Chevron Corporation says its wholly-owned subsidiary, Chevron Canada Limited, has reached agreement to sell a 30 per cent interest in its Duvernay shale gas play to Kuwait Foreign Petroleum Exploration Company’s wholly-owned subsidiary, KUFPEC Canada Inc., for $1.5 billion.
The total purchase price includes cash paid at closing as well as a carry of a portion of Chevron Canada’s share of the joint venture’s future capital costs. The Duvernay is located in west-central Alberta, and is believed to be among the most promising shale opportunities in North America.
The agreement creates a partnership for appraisal and development of liquids-rich shale resources in approximately 330,000 net acres in the Kaybob area of the Duvernay.
“This sale demonstrates our focus on strategically managing our portfolio to maximize the value of our global upstream businesses and is consistent with our partnership strategy,” said Jay Johnson, senior vice president, Upstream, Chevron Corporation. “The transaction provides us an expanded relationship with a valued partner. It also recognizes the outstanding asset base we have assembled.”
Following the closing of the transaction, Chevron Canada will hold a 70 percent interest in the joint venture Duvernay acreage and will remain the operator. The transaction is expected to close in November 2014.
“We remain encouraged by the early results of our exploration program and view the Kaybob Duvernay as an exciting growth opportunity for the company,” said Jeff Shellebarger, president of Chevron North America Exploration and Production Company.
Chevron Canada has drilled 16 wells since beginning its exploration program, with initial well production rates of up to 7.5 million cubic feet of natural gas and 1,300 barrels of condensate per day. A pad drilling program recently commenced which is intended to further evaluate and optimize reservoir performance as well as reduce execution costs and cycle time.
There’s a dumb, dumb, really dumb idea that just won’t go away—that Enbridge could solve all its problems if only, if only, it would send the Northern Gateway Pipeline to Prince Rupert.
Enbridge long ago rejected the idea. Before Enbridge updated its website to make Gateway Facts, to make it slick and more attractive, the old website had an FAQ where Enbridge explained why it wasn’t going to Prince Rupert.
Did you consider running the pipeline to Prince Rupert where a major port already exists?
We considered Prince Rupert and Kitimat as possible locations. We carried out a feasibility study that took into account a number of considerations. The study found that the routes to Prince Rupert were too steep to safely run the pipeline, and that Kitimat was the best and safest option available.
Current proposed route for the Northern Gateway pipeline. (Enbridge)
Here in the northwest even the supporters of the Northern Gateway roll their eyes when they hear the old Prince Rupert story come up again and again – and it’s not just because these people support the Kitimat plans for Northern Gateway, it’s because those supporters (not to mention the opponents) have driven along the Skeena from Terrace to Prince Rupert.
There just isn’t any room for a pipeline. It’s a game of centimetres.
A rainbow hugs the mountains near the Telegraph Point rest area on the Skeena River between Terrace and Prince Rupert, Sept. 29, 2014. Traffic is seen on the narrow corridor between the mountains and the river (Robin Rowland/Northwest Coast Energy News)
Alternatives to Kitimat?
Now the new premier of Alberta, Jim Prentice, who should know better if he’s going to lead that province, is hinting that Kitimat isn’t the only possible solution for the Northern Gateway.
Without specifying Prince Rupert, according to Gary Mason reporting in The Globe and Mail, Prentice was speculating about an alternative to Kitimat.
Asked whether he believes the Gateway terminus should be relocated to Prince Rupert or another destination, Mr. Prentice said, “Everything I’ve heard from the Haisla who live there is they don’t agree with the terminal being in Kitimat.” Is it possible to get First Nations approval if there is no support at the planned terminus site? “It’s pretty tough,” the Premier said.
Prince Rupert has a thriving local fishing industry that employs hundreds of people and is critically important to the local First Nations. He is convinced the community would not be willing to put that at risk.
“Overwhelmingly people in my community are much more comfortable with liquefied natural gas, with wood pellets, with coal, than any oil product,” he said.
The Prince Rupert Port Authority also rejected the idea
A spokesman for the Prince Rupert Port Authority said Wednesday there is currently no room for Enbridge to build at the port even if it wanted to. “We are fully subscribed,” Michael Gurney said. There are two large vacant lots within the port authority’s jurisdiction, but both are locked by other energy companies, earmarked for LNG projects.
So not only is there no room on the road to Prince Rupert, there is no room in Prince Rupert.
Shovel-ready?
Let’s just consider for a moment that if Prince Rupert was the ideal location for the Northern Gateway terminal (which it is not), what would be needed to get the project going today.
The Northern Gateway Joint Review Panel would have be reconstituted or a new JRP created by the National Energy Board. That’s because the bitumen comes from Bruderheim, Alberta, crossing provincial boundaries and thus it’s in federal jurisdiction.
Even under the fast track rules imposed on the NEB by Stephen Harper’s Conservative government, new environmental and social impact studies would be required, starting from scratch. So add another five years of paperwork before a single shovel goes into the ground.
The pipeline would have to cross the traditional territory of First Nations that, so far, have not been part of the negotiations, mostly the Tsimshian First Nation as well as the Nisga’a First Nation which has a treaty establishing local rule over their territory.
Traditional leaders of the Gitga’at First Nation lead a protest march through the streets of Prince Rupert, February 4, 2012. (Robin Rowland/Northwest Coast Energy News)
In February 2012, the largest anti-Enbridge demonstration outside of the Lower Mainland took place in Prince Rupert, with the elders of the Tsimshian First Nation welcoming the elders and members of the Gitga’at First Nation, at Hartley Bay, which had organized the protest.
When I say there isn’t room for a pipeline along the Skeena, it also means that there isn’t any room for the pipeline corridor right-of-way. Enbridge, in its submissions to the Joint Review Panel, said it requires a 25 metre wide right of way for the pipeline corridor. (For the record that’s just over 82 feet).
Along that highway, as you will see, there’s barely enough room for the CN mainline and Highway 16 (also known as the Yellowhead Highway) and on a lot of places both the highway and the railway roadbed are built on fill along the side of a cliff.
Albertans’ desperate desire to see the Northern Gateway go to anywhere to what they call “tide water” keeps coming up like the proverbial bad penny. The latest came when Jim Prentice speculated about a new route for the Northern Gateway.
I knew I had an appointment coming up in Prince Rupert on Monday, September 29. So I decided that only way to prove to people sitting in Calgary, Edmonton and Fort McMurray playing with Google Maps that the pipeline to Prince Rupert was a really dumb idea was to shoot photographs to show just why the Northern Gateway will never go to Prince Rupert—at least along the Skeena.
As you drive out of Terrace, you pass two large swing gates (also called by some “Checkpoint Charlie” gates after the Cold War era crossing in Berlin.) At the first rest stop west of Terrace, there are another set of gates at the Exstew. There’s a third set of gates just outside Prince Rupert.
A logging truck passes the avalanche gates at Exstew on Highway 16, Sept. 29, 2014. (Robin Rowland)
The swing gates are avalanche gates and, in the winter, Highway 16 can be shut down if an avalanche closes the highway or the danger from avalanche is too great to allow motorists to proceed. When you drive the highway from Terrace to Prince Rupert in the winter (the signs were covered up when I drove Monday) you are warned “Avalanche danger Next 13 kilometres. No stopping.”
The Exstew avalanche gates, (Robin Rowland/Northwest Coast Energy News)
The drive along the Skeena from just west of Exchamsiks River Provincial Park all the way to Tyee where the highway turns inland to reach northwest to Prince Rupert on Kaien Island is one of the most spectacular drives on this planet. The highway snakes along a narrow strip of land with steep mountain cliffs on one side and the vast river on the other.
The problem is that apart from locals and tourists, none of the “experts” whether journalist, think tanker, bureaucrat or politician have, apparently ever driven from Prince Rupert to Terrace.
When both Opposition Leader Tom Mulcair and Liberal Leader Justin Trudeau were in the northwest earlier this summer to “engage” with the local people, apart from short boat trips down Douglas Channel, they flew everywhere. Scheduling you know. Stephen Harper has never visited northwest BC and probably never intends to. His cabinet members fly in for photo ops and then are on the next plane out of town.
Of all the visiting journalists who have come to the northwest only a couple have bothered to drive around the region. Most fly-in fly-out. These days, most often budget-strapped reporters never leave their offices, interviewing the same usual suspects by phone on every story.
On Monday, I took most of the photographs on my way back from Prince Rupert to Terrace after my appointment, so the sequence is from west to east. There are also very few places along the river where you can safely stop. There are concrete barricades on both sides of the highway to prevent vehicles either going into the river or onto the narrow CN right-of-way.
There are, however, two rest stops and a number of small turnoffs on the highway, the turnoffs mainly intended for use by BC Highways, but which are also used by tourists, fishers and photographers.
The first image was taken at one of those highway turnoffs just east of Aberdeen Creek. This is what the highway and rail corridor are like all along the Skeena, the highway, bounded by concrete barricades, the CN rail line and then the towering mountains. Note where the telegraph and telephone lines are—further up the cliffside.
A closer view of the highway and rail corridor just east of Aberdeen Creek.
Here is the view of the Skeena River from the Aberdeen Creek turnoff. You can see to the east, a mountain and the narrow strip of fill land that supports the highway and the rail line.
You see the broad width of the mighty Skeena, the Misty River, as it is called by the Tsimshian First Nation and by everyone else who lives in the northwest and on the right side of the image, the highway and rail corridor built on fill.
Any room for a pipeline?
There’s another turnoff on the other side of the headland east of Aberdeen Creek, looking back the way we came.
The final small turnoff is just by the Kylex River. Again you can see how narrow the highway and rail corridor are.
A few kilometres further along—as I said the highway snakes and curves its way along the riverbank– you come to the Basalt Creek rest area. So this telephoto image shows a logging truck heading west, taken from Basalt Creek, looking back at the highway.
Again you can see both the highway and CN line are built on fill. Is there any room for a pipeline?
Any room for a 25 metre pipeline right-of-way?
Between Basalt Creek and Telegraph Point, a few kilometres to the east, again the highway and rail line hug the narrow strip between the river and mountains.
This shot, taken from Telegraph Point, in October 2013, shows a CN intermodal container train heading to Prince Rupert. The container trains and the coal trains usually have between 150 and 180 cars. If a winter avalanche took out a train, there would be environmental damage, but that damage would be insignificant from coal or containers compared to a train of railbit tankers carrying diluted bitumen.
At Telegraph Point, the second of the three rest stops between Prince Rupert and Terrace, again there is just a narrow strip between the mountain, the highway and the river.
Across the highway from the rest stop, you can again see the narrow corridor, the first shot looking west the rail line close to the cliff face, the second, east, with the waterfall, which you don’t see during the rest of the year, fed by the fall monsoon.
Two shots from the same location, Telegraph Point, taken in March, 2013, of a CN locomotive hauling empty coal cars back to the fields around Tumbler Ridge. (No waterfall in March)
Alternative routes
Everyone has assumed that if Northern Gateway changed its route, the most likely choice given the configuration of the pipeline at the moment is to follow the Skeena.
There are alternatives. The Petronas LNG project and its partner TransCanada Pipelines have proposed a more northern cross-country route, which would go north from the Hazeltons, avoiding the Skeena
If Enbridge wanted to try a northern route, similar to the one TransCanada contemplates for Petronas, Northern Gateway would again run into trouble.
