Apache Corporation today announced it has agreed to sell its interest in two LNG projects, Wheatstone LNG and Kitimat LNG, along with accompanying upstream oil and gas reserves, to Australila’s Woodside Petroleum Limited for a purchase price of $2.75 billion.
The news release says:
Apache will also be reimbursed for its net expenditure in the Wheatstone and Kitimat LNG projects between June 30, 2014, and closing which is estimated to be approximately $1 billion.
Under the terms of the agreement, Apache will sell its equity ownership in its Australian subsidiary, Apache Julimar Pty Ltd, which owns a 13-percent interest in the Wheatstone LNG project and a 65-percent interest in the WA-49-L block which includes the Julimar/Brunello offshore gas fields and the Balnaves oil development. The transaction, which has an effective date of June 30, 2014, will also include Apache’s 50-percent interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard natural gas basins in British Columbia, Canada.
Based on current estimates, Apache’s net proceeds upon closing are expected to be approximately $3.7 billion. Receipt of proceeds from this transaction will trigger an estimated $650 million cash tax liability, approximately $600 million of which is associated with the income tax due on Apache’s Overall Foreign Loss account balance. Upon incurring this income tax liability, Apache estimates that it will have the flexibility to repatriate cash generated from foreign operations and/or future international strategic transactions with minimal U.S. cash tax impact.
“Today’s announcement marks the successful completion of one of our primary strategic goals of exiting the Wheatstone and Kitimat LNG projects. Apache recognizes the contribution of our employees who have worked so diligently on these projects since their inception, and we sincerely thank them for their tremendous effort. I would also like to thank Woodside’s CEO and Managing Director, Peter Coleman, and his entire staff for their hard work and professionalism in bringing this transaction to a successful conclusion. I am proud of Apache’s legacy in advancing the Wheatstone and Kitimat LNG projects, and I am confident that Woodside’s participation will have a positive impact in seeing these world-class LNG facilities through to first production. We look forward to the redeployment of the proceeds from this sale, which may be used to reduce debt, repurchase shares and to pursue other opportunities that enhance our asset base and drive profitable production growth,” said G. Steven Farris, chairman, chief executive officer and president.
Upon completion of the transaction, Apache will continue to hold upstream acreage offshore Western Australia in the Carnarvon, Exmouth, and Canning basins along with related hydrocarbon reserves and production. Apache will also retain its 49-percent ownership interest in Yara Holdings Nitrates Pty Ltd and 10-percent interest in the related ammonium nitrate plant.
The transaction is expected to close in the first quarter of 2015 and is subject to necessary government and regulatory approvals and customary post-closing adjustments. The sale of the Kitimat LNG project is subject to certain operator consents.
The Wet’suwet’en First Nation will receive approximately $2.8 million from the Province at three different stages in the CGL project: $464,000 upon signing the agreement, $1.16 million when pipeline construction begins, and $1.16 million when the pipeline is in service.
The Wet’suwet’en First Nation will also receive a yet-to-be-determined share of $10 million a year in ongoing benefits per pipeline. The ongoing benefits will be available to First Nations along the natural gas pipeline routes. The B.C. government anticipates signing similar agreements with other First Nations in the near future.
Provincial benefit-sharing offers First Nations resources to partner in economic development, complements industry impact benefit agreements that provide jobs and business opportunities, and is a way for government and First Nations to work together to help grow the LNG industry.
John Rustad, Minister of Aboriginal Relations and Reconciliation says in the release, “Too many First Nation communities have been left out of economic growth in B.C. for far too long. It’s exciting to be able to partner with First Nations like the Wet’suwet’en so they can share in the benefits of a new LNG export industry – stronger economies, good-paying jobs and collectively working to establish environmental legacies made possible by LNG development.”
The release quotes Chief Karen Ogen, Wet’suwet’en First Nation, as saying, “Pipeline benefits agreements are just one vehicle driving our participation in LNG development. While these agreements ensure First Nation communities share in the economic benefits of LNG, we are working collaboratively with the Province and other First Nations to ensure environmental priorities are addressed as well.”
The release also quotes Rich Coleman, Minister of Natural Gas Development as saying, “Our government continues to build strong partnerships with First Nations as LNG development gains momentum. Pipeline benefits agreements like this one pave the way for job creation and economic growth as we work together to further the potential of our natural gas sector.”
The news release says the Wet’suwet’en First Nation is among the 15 First Nations located along the Chevron/Apache Pacific Trail Pipeline route that have already signed agreements that will provide $32 million in benefits to First Nations once construction has started.
British Columbia issued an environmental assessment certificate for the proposed CGL project this fall. In addition to meeting conditions set out in the environmental assessment certificate, the project will now require various federal, provincial and local government permits to proceed.
When the certificate was approved in October, the Office of the Wet’suwet’en, which represents hereditary leadership issued a release saying:
B.C. ‘s approval of Coastal GasLink Pipeline project does not mean the project is a go. The Wet’suwet’en still have the right to determine the use of the land and our future.
Not enough information has been made available through the regulatory process to determine environmental impacts nor infringements to Wet’suwet’en rights title and interest.
