crucial factor stands out from the Gunton and Broadbent study (and one which should be confirmed by independent analysis). The two say that Enbridge, in its risk and safety studies for the Northern Gateway project and the associated tanker traffic, consistently failed to consider the possibility of a combination of circumstances that could lead to either a minor or a major incident.
Up until now, critics of the Northern Gateway project have often acknowledged that Enbridge’s risk analysis is robust but has consistently failed to take into consideration the possibilty of human error.
As most accidents and disasters happen not due to one technical event, or a single human error, the SFU finding that Enbridge hasn’t taken into consideration a series of cascading events is a signficant criticism.
Overall the SFU study says there could be a tanker spill every 10 years, not once in 250 years, as calculated by Enbridge.
It also says there could be 776 oil and condensate spills from pipelines over 50 years, not 25 spills over 50 years as projected by Enbridge. (And the life of the project is estimated at just 30 years, raising the question of why the 50 year figure was chosen)
Enbridge track record
The study also bases its analysis of the possibility of a spill not on Enbridge’s estimates before the Joint Review Panel but on the company’s actual track record of pipeline spllls and incidents and concludes that there could be between one and 16 spills (not necessarily major) each year along the Northern Gateway pipeline.
Findings for Kitimat
Among the key findings for Kitimat from the SFU study are:
Enbridge said the possibility of tanker spill was 11.3 to 47.5 per cent over the 30 year life of project. The SFU study says the possibility of a spill within the 30 years is 99.9 per cent.
The SFU study says it is likely there will be a small spill at the Kitimat Enbridge terminal every two years.
The SFU study estimates that there will be eight tanker transits each week on Douglas Channel if the Northern Gateway project goes ahead and more if it is expanded. (This, of course, does not include LNG tankers or regular traffic of bulk carriers and tankers for Rio Tinto Alcan)
The SFU study says that while Endridge did study maneuverability of tankers, it paid little attention to stopping distance required for AfraMax, SuezMax tankers and Very Large Crude Carriers.
The SFU study says Enbridge inflated effectiveness of the proposed tethered tugs and maintains the company did not study ports and operations that use tethered tugs now to see how effective tethering is.
The SFU says Enbridge’s risk analysis covered just 233 nautical miles of the British Columbia coast, where as it should have covered entire tanker route both to Asia and California, raising the possibility of a tanker disaster outside British Columbia that would be tied to the Kitimat operation.
Based on data on tanker traffic in Valdez, Alaska, from 1978 to 2008, the SFU study estimates probability of a 1,000 barrel spill in Douglas Channel at 98.1 per cent and a 10,000 barrel spill at 74.2 per cent over 30 year Gateway life. The Valdez figures account for introduction of double hulls after Exxon Valdez spill in 1989 and notes that spill frequency is much lower since the introduction of double hulled tankers.
According to a study by Worley Parsons for Enbridge in 2012, the Kitimat River is the most likely area affected by an unconstrained rupture due to geohazards in the region. According to the Worley Parsons study, geohazards represent the most significant threat to the Northern Gateway pipeline system.
Flawed studies
The SFU scholars list a series of what they say are major methological or analytic flaws in the information that Enbridge has presented to the Joint Review Panel, concluding that “Enbridge significantly understates the risk of of spills from the Northern Gatway.
Enbridge’s spill risk analysis contains 28 major deficiencies. As a result of these deficiencies, Enbridge underestimates the risk of the ENGP by a significant margin.
Some of the key deficiencies include:
Failure to present the probabilities of spills over the operating life of the ENGP
Failure to evaluate spill risks outside the narrowly defined BC study area
Reliance on LRFP data that significantly underreport tanker incidents by between 38 and 96%.
Failure to include the expansion capacity shipment volumes in the analysis
Failure to provide confidence ranges of the estimates
Failure to provide adequate sensitivity analysis
Failure to justify the impact of proposed mitigation measures on spill likelihood
Potential double counting of mitigation measures
Failure to provide an overall estimate of spill likelihood for the entire ENGP
Failure to disclose information and data supporting key assumptions that were used to reduce spill risk estimates
Failure to use other well accepted risk models such as the US OSRA model
SFU reports that Enbridge provides separate estimates of the likelihood of spills for each of the three major components of the project:
tanker operations,
terminal operations,
the oil and condensate pipelines.
The SFU scholars say Enbridge does not combine the separate estimates to provide an overall estimate of the probability of spills for the entire project and therefore does not provide sufficient information to determine the likelihood of adverse environmental effects……
It notes that “forecasting spill risk is challenging due to the many variables impacting risk and the uncertainties in forecasting future developments affecting risk. To improve the accuracy of risk assessment, international best practices have been developed.”
Part of the problem for Enbridge may be that when the company appeared before the Joint Review Panel it has repeatedly said that will complete studies long after approval (if the project is approved), leaving large gaps in any risk analysis.
The SFU study may have one example of this when it says Enbridge did not complete any sensitivity analysis for condensate spills at Kitimat Terminal or the condensate pipeline.
Our experts have identified a number of omissions, flawed assumptions and modeling errors in the study and have serious concerns with its conclusions:
The spill probability numbers are inflated: The author uses oil throughput volumes that are nearly 40 per cent higher than those applied for in this project which also inflates the number of tanker transits using these inflated volumes
The pipeline failure frequency methodology adopted by Mr. Gunton is flawed, and does not approximate what would be deemed a best practices approach to the scientific risk analysis of a modern pipeline system
Mr. Gunton based his failure frequency analysis on a small subset of historical failure incident data. Why would he limit the source of his data to two pipelines with incidents not reflective of the industry experience and not reflective of the new technology proposed for Northern Gateway?
The study results are not borne out by real world tanker spill statistics. Based on Mr. Gunton’s estimates we should expect 21 to 77 large tanker spills every year worldwide while in reality after 2000 it has been below 3 per year and in 2012 there were zero.
Most of Enbridge’s rebuttal is a personal attack on Gunton, noting
We are very concerned about the misleading report released by Mr. Gunton, who was a witness for the Coastal First Nations organization during the Northern Gateway Joint Review Panel process.
Mr. Gunton should have made his study available to the JRP process, the most thorough review of a pipeline that’s ever taken place in Canada. All of Northern Gateway’s conclusions have been subject to peer review, information requests and questioning by intervenors and the Joint Review Panel.
In response, Gunton told the Globe and Mail “the report took over a year to complete and it was not ready in time to be submitted as evidence before the federal Joint Review Panel which is now examining the proposed pipeline.”
Enbridge’s statement also ignores the fact under the arcane rules of evidence, any study such as the one from Simon Fraser had to be submitted to the JRP early in the process, while evidence was still being submitted.
The recent ruling by the JRP for closing arguments also precludes anyone using material that was not entered into evidence during the actual hearings.
That means that the SFU study will be ignored in the final round of the Joint Review Panel, which can only increase the disillusionment and distrust of the process that is already common throughout northwest British Columbia.