It would require reopening or creating a new Joint Review Panel, many more years of environmental and social impact studies of the route, even under Stephen Harper’s fast track system. The TransCanada/Petronas pipeline would also cross the traditional territory of the Gitxsan First Nation and if Enbridge tried that the company would have to deal with the fact that it signed a controversial agreement with Elmer Derrick that was immediately repudiated by most members of the Gitxsan First Nation and eventually dropped by Enbridge.
So why does this idea of a pipeline to Prince Rupert keep coming up?
In most cases, the idea of the pipeline to Prince Rupert is always proposed by Albertans, not from any credible source in British Columbia, or the suggestions come from desk bound analysts in Toronto and Ottawa both in think tanks and in the newsrooms of dying newspapers who have never seen the Skeena River apart from a tiny handful who have looked at Google Street View
(Yes you can Google Street View Highway 16 along the Skeena, I recommend it if you can’t do the drive)
Perhaps the worst example of this failure of both analysis and journalism came in the Edmonton Journal on July 7,2014, when it published a piece by Bob Russell, entitled Opinion: Make Prince Rupert the terminus, which went over the same old inaccurate arguments.
The overland route currently proposed by Enbridge is fraught with environmental issues because it goes over coastal mountains and streams before entering Kitimat’s port. This port will also be the base of perhaps as many as four liquefied natural gas terminals, which will result in the channel always busy with LNG ships outbound and returning from many Asian ports.
There are existing rights of way for the major highway, the Yellowhead, and CN Rail line from Edmonton to the Port of Prince Rupert, so this eliminates the issue of transgressing First Nations lands. The technical issues of narrow passages can be overcome with engineering. In fact, the pipeline can be buried in the roadway at some restricted locations if absolutely necessary, but two different engineers have assured me that for the most part, the right of way should be able to handle the pipeline. A vital factor, of course, is to reduce the impact by eliminating the need for two pipelines.
The clue is how the Edmonton Journal describes Russell;
Bob Russell has an extensive background in planning and was a member of the Edmonton Metro Regional Planning Commission. He has flown the Douglas Channel, visited Kitimat and toured the Port of Prince Rupert.
This is so typical of the Albertan attitude toward northwest British Columbia, people fly in for a couple of days, make a quick observation, and fly out again and present themselves as experts on the region. (Some “experts” on Kitimat, very active on Twitter have apparently never left Calgary).
It obvious that the “two engineers” who assured him “the right-of-way could handle of pipeline” have no idea what they’re talking about. As the photos show there is barely enough room for a highway and a rail line much less a 25 metre wide pipeline corridor.
If the pipeline was to be built as Russell proposed, the only highway between Prince Rupert and the rest of Canada would have to be closed for years, there are no detours. All so a pipeline can be buried under the asphalt not in solid ground, but in the fill on the side of a riverbank in an avalanche zone?
Of course, closing a highway up here won’t inconvenience anyone in Edmonton or Calgary, will it?
Would CN be happy with years of disruption of their lucrative traffic to Prince Rupert with grain and coal outbound to Asia and all those containers coming in to feed Chinese products to the North American market? (you can be sure Walmart wouldn’t be happy about that, not to mention prairie farmers including those from Alberta)
Russell’s statement
There are existing rights of way for the major highway, the Yellowhead, and CN Rail line from Edmonton to the Port of Prince Rupert, so this eliminates the issue of transgressing First Nations lands.
Is also inaccurate.
I was told by First Nations leaders during the Idle No More demonstrations in the winter of 2013, that, a century ago, when the Grand Trunk built the railway along the Skeena , they did just that, built it without consulting the First Nations along the route, sometime digging up native cemeteries and sacred spots.
While apparently CN has worked in recent years to improve relations with the First Nations along the rail line, according to those leaders some issues of right-of-way remain to be resolved.
If there were any plans to build a diluted bitumen pipeline along that route, that would likely mean another court battle adding to those already before the Federal Court, a court battle that would cost Enbridge, CN, the federal government, environmental NGOs and the First Nations more millions in lawyers’ fees.
It’s doubtful if in the long gone (and perhaps mythical) days of “get it right” journalism that the Russell opinion piece would have passed the scrutiny of an old fashioned copy editor and fact checker.
In 2012, the Edmonton Journal (in a story no longer available on their website) also cited former Alberta Premier Peter Lougheed and former Bank of Canada governor David Dodge, as also favouring Prince Rupert.
Dodge, who was in Edmonton Tuesday to deliver a speech on the global economic outlook at MacEwan University, said Enbridge’s proposed Northern Gateway pipeline to Kitimat looks like even more of a long shot.
“I think the project to Kitimat looks, objectively, more risky. So why hasn’t much greater effort gone into looking at Prince Rupert and taking (bitumen) out that way? My guess is, the easiest place to get B.C. to buy into the project would be to go to Rupert.”
Dodge’s views echo those of former Alberta Premier Peter Lougheed, who also favours looking at an alternate pipeline route to Prince Rupert, where ocean-going supertankers can navigate more easily.
Back in 2012, I finished my piece for the Huffington Post by saying:
So why do people insist, despite the evidence, that the Northern Gateway go to Prince Rupert? It’s no longer an pipeline; it’s emotion and ideology. Ideology in that opposition to the Northern Gateway is seen by conservatives as heretical opposition to free enterprise itself. Emotion among those who see promoting the oil patch as an issue of “Alberta pride” and even Canadian patriotism.
For the promoters of the pipeline to Prince Rupert, ignoring the science of geology and the study of geography across all of northwestern B.C. is no different than repeatedly knocking your head against the Paleozoic metamorphic greenstone of the mountain cliffs along the Skeena. It only gives you a headache.
Things haven’t gotten much better in the past two years. In fact they’re getting worse as opposition to pipelines mounts.
It seems that in 2014 the Alberta and the federal government policy in promoting pipelines Northern Gateway, KinderMorgan’s TransMountain, Keystone XL, Line 9 Reversal and Energy East (slick PR and smiling representatives at open houses, politicians at strictly controlled photo ops) is to ignore facts on the ground and to refuse to deal with the concerns of local people from coast to coast.
There could, perhaps, be a more inclusive and truly science-based pipeline planning process that could see pipelines go on optimum routes but that isn’t happening.
The policy for the oil patch and its politician supporters when it comes to pipelines is facts and geology don’t really matter. So they put on ruby slippers, knock their heels together three times and send pipelines down a yellow brick road to an Emerald City (while telling the locals to ignore the man behind the curtain)
The Haisla Nation’s plan for entering the LNG business is based on the idea that “it is anticipated that the Haisla Projects will be developed using a business model based on controlling two components of the value chain: land and pipeline capacity” according to its application to the National Energy Board for a natural gas export licence.
Cedar LNG Development Ltd., owned by the Haisla Nation, filed three requests for export licences with the NEB on August 28, under the names Cedar 1 LNG, Cedar 2 LNG and Cedar 3 LNG. Another name used in the application is the “Haisla Projects.”
The 25-year export licence request is standard in the LNG business; it allows export of natural gas in excess of projected North American requirements. Thus like the NEB hearings for the Kitimat LNG and LNG Canada projects it is not what is called a “facility” licence which is what Enbridge Northern Gateway requested.
The project anticipates six “jetties” that would load LNG into either barges or ships at three points along Douglas Channel, one where the present and financially troubled BC LNG/Douglas Channel Partners project would be.
A second would be beside the BC LNG project, which may refer to the Triton project proposed by Pacific Northern Gas parent company Altagas.
Both are on land now owned by the Haisla Nation in “fee simple” land ownership under Canadian law.
Map from the Haisla application to the NEB showing that the Haisla Projects Region will allow for a total of six LNG jetty sites. One of these, on DL99, is currently ear-marked to be used for a project involving a consortium (BCLNG) One will be situated on the DL309 Haisla fee simple land and the other four jetties are to be situated on the Haisla leased lands that surround the Chevron-led LNG development at Bish Cove. The map also shows that the Haisla own land at Minette Bay.
The other four would be on land surrounding the current Chevron-led Kitimat LNG project along Douglas Channel and in the mountains overlooking Bish Cove which the Haisla have leased.
Haisla Nation Chief Counsellor Ellis Ross at Bish Cove, June 19, 2013. (Robin Rowland/Northwest Coast Energy News)
The move last week and the revelation of the Haisla’s plans for the land are a cumulation of Haisla Nation Chief Counsellor Ellis Ross’s idea of restoring more of the First Nation’s traditional territory by buying or leasing the land using standard Canadian land law and at the same time getting around some of the more restrictive provisions of the Indian Act that apply to reserve land.
Just how the Haisla will go into the pipeline business is not as clear as the First Nation’s acquisition of the land. The application says:
The pipeline capacity required to transport sourced LNG to the Haisla Projects will include a mix of new and existing pipeline and infrastructure. The Haisla are in the advanced stages of negotiating and drafting definitive agreements with the major gas producers and pipeline transmission companies located in the vicinity with respect to securing pipeline capacity. It is expected that the Haisla Projects will rely on the Haisla’s business partners or customers to source gas from their own reserves and the market.
With the Haisla basing their business strategy on land and pipelines, the First Nation’s strategy is looking for flexibility in what is a volatile and uncertain market for LNG.
The application says the Haisla “are currently in advanced stage discussions and negotiations with a number of investors, gas producers, LNG purchasers, pipeline transmission companies, technology providers and shippers. As such, the particular business models have yet to be finalized. However, it is anticipated that between the various Haisla Projects, multiple export arrangements may be utilized.”
As part of the idea of flexibility, the actual LNG infrastructure will be constructed and operated with potential partners. That is why there are three separate applications so that each “application will represent a separate project with independent commercial dealings with investors, gas producers, LNG purchasers, pipeline transmission companies, technology providers and shippers.”
The Haisla say that they are “working with a number of entities to develop business structures and partnerships to provide transaction flexibility, adequate financing, modern technology, local knowledge, and marketing expertise specific to Asian targets. The separate projects will accommodate expected production and demand and will also allow for a number of midlevel organizations to be involved with the various projects as well as traditional major gas producers and LNG purchasers.”
The Haisla are working with the Norwegian Golar LNG which had been involved in the stalled BC LNG project, using a Golar LNG’s vessels and technology, using a new design that is now being built in Singapore by Keppel Shipyard.
Golar LNG uses PRICO LNG process technology developed by Black & Veatch, (Wikipedia entry) “which is reliable, flexible and offers simplified operation and reduced equipment count.”
The filing says the project will “be developed using either barge-based or converted Moss-style FLNG vessels. The terminals will consist of vessel-based liquefaction and processing facilities, vessel-based storage tanks, and facilities to support ship berthing and cargo loading”
The jetties to be used for the Haisla Projects may be either individual FLNG vessels or “double stacked”, meaning that the FLNG vessels are moored side-by-side at a single jetty. The Haisla have conducted various jetty design work and site /evaluation studies with Moffat and Nichol.
The Haisla Projects anticipate that the construction will be in 2017 to 2020, “subject to receiving all necessary permits and approvals” and is expected to continue for a term of up to twenty five years. There is one warning, “The timelines of the Haisla Projects will also depend on the contracts and relationships between the Applicant and its partners.”
The filing goes on to say:
Haisla Nation Council and its Economic Development Committee are committed to furthering economic development for the Haisla. The Haisla’s business philosophy is to advance commercially successful initiatives and to promote environmentally responsible and sustainable development, while minimizing impacts on land and water resources, partnering with First Nations and non-First Nations persons, working with joint venture business partners, and promoting and facilitating long-term development opportunities.