Current benefits offered by the province and pipeline companies do not take into account the impacts and infringements to our lands, culture and community well-being, for today and into the future.
One group, the Unist’ot’en Camp, representing one house of the Wet’suwet’en continues to camp out in the bush, and the group says they are determined to block any pipeline construction within their traditional territory.
In its news release, BC says, benefits agreements are separate and different than industry impact benefit agreements. Pipeline benefits agreements are made between the Province and First Nations, exclusive of proponents. Impact benefit agreements are made between proponents and First Nations, exclusive of the Province.
The province of British Columbia has posted a request for bids for an extensive air shed study for Prince Rupert, a study that has much wider scope that the controversial Kitimat air shed study. The maximum cost for the study is set at $500,000.
a study of potential impacts to the environment and human health of air emissions from a range of existing and proposed industrial facilities in the Prince Rupert airshed, further referred to as Prince Rupert Airshed Study (PRAS) in North West British Columbia.
The “effects assessment” should include the “prediction of effects of existing and proposed air emissions of nitrogen dioxide, sulphur dioxide and fine particulate matter (at PM2.5, called dangerous by Wikipedia ) from “an existing BC Hydro gas fired turbine, a proposed oil refinery, and seven proposed LNG export terminals (Pacific Northwest LNG, Prince Rupert LNG, Aurora LNG, Woodside LNG, West Coast Canada LNG, Orca LNG, and Watson Island LNG).”
In addition to “stationary sources” of nitrogen dioxide, sulphur dioxide and particulate matter, “the impact assessment will also include rail and marine transportation sources of these contaminants in the study area.”
Area of the proposed Prince Rupert air shed study. (Environment BC)
The request for proposal goes on to say:
The identified sources will be used for air dispersion modelling to determine how the contaminants in various aggregations (scenarios) will interact with the environment, including surface water, soils, vegetation and humans. Interactions of interest will include:
– water impact mechanisms related to acidification and eutrophication;
– soil impact mechanisms related to acidification and eutrophication; and
– vegetation and human health impact mechanisms related to direct exposure.
Water and soil impact predictions will be based on modelled estimates of critical loads for both media, given existing and predicted conditions in the airshed. Vegetation and human health impact predictions will be based on known thresholds of effects, given modelled existing and predicted conditions (contaminant concentrations) in the airshed.
Although the documents say that the Prince Rupert study will be based on the same parameters at the Kitimat air shed study, the Kitimat study only looked at sulphur dioxide and nitrogen dioxide, and did not include particulate matter.
Environmental groups also criticized the Kitimat air shed study for not including green house gases. The proposed Prince Rupert study also does not include green house gases.
A draft report is due by March 15, for review by the province and affected First Nations and subject to peer review. The District of Kitimat was not asked for comment on the study on that air shed study, even though scholars as far away as Finland were asked to review it. It appears that Prince Rupert itself is also excluded from a chance to review the study. The final report is due on May 15.
The province has issued a permit to Rio Tinto Alcan to increase sulphur dioxide emissions from the Kitimat Modernization Project. The Environmental Appeal Board will hold hearings in January 2015. Elisabeth Stannus and Emily Toews, from Kitimat, have appealed against decision to allow RTA to increase sulphur dioxide emissions.
Councillor Phil Germuth questions Northern Gateway officials about their plans for leak detection, Feb. 17, 2014 (Robin Rowland/Northwest Coast Energy News)
Enbridge Northern Gateway officials are loath (to put it mildly) to speak to the media but sometimes they let things slip. Earlier this summer, at a social event, I heard an Enbridge official (probably inadvertently) reveal that when the company’s engineers came before District of Kitimat Council earlier this year they were surprised and somewhat unprepared to fully answer the detailed technical questions from Councillor Phil Germuth on pipeline leak detection.
The results of the municipal election in Kitimat, and elsewhere across BC show one clear message; voters do want industrial development in their communities, but not at any price. Communities are no longer prepared to be drive by casualties for giant corporations on their road to shareholder value.
The federal Conservatives and the BC provincial Liberals have, up until now, successfully used the “all or nothing thinking” argument. That argument is: You either accept everything a project proponent wants, whether in the mining or energy sectors, or you are against all development. Psychologists will tell you that “all or nothing thinking” only leads to personal defeat and depression. In politics, especially in an age of attack ads and polarization, the all or nothing thinking strategy often works. Saturday’s results, however, show that at least at the municipal level, the all or nothing argument is a political loser. Where “all politics is local” the majority of people are aware of the details of the issues and reject black and white thinking.
Northern Gateway’s Ray Philpenko gives a presentation on pipeline leak detection to Kitimat Council, Feb. 17. 2014. (Robin Rowland/Northwest Coast Energy News)
The Enbridge official went on to say that for their company observers, Germuth’s questions were a “what the…..” moment. As in “what the …..” is this small town councillor doing challenging our expertise?
But then Enbridge (and the other pipeline companies) have always tended to under estimate the intelligence of people who live along the route of proposed projects whether in British Columbia or elsewhere in North America, preferring to either ignore or demonize opponents and to lump skeptics into the opponent camp. The Northern Gateway Joint Review Panel also lost credibility when it accepted most of Northern Gateway’s arguments at face value while saying “what the ……” do these amateurs living along the pipeline route know?