The Haisla Applications will allow the Haisla to be directly involved as participants in Canada’s LNG industry, rather than having only royalty or indirect interests. The Kitimat LNG and LNG Canada projects, and the associated Pacific Trails Pipeline and Coastal Gas Link Pipeline, have increased economic opportunities in the region and the Haisla are very supportive of these projects locating within the traditional territory of the Haisla. The support of the Haisla for these two projects reflects a critical evolution of the Haisla’s economic and social objectives.
Map from the Haisla Nation application to the NEB showing the proposed LNG developments in relation to Douglas Channel.Map from the Enbridge filing with the Joint Review Panel showing the same area with the proposed Northern Gateway bitumen terminal.
The San Miquel Mission in Santa Fe, New Mexico, was built between 1610 and 1619. Santa Fe mandates that building in the city continues to reflect its historic heritage. (Robin Rowland/Northwest Coast Energy News)
Updated with additional links
“Is there a longterm vision for Kitimat?” Spencer Edwards, one of the public delegates, asked District of Kitimat Council Monday night, August 18, as there was yet another public hearing on the highly controversial development on Kingfisher Avenue.
If there is a vision for the future of development in Kitimat, it appears, to say the least, that both Council and the overworked Community Planning and Development division are struggling to find something. It is more likely that with the sudden increase in development, that both Council and staff just don’t have time to “do the vision thing.”
Clarence Stein’s Kitimat Townsite report
The growing objections to the Kingfisher development of either 40 or 53 townhouses and a second development Riverbrook Estates, that would be beside the Dyke Road off Kuldo near to the Riverlodge Tennis Courts, a mix of single family homes, townhouses and apartments, shows the vision gap.
Public delegations are demanding just that— a vision.
At council meetings over the past weeks, a number of delegates have referred to Clarence Stein’s original vision for Kitimat from the 1950s. A note to Council from the residents of Marquette Street presented in opposition to the Kingfisher development says:
This is not what the famous American Architect, Urban Planner and Founder of the Garden Cities movement, Clarence Stein had envisioned a modern town with a population of 50,000 resident when he designed Kitimat over 60 years ago. He would be turning inside his grave.
Stein asked the same question. In his plan for Kitimat (page 45) he said future councils, staff and developers must ask: “What do the people themselves want?”
It’s fairly obvious by now that what the people of Kitimat want is more housing—there is, after all, a housing shortage at the moment. It also crystal clear that the residents of Kitimat do not want cookie cutter town houses and apartments built, as the Marquette note says “as is happening in Surrey, Port Coquitlam and so many other places in the Lower Mainland.”
Spencer Edwards asked District of Kitimat Council on Monday, “Is there a strategic long term plan, long term vision for the development of Kitimat. Does it simply involve industry or a diverse range that’s in place, and if that plan is in place, is it possible to view it at some point.” (Robin Rowland/Northwest Coast Energy News)
“Kitimat is full of hicks”
While developers (just like energy companies) come before Council and make presentations of their vision, with assurances of respect for this community, there is a dark side.
When the developer delegations left the Council Chambers Monday after their presentations, some of them were overheard by witnesses in the parking lot disparaging what had just gone on inside from both council members and citizen delegations, saying that “Kitimat is unsophisticated”….”doesn’t understand how things were done in the big city” and… “Can’t make up their minds.”
As one of my sources who overhead the conversation remarked, “They must think Kitimat is full of hicks.”
While it is uncertain which of the developer and real estate delegations made the remarks in the dark, it is clear if that is the real attitude toward development in Kitimat, then vision, not “let’s get on with it” must be the priority.
There must be strong development regulations to ensure that anyone building in the District must be held strictly to account to keep those assurances (and not be allowed to say market conditions have changed to get out of any commitments). More than that what Kitimat needs and needs now is an updated version of Stein’s vision, not the “motherhood” statements found in the current Official Community Plan.
So Kitimat, do you know the way to Santa Fe? (We’ll get there in bit).
Unfortunately the OCP is more of a motherhood document than a plan for the future of Kitimat. It’s also obsolete: a 2007-2008 rewrite of the original 1987 plan, updated with a few paragraphs in 2013 (as required by law, it is reconsidered every five years) There’s an already obsolete table predicting continuing decline of Kitimat’s population over the next quarter century (although a nearby graph does include possible population increases as well as declines).
On the future of Kitimat, the opening paragraphs read circa 2008
Kitimat’s population, after peaking in the mid-80s, has been in a general decline to fewer people than in 1956, primarily because of external factors beyond the control of the local municipality. Kitimat, like many other rural communities across Canada, is being affected by world markets and resultant demographic shifts as economic power and population is concentrated in major metropolitan centres. It is hoped that population will grow again and there are potential projects that would support this. New industry may locate here or existing businesses may expand based on the deep sea port, relatively low-priced land, and the proximity to natural resources. Kitimat’s future remains uncertain.
Even with the few updates in 2013, it seems no one expected the current building boom. That means the OCP can’t handle the boom, whether or not it continues or fades away.
The problem facing those who want development in Kitimat is that much of provincial law is pretty clear, a developer looks at the OCP, which has little specifics, then the zoning and then, if everything is in order, apply for a development permit, gets it and the goes ahead.
At Monday’s meeting, Edwards asked, “Is there any indication of what quality of development is being put in place?”
Deputy Administrative Officer, Warren Waycheshen, replied that the zoning plan for the Kingfisher development “allows what the setbacks are going to be, height, distances, it doesn’t set the building quality. That will come through the development permit stage.”
There have been the same arguments over and over in Kitimat in the past year, where a new developer or a developer doing renovations, often from out of town, were able to go ahead and do what they wanted, with little regard for the residents of Kitimat, its history and the vision of Clarence Stein.
This brings me to Santa Fe, how Kitimat can maintain Stein’s vision and how Kitimat can use the development permit process to ensure that happens. That means an urgent program of updating and strengthening the development permit system to reflect Stein’s vision across the district.
Santa Fe
Santa Fe, New Mexico, was a crossroads of the Old West, home of the Pueblo First Nation which for centuries before the coming of Europeans built pueblos out of adobe. Adobe (not the software) is an old Arabic word meaning “mud brick” adopted into Spanish during the time of the Moors, brought to the New World and used by the Spanish in New Mexico, and taken up by the Americans who came via the Santa Fe Trail and then the railhead for the Atchison, Topeka and Santa Fe Railway.
In 1912, New Mexico became the 47th US State; Santa Fe became the capital.
At the same time, the Santa Fe local government adopted the 1912 equivalent of a BC Official Community Plan,
In 1912, when the town had only 5,000 people, the city’s civic leaders designed and enacted a sophisticated city plan that incorporated elements of the City Beautiful movement, the city planning movement, and the German historic preservation movement. It anticipated limited future growth, considered the scarcity of water, and recognized the future prospects of suburban development on the outskirts. The planners foresaw conflicts between preservationists and scientific planners. They set forth the principle that historic streets and structures be preserved and that new development must be harmonious with the city’s character.
The end of the fabled trail of pioneer days, Santa Fe is today the oldest state capital city in our nation. And if its earth-tone structures hark back to the Pueblo originals, well, that’s by design….. Almost a century ago, city fathers mandated use of the style all over town, predicting — accurately, as it turned out — that it would be good for the tourist trade. Today, even fast food outlets and big box stores are clad in Santa Fe style.
That CBS report was right on. I visited Santa Fe a few years ago, and noted how much of the town, especially the famous art galleries reflected that adobe style. The big box stores and the fast food joints are the same—and who cares about corporate building branding; the familiar signs were all that was needed.
What struck me was a mall I saw on the outskirts of town while driving to the airport. It was a mall, in many ways no different from the boring cookie cutter malls you see in Surrey, Coquitlam or Nanaimo—with one exception. It was built in the Santa Fe Adobe Style and looked a whole lot better than the uniform malls you see from almost every highway in North America.
Editor’s Note: CBS News Sunday Morning is scheduled to repeat its special report on Santa Fe By Design, this Sunday, August 24. Due to sports programming Sunday Morning is usually pre-empted in the Pacific Time Zone. If you have cable or satellite and access to a CBS east coast station, watch or set your PVR from 0900 to 1030 ET (0600 to 0730 PT)
That is what “new development must be harmonious with the city’s character” means and that’s what Kitimat should do. Make sure all future development is truly harmonious with Kitimat’s character.
Not that there aren’t the usual tensions and disputes over what harmonious means. As the Wall Street Journalreported last year, there is now some resistance to the old style among residents, including those outside the municipality’s jurisdiction or away from the historic districts where the rules are the strictest.
As the Journal reports:
a new wave of contemporary homes is springing up around the city’s less regulated outer edges, transforming the once uniform landscape and pushing southwestern design in new directions. Glints of glass and steel are now dotting the city’s earth-toned desert surroundings
Some home owners want to be completely contemporary and get away from the adobe style. On the other hand, as the Journal reported, some architects are working on innovative designs that blend the adobe style with the ultra modern:
Some local architects aim to meld traditional and contemporary architecture in their designs. While traditional materials of adobe homes—stucco and plaster walls, for example—are still used in many contemporary homes, the lines on modern designs are crisp and clean instead of rounded. Many of the contemporary homes around Santa Fe are characterized by large expanses of glass, clerestory windows and skylights—sometimes in unexpected places, such as in laundry rooms and showers—and muted stucco exteriors accented with steel that blend into the landscape.
Although Kitimat Community Planning and Development says on their website that Stein’s Townsite Report is a “must read,” it is doubtful that any of the developers have actually read it.
Note also that the Garden City concept that was the foundation of Kitimat was itself, in part, based on the now century-old City Beautiful movement that gave Santa Fe its character.
So there is a connection between the design of that desert city and this small town in the rainforest of the Northwest.
After Monday’s Council meeting, I asked Warren Waycheshen if there were any “heritage” or “look and feel” policies in British Columbia. Waycheshen told me that while it is difficult to mandate “harmonious character” and “blending into the landscape” at the zoning level, it can and has been done at the development permit stage in a few BC communities.
(And for those developers who think that wanting harmonious development is “unsophisticated,” well they can look at Santa Fe and Whistler)
Up until now in Kitimat, some in politics, some in the real estate and development communities have had an Oliver Twist approach, saying to every developer “Please, sir can we have some more?”
So far none of the designs presented before Council for any development have shown any innovation or imagination. None of them have any harmony with Kitimat’s character
. Even with the need for housing, there is time to slow things down and reconsider whether taking “off the shelf” projects originally designed for the land crowded Lower Mainland are right for Kitimat.
That’s because none of the Liquified Natural Gas projects are anywhere close to the Final Investment Decision Stage.
Many of the delegations to Council have warned about overbuilding and the possibility that slap dash, cookie cutter development could quickly deteriorate into slums if the boom doesn’t happen. There is some limited time to consider all the issues. Most residents who live around the Kingfisher development would prefer buildings with a higher quality that could be sold on the basis of its proximity to the golf course. There are fears that many developments, based on the Lower Mainland “build higher” philosophy would be inappropriate for seniors.
There is one consideration—that is the size of buildings. Both District Staff and developers cite changing demographics (average household size dropping from 3.2 to 2.4 persons) and the fact the large single family homes, such as the “berry” development by Oviatt Construction are too costly for young families who would prefer and could afford townhouses.
Do Kitimat planners consider the sometimes gloomy weather as Clarence Stein proposed. (Robin Rowland/Northwest Coast Energy News)
Harmonious townhouses
We have to ask what kind of townhouses? The original Stein report, in a chapter written by planning subcontractors Mayer and Whittlesey noted on page 220,
Larger-than-normal houses, for people will stay much indoors; covered terraces and breezeways where children can play. A large number of houses should have a cellar or attic space for workbench and game table. Provision of wood burning fireplaces should have special consideration, as a focus of interest and cheer in a rainy climate.
So smaller houses for affordability or larger houses so people can get through the fall and winter without getting cabin fever? Just how much Seasonal Affective Disorder happens in Kitimat? And beside the weather, people are staying indoors a lot of these days watching satellite TV, playing video games and on the Internet. All factors the developers aren’t considering.
Have Kitimat’s planners and builders ever considered how home design might help alleviate SAD?
Let’s throw out the boxes and have the architects go back to the drawing board or AutoCAD and design a townhouse that is right for Kitimat.
There are a lot of worries about snow clearing and parking in the narrow streets of the proposed developments. While district staff say the Kingfisher development meets “municipal parking standards” perhaps all those concerns by experienced long-time residents mean that those standards should be reconsidered rather than used as a rubber stamp.
It’s amazing that in the late 1940s and 1950s a bunch of men in New York (yes men, Stein, the man of his age, calls for planning by men) who at first had never been here, could imagine and create the Kitimat that became “the town of the future,” while today developers from Vancouver, Calgary or wherever do nothing more than pull an AutoCAD file off a hard drive, make a few tweaks and cosmetic changes and then try to convince residents, staff and council that this will be great for Kitimat.
Yes many of the original houses in Kitimat were “off the shelf” at the time but they were also often new and innovative for the 1950s. This is a chance to create a new vision but practical vision for the 21st century. The provincial government has mandated all community planning must consider climate change. There is no indication at all that the current development designs take climate into consideration.
What must be done
It’s time for Kitimat to rewrite the development permit standards, so that the original Stein vision is incorporated into every future development, whether residential, commercial, industrial or institutional. Some of the ideas will have to be updated from the 1950s to reflect changes in demographics, economics and technology. If Santa Fe, a modern hub of artistic and high tech innovation can do it, Kitimat can do it on a smaller scale.
Immediately
Since time is somewhat tight, ask the current developers, on a voluntary basis, to submit new ideas that show their projects won’t be just another subdivision in Surrey, new designs compatible with Kitimat. If developers want to build here, now and in the future, they are going to have to use their imagination and skill to bring Stein’s vision into the 21st century. Tell the developers that now they have to prove to Kitimatians that they don’t really believe this is a hick town.
Short term
Update development rules and guidelines
District staff, Council members, the Housing Committee and other interested groups should take a crash look at development guidelines and development permit rules and as soon as possible update those that can act as a guideline for future changes that reflect the Stein vision.
Hire a District Solicitor
We recommended this during the Enbridge Northern Gateway Joint Review hearings and when the LNG companies began environmental review. All the problems with potential development again show the need for a full time District Solicitor who will be in the District offices working with staff and members of council and attending council meetings to understand the needs of the residents of Kitimat on all issues. Having a lawyer on retainer who is not involved with community is no longer an option.
Medium term
Overhaul development rules and guidelines
Continue the work recommended for the short term and have staff, locally based developers and locally based engineering companies familiar with Kitimat form a task force to overhaul the development rules and guidelines so that developments fit into both an updated Clarence Stein vision and the uncertain economics of this region
Longer term
A new Official Community Plan
The current “maybe this, may be that” Official Community Plan is completely inadequate for the needs of Kitimat. It is little more than a collection of database copy and paste, motherhood bureaucrat speak with no significant reference to Stein’s original vision.
The community needs an OCP that has a strong, well-defined two track approach, one that assumes the LNG boom will go ahead, that Kitimat will grow, and a second that assumes that the new industry might pass us by and Kitimat may have to revert to planning diversification with an emphasis on tourism.
That also means looking for and hiring the Clarence Stein of the 21st Century, whether that person is in New York, Vancouver, London or Singapore.
The current OCP was largely written by Stantec, which seems to be the go-to consulting firm for everyone. While the involvement of Stantec may not have been an issue in 2008, Stantec is the same company that is now working for Enbridge and most of the LNG projects. That is a clear conflict of interest.
Kitimat needs a visionary who can build on what Stein and his colleagues did 60 years ago. While Stein was working for Alcan, what is needed in 2014 and beyond is truly independent consultant, not one serving a dozen different masters.
That includes maintaining harmony with the forested nature of the region. Without going completely the same way as Santa Fe, perhaps future construction in Kitimat should conform, within market conditions, to a style that reflects the demands of building in the northwest, like heavy snow loads and long days of dreary rain while at the same time is more reflective of the northwest natural environment. That means including the brilliant idea of sidewalks and green spaces at the back of houses, not just boxes on standard suburban streets. That doesn’t have to mean duplicates of First Nations’ longhouses or settlers’ log cabins.
A Kitimat “look and feel” should challenge architects to create a style that says Kitimat and the northwest while at the same time drawing plans that are economic for both the developer and the buyer, just as architects in Santa Fe are bringing a century-old vision into the 21st century.
If the current crop of developers think that Kitimat is unsophisticated, doesn’t understand what goes on big cities, and takes too long to make its mind, well we live here and you don’t and you won’t. If Kitimat does have a rosy economic future, it is highly likely that the community and district can find developers who aren’t in-and-out carpet-baggers but who will build something that will make a profit, be affordable for the buyer and be harmonious with the community and Stein’s vision updated for the 21st century.
As Stein asked, “What do the people themselves want?”
Editor’s note: My late father, Frederic Rowland, was Alcan’s assistant property manager in Kitimat, involved in town planning from Vancouver in the mid-50s and in Kitimat from 1957 to 1965 and thus one of the Alcan staff charged with implementing Stein’s vision.
Chevron is sticking with the Kitimat LNG project but won’t make a Final Investment Decision until it has signed sales and purchase agreements for between 60 and 70 per cent of the natural gas, Chevron’s vice-chairman and executive vice-president of upstream operations, George Kirkland told investment analysts in a conference call Friday.
“We need to get partnership resolved and Apache has to move through the issues s and we need to get a new partner in. That needs to happen. That’s quite obvious,” Kirkland added.
Other factors, Kirkland told the call, are final test results from the Liard and Horn River natural gas play in northeast British Columbia and finalization of the “pipeline corridor.”
Kitimat-Liard-Horn package
Although the residents of Kitimat are focused on the LNG terminal at Bish Cove, remarks both by Kirkland today and by Apache CEO Steve Farris Thursday, it appears that energy industry views Kitimat LNG as part of a “package” (a term used by both) that includes the Liard and Horn River gas fields and the connecting Pacific Trails Pipeline.
Kirkland also said Chevron has no interest in any further investment beyond the 50 per cent it already holds. “We have 50 per cent of the interest in Kitimat-Liard-Horn River assets. That’s right in the middle of the sweet spot where we like to be where we’re committing people to run the projects and operations. We don’t want more than 50 per cent but we do have available some small amount of working interest that we would provide to a LNG buyer.
“There’s always been a plan for us and Apache to have some working interest that could be sold down to buyers, so they would be part of the development and they would be in the value chain. That has not changed.”
Kitimat LNG’s rival project LNG Canada, run by Shell, has buyer partners in KoGas, Mitsubishi and PetroChina.
Kitimat LNG under construction at Bish Cove, September 2013. (Robin Rowland/Northwest Coast Energy News)
Final Investment Decision
One analyst asked Kirkland if the Final Investment Decision would come at the end of 2014, as previously announced, or in 2015. Instead, Kirkland said, “We will reach FID shortly after having 60 to 70 per cent gas committed to an SPA- a sales and purchase agreement. That is the critical decision maker and for both timing and the investment decision, irrespective of what happens with Apache. We’re driven, once again, by having a sales contract or sales contracts that gives us 60 to 70 per cent of the gas committed at an economic price.”
On the Kitimat terminal, Kirkland said, “We’ve got work going on, FEED [Front End Engineering and Design] work on the plant itself.
“We have to understand cost and schedule on that plant… We’re not spending huge money but it is a lot of money in terms of hundreds of millions of dollars. Now that is critical for us to have all that so we can deal knowledgeably with buyers. We have to understand cost. We have to understand resource, so we can deal with the particulars of pricing.
“We are not going to do a project unless it’s economic. We’ve always told you we’re not going to build that project unless we have 60 per cent of the gas sold. If you understand the project it makes sense.”
“I am not concerned if Apache leaves,” Kirkland said. “I think we could easily step in and be the operator of the upstream. I am confident there. Apache has been very good to work with in the early stages of the assessment of Liard.
“I think we’re in good shape but we need clarity, we need to get closure on the partnership and as I mentioned we have to do the work where we deal with buyers and understand costs and understand economics. We are very value driven, we are not going to go FID until we understand the economics of that sale.”
Confident on assets
Kirkland said that the company is confident about the assets in the Liard and Horn River regions but is waiting for final results from some test wells in the Liard.
“We can check off our confidence level on the Horn River. Resources are already high. We’ve already done that appraisal. So the focus on the resource sector is on the Liard, with some appraisal there and getting some production work. The wells where we need to get some production data will be complete by the end of the year. So that’s a really important step forward.”
Kirkland also hinted at the potential problems with the Pacific Trails Pipeline, where there is still a dispute with the Wet’suwet’en First Nation. “We’re going to focus on the pipeline and the end of the pipeline corridor. That’s important and we’re putting some money into that to finalize the pipeline routing, get all our clearances and then we’ve got work going on.”
Slide from the Chevron second quarter results presentation showing other LNG projects (Chevron)
Overall Kirkland was enthusiastic about other liquified natural gas projects in Australia and elsewhere in the world. Chevron Corporation reported earnings of $5.7 billion for the second quarter 2014, compared with $5.4 billion in the 2013 second quarter. Sales and other operating revenues in the second quarter 2014 were $56 billion, compared to $55 billion in the year-ago period.
Company CEO John Watson said a news release, “In Australia, our Gorgon and Wheatstone LNG projects continue to reach important interim milestones. Gorgon remains on track for expected start-up in mid-2015. We are also advancing the development of our liquids-rich, unconventional properties in the United States, Canada and Argentina.”
Apache will “completely exit” the Kitimat LNG project, company CEO Steven Farris told investors Thursday as the company reported its second quarter results.
The pull out from Kitimat is part of a plan by Apache to spin off assets that are not part of its “base business” so it can concentrate on its “North American onshore assets.”
“We have said for some time that Canada is part of our North American onshore portfolio,” Farris told analysts in a conference call.
“Certainly we have two businesses up there. [in Canada] We have a business which is a base business with respect to the Duverney Shale and Monteny shale and some of the other things we working on there. We also have the Kitimat-Horn River- Liard. Kitimat -Horn River -Liard is part of our LNG project which we reindicated today that we intend to exit.”
A long view of the Kitimat LNG project at Bish Cove, Sept. 14, 2013. (Robin Rowland/Northwest Coast Energy News)
The Horn River and Liard natural gas fields would have served the LNG project. The divesture could either be as a complete package or sold separately perhaps through the capital markets. The Duverney Shale and Monteny shale plays are considered North American assets, while the Horn RIver Liard plays are considered international because the product from there would be sold in Asia via an LNG terminal.
Chevron, the 50 per cent partner with Apache in Kitimat LNG, said it would have no comment on the Apache move until its own investor conference call Friday morning.
Apache also intends to divest its stake in the Australian Wheatstone LNG project, where Chevron is also a partner.
It was about 18 months ago, Farris said, that Apache changed its focus to “enhancing its North American onshore resource base… We’ve also made it clear that there are no sacred cows as our efforts continue.”
Change in company strategy
Apache CEO Steven Farris. (Apache)
Farris and other executives repeatedly emphasized on the call that the Kitimat and Wheatstone sales were part of an overall change in company strategy.
“I have to honestly say that the complete exit by Apache will not have an impact on Kitimat going forward one way or another,” Farris said.
“Whether we’re in it or not, they will contact with world class reserves and frankly Chevron and Apache are way a head of anybody else in that arena. We’ve always been in a position that we felt we could not be in these LNG projects. I think it’s important that we state that.”
Some other financial analysts on the call seemed a little skeptical about the move, with a couple of questions focused on whether Apache was giving up long term investments.
“In terms of business and priority of capital and time frame of LNG specifically Kitimat it make sense for someone to own it who has a different timeline,” Farris said.
As for the timing of the sale, both Farris and Chief Financial Officer, Alfonso Leon, would not give specifics. “We haven’t decided on a specific timeline, we are working on a number of different opportunities,” Leon said. “Each of them has a different timeline associated with it. So we will make decisions as we reach decision points. Specificaly on the separation work flow…it is not something that will be executed on an imminent basis. Work has been underway but there is still significant work ahead of us.”
The executives would not say how much Apache has spent on Kitimat LNG so far, but it has been estimated at $2 billion just this year.Upgrading the old forest service road to a modern highway capable of supporting heavy truck traffic was estimated to cost $25 million Kitimat LNG officials said late last year.
Fair price
As for the selling price, Farris said that company will hold out for the best deal, saying that Apache has got a “fair price” for international assets that is has already sold, adding that when it comes to Kitimat and Wheatstone. “We won’t sell at prices that don’t make sense,” whether that comes from a package deal with the northeast BC shale assets or through the capital markets.
Overall, Apache Corporation is making money, announcing second-quarter 2014 earnings of $505 million Net cash provided by operating activities totaled approximately $2.3 billion in second-quarter 2014, compared with $2.8 billion in the prior year, with cash from operations before changes in operating assets and liabilities totaling $2.2 billion, compared with $2.6 billion in second-quarter 2013.
In the quarterly report news release, Farris said, “Record-setting performance by our Permian Region continues to drive strong results for the company… Apache’s onshore North American liquids production increased 18 percent on a pro forma basis in the second-quarter 2014 compared with the same period a year ago”
Although some enviromental groups and First Nations are claiming victory in the Apache divestiture, it is clear that those activities had negiligble impact on the decision, which was driven in part by the demands of a New York hedge fund and by the growing uncertainty in the LNG market as Asian countries seek natural gas at much lower North American prices. As the old Godfather movies often said, “It’s not personal, it’s business.”
Apache’s exit, however, does increase the uncertainty in both the short term and long term development of LNG export terminals in northwestern BC, and clearly shows that Premier Christy Clark made a mistake in promising that the provincial economy will boom thanks to LNG.
Both Premier Clark and LNG Minister Rich Coleman were unavailable to the media Thursday. Coleman’s office did send an e-mail tothe media saying, “With 16 LNG proposals involving over 30 partners, we recognize partnerships will change over time, as companies make decisions that make commercial sense for their business. It’s the nature of the business and the energy sector.”
Shell reports
Little noticed in the media attention over Apache, was the fact Royal Dutch Shell also issued its quarterly report early Thursday. Unlike Apache, Shell is still investing in LNG projects around the world, and getting returns from existing LNG projects, while divesting under performing natural gas assets both upstream and downstream. There is no mention of LNG Canada and Kitimat in the report. In a statement issued with the quarterly report Royal Dutch Shell Chief Executive Officer Ben van Beurden commented in part:
I am determined to get a tighter grip on business performance management in the company, and improve thebalance between growth and returns. Our financial performance for the second quarter of 2014 was more robust than year-ago levels but I want tosee stronger, more competitive results right across the company, particularly in Oil Products and NorthAmerica resources plays….
Sharper accountability in the company means that we are targeting our growth investment more effectively,focusing on areas of the business where performance improvement is most needed, and driving asset sales innon-strategic positions….
We see attractive growth opportunities there such as natural gas integration and liquids-rich shales. We are taking firm actions to improve Shell’s capital efficiency by selling selected assets and making tougher project decisions. We have completed some $8 billion of asset sales so far in 2014. This represents good progress towards our targets to focus the portfolio, and to maintain the financial framework in robust health.
The United States says acidification of the oceans means there is an already growing risk to the northwest coast fishery, including crab and salmon, according to studies released by the National Oceanic and Atmospheric Administration.
As more carbon dioxide is released into the atmosphere and absorbed by the oceans, the water is becoming more acidic and that affects many species, especially shellfish, dissolving the shells.
A NOAA study released today of environmental and economic risks to the Alaska fishery says:
Many of Alaska’s nutritionally and economically valuable marine fisheries are located in waters that are already experiencing ocean acidification, and will see more in the near future…. Communities in southeast and southwest Alaska face the highest risk from ocean acidification because they rely heavily on fisheries that are expected to be most affected by ocean acidification…
An earlier NOAA study, released in April, identified a long term threat to the salmon fishery as small ocean snails called pteropods which are a prime food source for pink salmon are already being affected by the acidification of the ocean.
This photograph from NOAA of a pteropod, important in the ocean diet of pink salmon, shows the first evidence of marine snails from the natural environment along the U.S. West Coast with signs that shells are dissolving. (NOAA)
NOAA says:
The term “ocean acidification” describes the process of ocean water becoming more acidic as a result of absorbing nearly a third of the carbon dioxide released into the atmosphere from human sources. This change in ocean chemistry is affecting marine life, particularly the ability of shellfish, corals and small creatures in the early stages of the food chain to build skeletons or shells.
Today’s NOAA study is the first published research by the Synthesis of Arctic Research (SOAR) program, which is supported by an US inter-agency agreement between NOAA’s Office of Oceanic and Atmospheric Research and the Bureau of Ocean Energy Management (BOEM) Alaska Region.
Des Nobles, President of Local #37 Fish [UFAWU-UNIFOR] told Northwest Coast Energy News that the fisheries union and other fisheries groups in Prince Rupert have asked both the Canadian federal and the BC provincial governments for action on ocean acidification. Nobles says so far those requests have been ignored,
Threat to crabs
The studies show that red king crab and tanner crab grow more slowly and don’t survive as well in more acidic waters. Alaska’s coastal waters are particularly vulnerable to ocean acidification because of cold water that can absorb more carbon dioxide and unique ocean circulation patterns which bring naturally acidic deep ocean waters to the surface.
“We went beyond the traditional approach of looking at dollars lost or species impacted; we know these fisheries are lifelines for native communities and what we’ve learned will help them adapt to a changing ocean environment,” said Jeremy Mathis, Ph.D., co-lead author of the study, an oceanographer at NOAA’s Pacific Marine Environmental Laboratory in Seattle, and the director of the University of Alaska Fairbanks School of Fisheries and Ocean Sciences Ocean Acidification Research Center.
As for Dungeness crab, Sarah Cooley, a co-author of the Alaska study, who was with the Woods Hole Oceanographic Institution at the time, told Northwest Coast Energy News, “The studies have not been done for Dungeness crab that have been done for king and tanner crab, that’s something we’re keenly aware of. There’s a big knowledge gap at this point.” She says NOAA may soon be looking at pilot study on Dungeness crab.
A healthy pteropod collected during the U.S. West Coast survey cruise. (NOAA)
Risk to Salmon, Mackerel and Herring
In a 2011-2013 survey, a NOAA-led research team found the first evidence: “that acidity of continental shelf waters off the West Coast is dissolving the shells of tiny free-swimming marine snails, called pteropods, which provide food for pink salmon, mackerel and herring.”
The survey estimated that the percentage of pteropods along the west coast with dissolving shells due to ocean acidification had “doubled in the near shore habitat since the pre-industrial era and is on track to triple by 2050 when coastal waters become 70 percent more corrosive than in the pre-industrial era due to human-caused ocean acidification.”
That study documented the movement of corrosive waters onto the continental shelf from April to September during the upwelling season, when winds bring water rich in carbon dioxide up from depths of about 120 to 180 metres to the surface and onto the continental shelf.
“We haven’t done the extensive amount of studies yet on the young salmon fry,” Cooley said. “I would love to see those studies done. I think there is a real need for that information. Salmon are just so so important for the entire Pacific Northwest and up to Alaska.”
In Prince Rupert, Barb Faggetter, an independent oceanographer whose company Ocean Ecology has consulted for the fisherman’s union and NGOs, who was not part of the study, spoke generally about the threat of acidification to the region.
She is currently studying the impact of the proposed Liquified Natural Gas terminals that could be built at Prince Rupert near the Skeena River estuary. Faggetter said that acidification could affect the species eaten by juvenile salmon. “As young juveniles they eat a lot of zooplankton including crustaceans and shell fish larvae.”
She added, “Any of the shell fish in the fishery, including probably things like sea urchins are all organisms that are susceptible to ocean acidification because of the loss of their capacity to actually incorporate calcium carbonate into their shells.”
Faggetter said her studies have concentrated on potential habitat loss near Prince Rupert as a result of dredging and other activities for liquified natural gas development, She adds that ocean acidification “has been a consideration that climate change will further worsen any potential damage that we’re currently looking at.”
Her studies of the Skeena estuary are concentrating on “rating” areas based on the food supply available to juvenile salmon, as well as predation and what habitat is available and the quality of that habitat to identify areas that “are most important for the juvenile salmon coming out of the Skeena River estuary and which are less important.”
She said that climate change and ocean acidification could impact the Skeena estuary and “probably reduce some of the environments that are currently good because they have a good food supply. If ocean acidification reduces that food supply that will no longer be good habitat for them” [juvenile salmon].
Bongo nets are deployed up to 200 meters deep to catch marine snails (pteropods), which are indicators of the progress of ocean acidification. The pteropod samples were collected during the U.S. West Coast survey cruises in 2011 and 2013. Unlike the US, Canada’s DFO is using models to track what’s happening to pteropods. (NOAA)
The August 2011 NOAA survey of the pteropods was done at sea using “bongo nets” to retrieve the small snails at depths up to 200 metres. The research drew upon a West Coast survey by the NOAA Ocean Acidification Program in that was conducted on board the R/V Wecoma, owned by the National Science Foundation and operated by Oregon State University.
Nina Bednarsek, Ph.D., of NOAA’s Pacific Marine Environmental Laboratory in Seattle, the lead author of the April pteropod paper said, “Our findings are the first evidence that a large fraction of the West Coast pteropod population is being affected by ocean acidification.
“Dissolving coastal pteropod shells point to the need to study how acidification may be affecting the larger marine ecosystem. These near shore waters provide essential habitat to a great diversity of marine species, including many economically important fish that support coastal economies and provide us with food.”
Ecology and economy
Today’s study on the effects of acidification on the Alaska fishery study examined the potential effects on a state where the fishing industry supports over 100,000 jobs and generates more than $5 billion in annual revenue. Fishery-related tourism also brings in $300 million annually to the state.
A map of Alaska shows the economic and ecological risks to parts of the state from ocean acidification. (NOAA)
The study also shows that approximately 120,000 people or roughly 17 percent of Alaskans rely on subsistence fisheries for most, if not all of their dietary protein. The Alaska subsistence fishery is open to all residents of the state who need it, although a majority of those who participate in the subsistence fishery are Alaska’s First Nations. In that way it is somewhat parallel to Canada’s Food, Ceremonial and Social program for First Nations.
“Ocean acidification is not just an ecological problem—it’s an economic problem,” said Steve Colt, Ph.D., co-author of the study and an economist at the University of Alaska Anchorage. “The people of coastal Alaska, who have always looked to the sea for sustenance and prosperity, will be most affected. But all Alaskans need to understand how and where ocean acidification threatens our marine resources so that we can work together to address the challenges and maintain healthy and productive coastal communities.”
The Alaska study recommends that residents and stakeholders in vulnerable regions prepare for environmental challenge and develop response strategies that incorporate community values and needs.
“This research allows planners to think creatively about ways to help coastal communities withstand environmental change,” said Cooley, who is now science outreach manager at Ocean Conservancy, in Washington, D.C. “Adaptations can be tailored to address specific social and environmental weak points that exist in a community.
“This is really the first time that we’ve been able to go under the hood and really look at the factors that make a particular community in a borough or census are less or more vulnerable from changing conditions resulting from acidification. It gives us a lot of power so that we don’t just look at environmental issues but also look at the social story behind that risk.”
As for the southern part of the Alaska panhandle nearest British Columbia, Cooley said, “What we found is that there is a high relative risk compared to some of the other areas of Alaska and that is because the communities there undertake a lot of subsistence fishing, There tend not be a whole lot of commercial harvests in the fisheries there but they are very very important from a subsistence stand point… And they’re tied to species that we expect to be on the front line of acidification, many of the clam species that are harvested in that area and some of the crab species.”
Long term effects
Libby Jewett, Director of the NOAA Ocean Acidification Program and author of the pteropod study said, “Acidification of our oceans may impact marine ecosystems in a way that threatens the sustainability of the marine resources we depend on.
“Research on the progression and impacts of ocean acidification is vital to understanding the consequences of our burning of fossil fuels.”
“Acidification is happening now,” Cooley said. “We have not yet observed major declines in Alaskan harvested species. In Washington and Oregon they have seen widespread oyster mortality from acidification.
“We don’t have the documentation for what’s happening in Alaska right now but there are a lot of studies staring up right now that will just keep an eye out for that sort of thing, Acidification is going to be continuing progressively over the next decades into the future indefinitely until we really curb carbon dioxide emissions. There’s enough momentum in the system that is going to keep acidification advancing for quite some time.
“What we need to be doing as we cut the carbon dioxide, we need to find ways to strength communities that depend on resources and this study allows us to think differently about that and too really look at how we can strengthen those communities.
Faggetter said. “It’s one more blow to an already complex situation here, My study has been working particularly on eel grass on Flora Bank (pdf) which is a very critical habitat, which is going to be impacted by these potential industrial developments and that impact will affect our juvenile salmon and our salmon fishery very dramatically, that could be further worsened by ocean acidification.”
She said that acidification could also be a long term threat to plans in Prince Rupert to establish a geoduck fishery (pronounced gooey-duck).
The popular large 15 to 20 centimetre clam is harvested in Washington State and southern BC, but so far hasn’t been subject to commercial fishing in the north.
NOAA said today’s study shows that by examining all the factors that contribute to risk, more opportunities can be found to prevent harm to human communities at a local level. Decision-makers can address socioeconomic factors that lower the ability of people and communities to adapt to environmental change, such as low incomes, poor nutrition, lack of educational attainment and lack of diverse employment opportunities.
NOAA’s Ocean Acidification Program and the state of Alaska are also developing tools to help industry adapt to increasing acidity.
The new NOAA study is the first published research by the Synthesis of Arctic Research (SOAR) program. which is supported by an inter-agency agreement between NOAA’s Office of Oceanic and Atmospheric Research and the Bureau of Ocean Energy Management (BOEM) Alaska Region.
The long awaited Kitimat air shed study, released by the province Friday, July 17, 2014, says “that with proper management, Kitimat’s ai rshed can safely accommodate new industrial growth” without major affects on either human health or the environment. Link to news release :Study shows Kitimat airshed can handle new industrial development
The Kitimat Airshed Assessment looked at the cumulative effects of industrial air emissions, primarily sulphur and nitrogen oxides, and their potential impacts on both human health and the environment from
Rio Tinto Alcan’s existing aluminium smelter and its planned modernization
David Blacks proposed “Kitimat Clean” oil refinery at Onion flats
Four proposed LNG facilities; Shell-led LNG Canada, Chevron lead Kitimat LNG, the floating Douglas Channel LNG at the old log dump and a second floating LNG project called Triton.
BC Hydro gas turbine powered electrical generation facilities in Kitimat and near Terrace
Predicted increased to marine shipping in Douglas Channel.
The study was divided into two zones.
Health results were first examined for Kitimat townsite, the Kitimat Industrial Service Centre and Kitamaat Village.
The wider study included Gitga’at Old Town, Hartley Bay (Kulkayu), Kitimat-Stikine, Kitselas, Kitsumkaylum, Kshish, and Terrace.
Enbridge missing
There was one big factor missing from the study, it does not include the Enbridge Northern Gateway project, although the consultants who did the study do cite a couple of the air quality studies that Enbridge filed with the Northern Gateway Joint Review Panel. That despite the fact the Joint Review Panel under Condition 82 required that Enbridge file with the NEB for approval, at least four months prior to commencing construction, “an Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal.”
The JRP report acknowledged that emissions from the Enbridge terminal would be minimal but would contribute to the cumulative effect of pollutant emissions from other industries and required Enbridge to consult with the District of Kitimat, the environment ministries and other industries in planning for emissions.
The map from the airshed study also shows that the possible marine terminal for David Black’s proposed Kitimat Clean refinery project is at or close to where the proposed Enbridge Northern Gateway terminal would be.
Health and environment
The study looked at proposed emission levels and the effect of emissions elsewhere in the world and then compared those studies with the Kitimat Valley. It found that the risk of sulphur dioxide was “directly related to proximity to industrial area”–largely the Kitimat Service Centre area–and that there would be a minor increase in respiratory incidents of 0.5 per cent to 2 per cent, with a slight increase of nitrogen dioxide but those were within existing guidelines.
As for environmental impact, the study says nitrogen dioxide impacts will be low. There wil be “some increased risk of soil impacts” from sulphur dioxide. The study says there will be “no negative impacts to vegetation across all scenarios” but did find “potential for acidification” of seven small lakes. Lakelese Lake is not one of those affected.
The study also doesn’t include particulate matter and although it does consider climate change, did not take into consideration possible increase of green house gases in the Kitimat Valley.
The consultants, Esssa Technologies of Vancouver, based its findings on an earlier study by Rio Tinto Alcan on emissions from the Kitimat Modernization Project and worked on those findings by adding new industries and a greater area to the models they used.
The province and industry says they will continue to monitor air, water, soil and vegetation “to ensure these values are protected.”
The higher levels of sulphur dioxide emissions from the Rio Tinto Alcan Kitimat Mondernization Project will be allowed to continue under the current permit. Environment Minister Mary Polack told reporters that will only change if the current court challenge to the sulphur dioxide levels are successful.
A map by Essa Technologies and Environment BC of the Kitimat valley airshed study shows locations for existing and proposed industrial or infrastructure development. It does not include the proposed Enbridge Northern Gateway project.
What Northern Gateway Joint Review said about emissions in the air shed
Among the 209 conditions imposed on the Enbridge Northern Gateway project is No. 82, an Air Quality Emissions Management and Soil Monitoring Plan.
Northern Gateway must file with the NEB for approval, at least 4 months prior to commencing construction, an Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal…
This plan must include:
a) a description of the baseline, pre-construction conditions, informed by relevant modelling results and recent, existing monitor data;
b) locations of both air and soil monitoring sites on a map or diagram, including the rationale for the locations selected and the timing for installation;
c) methods and schedule of ambient monitoring for contaminants of potential concern in air (e.g., NO2, SO2, and H2S) and in soils (e.g., pH; major plant nutrients K, P, N, and S; and trace metals), and emissions source tracking;
d) data recording, assessment, and reporting details;
e) a description of the public communication and complaint response process;
f) additional measures that will be implemented as a result of monitoring data or ongoing concern;
g) the criteria or thresholds that will require implementing additional measures;
h) a description of the plan updating process;
i) a summary of Northern Gateway’s consultation with Environmental Canada and the British Columbia Ministry of Environment regarding the Air Quality Emissions Management and Soil Monitoring Plan. This summary must include any issues or concerns raised regarding the plan and how Northern Gateway has addressed or responded to them; and
j) a summary of discussions with the District of Kitimat and local or regional industrial emitters regarding collaborating on the plan’s design and implementation.
One of the things that the Joint Review Panel noted in requiring Enbridge Northern Gateway to have an updated plan and to collaborate with Kitimat and other industries is that levels of acceptable sulphur doixide in the atmosphere are changing and much of Northern Gateway’s modelling was based on standards that were becoming obsolete.
In the Joint Review Panel report, section 8.7, the JRP said:
Northern Gateway assessed changes in the atmospheric environment, including a modelled assessment of criteria air contaminant, hazardous air pollutant, and greenhouse gas emissions. Criteria air contaminants assessed by modelling included sulphur dioxides, nitrogen oxides, carbon monoxide, hydrogen sulphide, and particulate matter. Hazardous air pollutants were also modelled and included total volatile organic compounds (VOCs), benzene, toluene, ethylbenzene, and xylene (combined, BTEX), as well as hydrogen fluoride.
The provincial air shed report considered only two contaminants, sulphur dioxide and nitrogen dioxide.
Northern Gateway said there would be minimal atmospheric emissions from the construction and operation of the pipeline. The focus was on the Kitimat marine terminal.
The modelled assessment for the Kitimat Terminal included emissions associated with terminal operations, with the largest sources being vehicle traffic and
hydrocarbon storage tanks Northern Gateway used the conservative assumption of continuous ship berthing…emission rate) in order to capture the worst case scenario of concurrent adverse meteorology and maximum potential emissions. From the model results, Northern Gateway predicted that sulphur dioxide associated with operating the Kitimat Terminal would exceed the provincial air quality objectives (Level A) for all time periods. This after mitigation.
Environment Canada said that Northern Gateway took appropriate measures in designing and siting its proposed facilities to minimize adverse effects on air quality. It acknowledged Northern Gateway’s commitments to adopt best practices and to use economically-feasible best-available technologies in designing the Kitimat Terminal to minimize effects on air quality.
Northern Gateway ackknowledged that “due to the project interacting with nearby topographical features, where the largest sulphur dioxide emissions are from the
marine vessels, the highest concentrations were predicted to occur infrequently and immediately adjacent to the terminal fence line.
Northern Gateway, Transport Canada, the Heiltsuk First Nation and other stakeholders did acknowledge that eventually the vessels coming to Kitimat “would be subject to the reduced sulphur fuel requirements associated with the joint United States-Canada North American Emission Control Area.
Based on this, marine fuel sulphur requirements permitted in Canadian coastal waters (200-nautical-mile limit) would be 1.0 per cent in 2012, reducing further to 0.1 per cent by 2015. Northern Gateway predicted that sulphur dioxide emissions from marine vessels should be approximately 96 per cent lower than modelled once these new international fuel standards take effect. Northern Gateway also predicted exceedances of provincial air quality objectives in the area for carbon monoxide, particulate matter, hydrogen sulphide, and total reduced sulphur.
Northern Gateway said there “no exceedances of hazardous air pollutant guidelines were predicted as a result of the project itself” but there could be a cumulative effect with other industries in the Kitimat waterfront.
The Joint Review Panel ruled:
By the Kitimat Terminal’s proposed in-service date, there will have been significant changes to the number and magnitude of existing air emission sources since
the provincial emission inventory of 2000 was compiled, and since Northern Gateway completed its modelling assessment.
Regarding the sulphur emissions attributable to the terminal, marine vessel berthing would account for 97 per cent. Given that Northern Gateway used conservative assumptions regarding berthing in the modelling and that regulations coming into force regarding the sulphur content of marine fuels would further decrease predicted missions, the Panel finds that the modelling results presented in the application and subsequent filings are not predictive of the realistic potential effects on local air quality.
Based on the filed information about sulphur dioxide emissions, the Panel is satisfied that new modelling based on the updated information would indicate that sulphur dioxide associated with the Kitimat Terminal’s operations would not exceed provincial air quality objectives.
The Panel requires that further modelling, reflecting the current level of activity, equipment, and marine sources, must inform Northern Gateway’s design of the Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal.
Updated modelling would be used to inform the monitoring program’s design, as well as to help ensure that the monitors are placed effectively to monitor both human and environmental health.
Cumulative effects on the atmospheric environment
Northern Gateway said that, during the Kitimat Terminal’s operations, tank maintenance and marine berthing would add a potential measureable contribution to regional cumulative environmental effects from air emissions. Northern Gateway incorporated the existing industrial sources in the Kitimat area in its modelling assessment, using the British Columbia Ministry of Environment’s emissions inventory. At the time the modelling was run, the available emission estimates from 2000 were used to characterize the existing sources in the airshed.
The Joint Review panel noted that over the time of the hearings”it heard of many changes to the industrial make-up of the Kitimat area since the 2000 emissions inventory was developed.”
Combining these with the predicted project emissions, the model results indicated predicted exceedances of regulatory thresholds for sulphur dioxide, carbon monoxide, particulate matter, hydrogen sulphide, and total reduced sulfur, though not at every averaging period.
Northern Gateway said that, due to the existing large emission sources and the region’s complex meteorology and topography, the exceedances are primarily attributable to the other industrial activities around Kitimat and not from the project itself.
Because there would be adverse project effects remaining after mitigation that could combine with the effects of other past, present, and future projects, and because cumulative effects are of primary concern, the Panel’s significance recommendation is given below in its analysis of cumulative effects.
The Panel finds that the emissions associated with the Kitimat Terminal’s operation would be minimal compared to the existing sources presented.
Although the modelled cumulative emissions exceeded many regulatory thresholds, the exceedances were predicted based on an out-of-date emissions inventory, and were predicted to occur prior to adding emissions from the project. Based on the information about sulphur dioxide emissions on the record, in addition to the modelling included in the application, the Panel is satisfied that new modelling based on updated information would indicate that sulphur dioxide associated with the Kitimat Terminal’s operations would not contribute to an increased exceedance of provincial air quality objectives, either through limited emissions or berthing management to limit emissions in particularly adverse conditions.
One small step for the Supreme Court of Canada, one giant leap for mankind.
A barely-noticed* part of the unanimous Supreme Court of Canada decision on Thursday recognizing the rights and title of the Tsilhqot’in First Nation to their traditional territory may—may— change the way resource companies operate, not just in Canada but around the world.
Members of the Spirit of Kitlope Dancers, VIcki Amos, Sandra Grant, Gail Amos and Roberta Grant, celebrate the Supreme Court decision at the Hailsa-owned old hospital site, June 26, 2014 (Robin Rowland/Northwest Coast Energy News)
The ruling isn’t just about consultation, reconciliation and accommodation, it’s about the future.
A close reading of the decision, written by Chief Justice Beverly McLaughlin says the Crown, in its relations with First Nations, cannot “deprive future generations of the benefit of the land.”
While the ruling applies only to First Nations, it upholds the First Nations’ concept of “stewards of the land” for the future and thus could protect the environment for all future generations, aboriginal and non-aboriginal, in Canada and perhaps around the world.
The ruling says:
Aboriginal title, however, comes with an important restriction — it is collective title held not only for the present generation but for all succeeding generations. This means it cannot be alienated except to the Crown or encumbered in ways that would prevent future generations of the group from using and enjoying it. Nor can the land be developed or misused in a way that would substantially deprive future generations of the benefit of the land. Some changes — even permanent changes – to the land may be possible. Whether a particular use is irreconcilable with the ability of succeeding generations to benefit from the land will be a matter to be determined when the issue arises.
While the Supreme Court ruling was about a case in British Columbia, where previous decisions have shown that in that province, aboriginal title was not extinguished at the time of European settlement and, what the court calls, “declaration of sovereignty,” by the colonial powers, the decision is already seen as applying to First Nations across the country where they can prove long term use of the land.
Already there are those in the business community and among the conservative pundits who are raising the alarms about First Nations blocking resource development.
Perhaps, just perhaps, some big corporations are quietly approving the Supreme Court decision because it gives responsible companies a roadmap for their operations, that roadmap will, as the years go by, reduce, not increase, uncertainty.
Some companies, including the world’s biggest corporations are now thinking about the future. It is likely those companies are already planning new procedures and practices that will comply with the Supreme Court’s requirement of consultation and consent on First Nations’ traditional territory.
In May, at an LNG event in Vancouver, I was speaking to a high ranking energy executive whose responsibilities cover half the planet.
“Everything has changed in the past five years,” he told me. “Once all we had to do is talk to presidents and prime ministers, now we listen to everybody.”
What changed, he said, was the rise of social media, Facebook and Twitter. “In one case five women in one small town shut down a project that would have been worth millions.” (He would not tell me the specifics and assured me it was true but he wasn’t prepared to give the details because it wasn’t his company that was involved).
“Not all my colleagues agree with me,” he said, “But in the end it’s good for business, if we genuinely engage with a community, we actually save on costs and get into profit sooner.” He said that smart companies in the energy sector have staff constantly monitoring social media, not to identify “enemies” but so top management can be aware of growing issues that may complicate their future operations.
This company generally, so far, has good relations with First Nations in British Columbia (although its record elsewhere in the world has been questionable at times in the past).
The entrance to the Kildala Arm off Douglas Channel, September, 2013. (Robin Rowland/Northwest Coast Energy News)
If truly responsible resource and other companies either willingly or are compelled to change their practices and investment decisions on First Nations’ land so that those projects consider future generations, and still make a profit, (which my source says they can) then it is likely that the companies will then adopt those practices in other parts of Canada where Rights and Title are not an issue and then around the world.
To use a marketplace phrase, it isn’t going to be “an easy sell.” For more than half a century now, the world has been plagued by the idea from Milton Friedman and other economists that a corporation has only one responsibility to its bottom line and “shareholder value.” With companies that still follow the no responsibility culture, comes the race to the bottom and the environmental degradation we have seen increasing in recent years.
As The Globe and Mail reported, the Business Council of British Columbia, an intervenor, said in its submission
Business groups say the Tsilhqot’in’s approach to title threatens the economy. “A territorial approach undermines the ability of corporations, and indeed First Nations, to ensure the global competitiveness that is required to attract capital … within natural resource sectors dependent on the land base,” a coalition of B.C. business groups, intervening in the case, told the Supreme Court in its written argument.
For years now global competitiveness has been used an excuse for deliberately ignoring or turning a blind eye to practices that “substantially deprive future generations of the benefit of the land.”
Even if no high court in any another country matches or cities the Supreme Court of Canada decision, (and they should for the rights of all indigenous people) smart companies will increasingly recognize their responsibility not to “deprive future generations of the benefit of the land.”
If those companies don’t change, as the years go on and the environmental crisis worsens, courts in other nations will likely cite the Supreme Court of Canada and force those companies to be responsible.
In the long term, in the future cited by the Chief Justice, those companies that do work toward a true “benefit of the land” for everyone will have a competitive advantage, perhaps not in the coming years, but certainly in the coming decades.
To use another phrase, respecting the rights and title of First Nations and the stewardship of the land will be a “net benefit” to Canada in the 21st century, even if the bean counters don’t believe it.
Legal recognition of the concept of stewardship by a high court might also save the planet from total disaster.
*(Barely-noticed: I can only find one media account that mentions in passing, an op ed opinion piece in the Globe and Mailby Vancouver lawyer Albert Hudec Aboriginal court ruling won’t resolve real-world resource issues)
The response to the Joint Review Panel decision on the Northern Gateway, beginning in December and continuing until this Canada Day, both in the public and in the media is sharply divided by the Rocky Mountains.
A lof of Albertans, most of the energy companies and many in the media, especially the Toronto-based business press, keep telling Canadians that the NEB is an independent, quasi-judicial body, that carefully weighs the scientific and other evidence before coming to a conclusion.
Prime Minister Stephen Harper stands up in Question Period and from his prepared script also claims the JRP and NEB are independent bodies.
Most of those writing about the attitude of the National Energy Board have never attended a single hearing, As for the Joint Review,. those from the major media who did attend were only there for the opening and closing sessions.
Members of the Northern Gateway Joint Review Panel, left to right, Kenneth Bateman, chair Sheila Leggett and Hans Matthews make notes at the June 25, 2012 hearings at the Haisla Recreation Centre, Kitamaat Village. A map of Douglas Channel can be seen behind the panel. (Robin Rowland/Northwest Coast Energy News)
In British Columbia, those attended the Northern Gateway Joint Review sessions saw a strange and arcane bureaucratic system with rules of evidence and procedure often tilted toward a proponent in the energy sector.
Those rules of evidence were created for the cosy club atmosphere of the NEB in Calgary where mostly there are friendly hearings attended only by the proponents and energy sector lawyers. Those same rules were infuriating to those in northwest British Columbia trying and failing to persuade the JRP to take seriously many of the concerns of the region. The rules of evidence and procedure were baffling to lawyers practicing in BC; even the highly experienced lawyers from the BC Department of Justice were chewed out by the JRP in Prince George for not following proper procedures.
The tail fins of a humpback whale are seen in Douglas Channel near Bish Cove, as a fishing boat speeds toward Kitimat harbour in a rain storm on Aug. 21, 2013. (Robin Rowland/Northwest Coast Energy News)
The JRP seemed to believe that time stopped at the evidentiary deadline, and although it acknowledged that Northern Gateway was a 50 year project, the panel didn’t need to know anything new.
A careful reading of the two volumes of the Joint Review Panel report and decision clearly shows that JRP finding was not, as one columnist called it, a triumph of science over emotion, but a proceeding that was biased from the outset to find in favour of Enbridge. It is clear that even though the Joint Review Panel did impose 209 conditions on Northern Gateway, reading those almost 500 pages one sees time and time again that Northern Gateway’s evidence and assurances were accepted at face value, while the panel treated the evidence and testimony from opponents with a much higher level of skepticism.
Moving to Calgary
One of my sources once told me that the “NEB is nothing more than an extension of the Petroleum Club.” In the 1991 budget, then Prime Minister Brian Mulroney moved the NEB headquarters from Ottawa to Calgary as a political gift to Alberta.
At that time the move was also seen as practical, Alberta was still complaining no one in Ottawa was listening to it. So if the Conservative government moved the NEB to Calgary, it would be there listening to the oil patch. NEB offices were scattered across the country, consolidating them in Calgary seemed, at the time, to be a way of saving taxpayers’ money and enhancing internal communications.
Seen now, about 25 years later, it’s clear the NEB move from its Ottawa headquarters and regional offices to Calgary was a disaster waiting to happen. Over the past quarter century, despite its claims of independence, the NEB and its staff have become so embedded in the oil patch energy culture of Calgary that (probably subconsciously) the NEB has shown that it is largely incapable of really taking seriously the culture of British Columbia on issues such as the Northern Gateway and Kinder Morgan projects. The NEB Calgary culture is also colliding,with the concerns and culture of other parts of the country as diluted bitumen pipelines head eastward.
The Conservative omnibus bills that gutted environmental protection and speed up the review process has made things much worse–at least until this week.
Now the Supreme Court has sent a shot across the bow of the full steam ahead National Energy Board, compelling the board to put much more weight on the concerns of First Nations.
The decision upholding the Tsilhqot’in claim to its traditional territory means the NEB and any future joint review panel (whether involving multiple federal agencies or federal agencies and a province) are going to have to take the concerns of First Nations and indeed all Canadians a lot more seriously—and the future of the planet as well, as described in the first part of this analysis. Chief Justice Beverly McLaughlin wrote that on First Nations` traditional territory:
that it is collective title held not only for the present generation but for all succeeding generations. This means it cannot be alienated except to the Crown or encumbered in ways that would prevent future generations of the group from using and enjoying it.
“Future generations” is the key phrase.
Future generations could undermine that whole world view of the Joint Review Panel, since the panel so casually dismissed the fears of a major disaster on the coast, saying it was “unlikely” and could be “mitigated.”
The JRP basically had a so-what attitude to British Columbia, arguing that since parts of the British Columbia environment had already been degraded any future environmental problems would be minimal and could be “mitigated.”
Public interest
While in the introduction to its definition of the Public Interest, the JRP says
If approved and built, the Enbridge Northern Gateway Project could operate for 50 years or more. Sustainable development was an important factor in our environmental assessment and our consideration of the public interest. The project would have to meet today’s needs without compromising the ability of future generations.
Sounds like that might match the Chief Justice. But, as the old saying goes, the devil is in the details. And just a few paragraphs later, the JRP says:
Our assessment of the project’s effects on residents and communities Considering Northern Gateway’s project design, its commitments, and our conditions, we concluded that the project’s potential effects on people’s land, water, and resource use could be mitigated. We were not persuaded that construction and routine operations of the project would have a negative effect on the social fabric of communities in the project area. We also were not persuaded that the project would adversely affect the health and well being of people and communities along the route or in coastal areas. We found that the net overall economic effects of the project would be positive and would provide potential benefits and opportunities to those individuals and businesses that choose to participate in the project.
“Trust Enbridge”
The JRP’s attitude toward a major disaster was “trust Enbridge.”
We found that some level of risk is inherent in the Enbridge Northern Gateway project, and that no party could guarantee that a large spill would not occur. We found that a large spill, due to a malfunction or accident, from the pipeline facilities, terminal, or tankers, is not likely.
We found that Northern Gateway has taken steps to minimize the likelihood of a large spill through its precautionary design approach and its commitments to use innovative and redundant safety systems, such as its commitments to address human error, equipment failures, and its corporate safety culture. These commitments and all others made by the company
Oh well, the ecosystem will recover eventually—a conclusion that could be reached only by ignoring the evidence from Prince William Sound, site of the Exxon Valdez spill.
We found that, in the unlikely event of a large oil spill, there will be significant adverse environmental effects, and that functioning ecosystems recover through mitigation and natural processes.
We found that a large oil spill would not cause permanent, widespread damage to the environment. The extent of the significant adverse effects would depend on the circumstances associated with the spill. Scientific research from past spill events indicates that the environment recovers to a state that supports functioning ecosystems similar to those existing before the spill. We found that, in the unlikely event of a large oil spill, there would be significant adverse effects on lands, waters, or resources used by residents, communities, and Aboriginal groups.
We found that, in rare circumstances, a localized population or species could potentially be permanently affected by an oil spill. Scientific research from a past spill event indicates that this will not impact the recovery of functioning ecosystems.
In other words, some communities, probably aboriginal communities, would have be sacrificed in the public interest and the economics of Alberta while the economy of that part of British Columbia would be destroyed.
Will the JRP have to start over?
The environmental law community and First Nations leaders are already taking a look at another paragraph in the Supreme Court judgement. Paragraph 92 in lawyer speak.
At the celebration of the Supreme Court decision, on June 26, Gerald Amos welcomed the suggestion from lawyers that the ruling could force a re-examination of Northern Gateway. (Robin Rowland/Northwest Coast Energy News)
One of the many reports comes from West Coast Environmental Law which noted in an e-mail
[T]he Tsilhqot’in decision, Canada’s highest court brings home the implications of this for Enbridge and other project proponents:
Once title is established, it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward.
For example, if the Crown begins a project without consent prior to Aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing.
And what about the overhaul of environmental legislation in 2012 to smooth the way for pipeline and other industrial development?
The court notes: “Similarly, if legislation was validly enacted before title was established, such legislation may be rendered inapplicable going forward to the extent that it unjustifiably infringes Aboriginal title.”
Reset
In other words, the Supreme Court decision resets everything.
It could nullify the recent decision by the Prime Minister to permit the Northern Gateway to go ahead. Or it could mean, especially given the number of court challenges just to the JRP, that, in light of the Tsilhqot’in decision the panel will be ordered by a court to go back to the drawing board and reconsider its findings.
Then there are the pending challenges to the Harper decision allowing the Northern Gateway to go ahead. Sources told Northwest Coast Energy News that the first of a number of court challenges were to be filed last week. It is likely that after the holiday weekend, lawyers will be rewriting their filings and their briefs in light of the Tsilhqot’in decision and presenting the Federal Court with those challenges some time in July.
The justices of the Supreme Court did allow a public interest exemption on the use of First Nations land for a larger purpose, but there must now be genuine consultation and the public interest will likely have be proven beyond a reasonable doubt, it can’t just be the whim of a prime minister with a tame, unquestioning caucus who decides what is in the public interest.
Who consults whom?
In the decision, Chief Justice McLaughlin wrote:
Governments and individuals proposing to use or exploit land, whether before or after a declaration of Aboriginal title, can avoid a charge of infringement or failure to adequately consult by obtaining the consent of the interested Aboriginal group
and later
The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders. If the Aboriginal group does not consent to the use, the government’s only recourse is to establish that the proposed incursion on the land is justified under s. 35 of the Constitution Act, 1982.
Compare that again with what the JRP said. As with the environmental impact it begins by saying:
The Panel finds that the magnitude, extent, and potential impacts of this project required an extensive program of public consultation. The Panel considers thorough and effective consultation to be a process that is inclusive of, and responsive to, all potentially-affected groups and individuals.
Then the JRP says:
The Panel notes that, among potentially-affected parties, there were differing perspectives on what constitutes a thorough and effective process of consultation. There were also different views among some parties about how consultation should occur, and their roles and responsibilities during consultation.
And then:
The Panel believes that it is critical for all parties to recognize and understand their respective roles and responsibilities for achieving effective dialogue during consultation. The Panel noted the principles of thorough and effective consultation at the beginning of this chapter. The Panel finds that these principles require that a process must provide timely, appropriate, and effective opportunities for all potentially-affected parties to learn about a project, provide their comments and concerns, and to discuss how these can be addressed by the applicant.
So what does it mean?
The JRP starts off by giving Northern Gateway a slap on the wrist:
The applicant [Enbridge] must be genuinely responsive. Affected parties have an ongoing and mutual responsibility to respond to opportunities for consultation, to communicate concerns they may have, and to discuss how these can be addressed.
But then it goes on in the same paragraph:
Consultation requires trust, mutual respect, and relationship-building. All parties have an obligation to seek a level of cultural fluency, in order to better understand the values, customs, needs, and preferences of the other parties involved in the consultation process. All parties may be required to adjust their expectations in response to the information, concerns, and interests raised and considered through the process. The Panel observed that this approach did not always occur in this proceeding.
Get the phrase “all parties.” It is clear here that the JRP is taking on the First Nations and other opponents for not seeing Northern Gateway’s point of view, since it accepts, as seen below, Northern Gateway’s contention that it is doing a good job with consultation,
And the word “trust.” Again the Alberta-bound JRP (the panel had no members from British Columbia, two from Alberta, one from Ontario) are saying “trust Enbridge.”
Unfortunately after a decade of operating in the northwest, and despite its spin, Enbridge has failed time and time again to establish trust with First Nations and it has equally failed to establish trust with a significant number non-aboriginal residents of the northwest.
The companies developing LNG projects have, for the most part, established a level of trust.
The joke up here is now so old it’s a cliche (but still unknown to the eastern media) where an LNG executive says, “We look at what Enbridge did and do the exact opposite.”
The Panel accepts Northern Gateway’s view that consultation is a process which should ensure that all parties are better informed through consultation, and that it involves being prepared to amend proposals in light of information received. In this regard, the Panel notes that Northern Gateway made numerous changes to the design and operation of the project in response to input provided by the public, landowners, governments, and stakeholders
In fact, Northern Gateway is still fumbling the ball.
It is true that Northern Gateway did change its plans and put another $500 million into the plans for the project–after a lot of public pressure and growing controversy during the JRP hearings over its plans.
JRP Chair Sheila Legget during the final arguments in Terrace, June 17, 2013. (Robin Rowland/Northwest Coast Energy News)
Equally telling was Northern Gateway’s dismissal in its final arguments (arguments accepted by the JRP) that there was no earthquake hazard in the region, despite two major earthquakes at Haida Gwaii and southern Alaska just months earlier, both of which shook Kitimat.
In the final oral arguments, Northern Gateway’s lawyer Richard Neufeld summarily dismissed the fears of the Haida and Heiltskuk First Nations about destruction of the herring spawning beds because, he said, first, the chances of a tanker disaster were unlikely and second, even if there was a tanker disaster it was even more unlikely that it would occur during the spawning season. (Not that the spawning season matters, herring beds in San Francisco Bay are still damaged years after a spill there).
Now with the Tsilhqot’in decision, Enbridge can no longer summarily dismiss those fears. The companies who have proposed liquefied natural gas projects are meeting with anyone, including avowed opponents, and opening dialogues, even if both sides continue to disagree. Despite its spin, accepted by the political pundits and eastern business media, those who live in the northwest know Northern Gateway’s consultations and engagement, so far, have mostly been with friendly groups and friendly audiences.
The Supreme Court decision is going to change that attitude in the coming weeks. If Enbridge wants Northern Gateway to go ahead, the company is going to have to genuinely engage with First Nations. Given all the damage created by Enbridge over the past decade, that engagement is unlikely to change anything.
The Supreme Court decision is going to have one more consequence.
Eventually, in a few years, the decision will negate that stupid attitude from the conservative media and some in the business community that the people of northwestern British Columbia are against all development. That was never true but it’s a convenient excuse for those columnists and conservatives not to question their own assumptions.
If the reporters and columnists had bothered to come up here, if the press-release dispatching business leaders had bothered to leave their executive suites, they’d know what northwestern BC wants is responsible and sustainable development, not quick in and out profits.
The Supreme Court decision means that any future industrial development in the northwest will be much different from anything seen in the past because First Nations must be involved from the beginning.
Given its sorry track record, it is unlikely that Enbridge will be part of that development. but others will profit, yes profit, from that failure.
In the coming years it is also likely that there will be a new approach to development from the National Energy Board after they begin to see their narrow oil-patch friendly approach and rulings struck down by the courts quoting the Tsilhqot’in decision.
Chevron Corporation says its wholly-owned subsidiary, Chevron Canada Limited, has reached agreement to sell a 30 per cent interest in its Duvernay shale gas play to Kuwait Foreign Petroleum Exploration Company’s wholly-owned subsidiary, KUFPEC Canada Inc., for $1.5 billion.