Pro Development
“I am pro-development,” Germuth proclaimed to reporters in Kitimat on Saturday night after his landslide victory in his campaign for mayor.
On the issue of leak detection, over a period of two years, Germuth did his homework, checked his facts and looked for the best technology on leak detection for pipelines. That’s a crucial issue here where pipelines cross hundreds of kilometres of wilderness and there just aren’t the people around to notice something is amiss (as the people of Marshall, Michigan wondered at the time of the Line 6B breach back in 2010). Enbridge should have been prepared; Germuth first raised public questions about leak detection at a public forum in August 2012. In February 2014, after another eighteen months of research, he was ready to cross-examine, as much as possible under council rules of procedure. Enbridge fumbled the answers.
So that’s the kind of politician that will be mayor of Kitimat for the next four years, technically astute, pro-development but skeptical of corporate promises and determined to protect the environment.
Across the province, despite obstacles to opposition set up by the federal and provincial governments, proponents are now in for a tougher time (something that some companies will actually welcome since it raises the standards for development).
We see similar results in key votes in British Columbia. In Vancouver, Gregor Roberston, despite some problems with policies in some neighborhoods, won re-election on his green and anti-tankers platform. In Burnaby, Derek Corrigan handily won re-election and has already repeated his determination to stop the twinning of the Kinder Morgan pipeline through his town. In Prince Rupert, Lee Brain defeated incumbent Jack Musselman. Brain, who has on the ground experience working at an oil refinery in India, supports LNG development but has also been vocal in his opposition to Northern Gateway.
The new mayor in Terrace Carol Leclerc is an unknown factor, a former candidate for the BC Liberal party, who campaigned mainly on local issues. In the Terrace debate she refused to be pinned down on whether or not she supported Northern Gateway, saying, “Do I see Enbridge going ahead? Not a hope,” but later adding, “I’d go with a pipeline before I’d go with a rail car.”
Kitimat election signs. (Robin Rowland/Northwest Coast Energy News)
Plebiscite confirmed
Kitimat’s mayor and council elections also confirm that Northern Gateway plebiscite vote last April. Kitimat wants industrial development but not at the price of the community and the environment. The unofficial pro-development slate lost. A last minute attempt to smear Germuth on social media was quickly shot down by people from all sides of the Kitimat debate. Smears don’t usually work in small towns where everyone knows everyone.
Larry Walker, an environmentalist with a track record in municipal politics as an alderman in Spruce Grove, Alberta, won a seat. Together with Rob Goffinet and Germuth, that is three solid votes for the environment. The other new councillor is Claire Rattee who will be one to watch. Will the rookie be the swing vote as Corinne Scott was?
Mario Feldhoff who came to third to Goffinet in the overall vote (Edwin Empinado was second) is a solid councillor with a strong reputation for doing his homework and attention to detail and the unofficial leader of the side more inclined to support development. Feldhoff got votes from all sides in the community.
During the debates, Feldhoff repeated his position that he supports David Black’s Kitimat Clean refinery. But as an accountant, Feldhoff will have to realize that Black’s plan, which many commentators say was economically doubtful with oil at $110 a barrel, is impractical with oil at $78 a barrel for Brent Crude and expected to fall farther. Any idea of a refinery bringing jobs to Kitimat will have to be put on hold for now.
LNG projects are also dependent on the volatility and uncertainty in the marketplace. The companies involved keep postponing the all important Final Investment Decisions.
There are also Kitimat specific issues to deal with. What happens to the airshed, now and in the future? Access to the ocean remains a big issue. RTA’s gift of land on Minette Bay is a step in the right direction, but while estuary land is great for camping, canoeing and nature lovers, it is not a beach. There is still the need for a well-managed marina and boat launch that will be open and available to everyone in the valley.
Germuth will have to unite a sometimes contentious council to ensure Kitimat’s future prosperity without giving up the skepticism necessary when corporations sit on a table facing council on a Monday night, trying to sell their latest projects. That all means that Germuth has his job cut out for him over the next four years.
All Farris would say is, “We have lots of people working on the projects to do just that.”
At that same time, Apache is still spending money on the Kitimat project. The quarterly report says that Apache spent $151 million on the project in the third quarter, and a total of $498 million so far this year. That includes an equity investment in the Pacific Trail Pipelines $15 million in the third quarter and $44 million so far this year.
Chevron, Apache’s partner continues to work on the Kitimat project.
On Monday, October 20, 2014, the Minister of Fisheries and Oceans, Gail Shea, stood in the House of Commons during Question Period and proved she is not up for the job.
Answering questions from Opposition MPs about the incident of the Russian container ship, Simushir, which drifted dangerously close to the coast of Haida Gwaii, Shea got up and read a prepared script, a script with answers which ignored centuries of the laws and custom of the sea, as well as Canada’s own laws and treaty obligations, answers probably written by what are now known as “the kids in short pants” in the Prime Minister’s Office.
There was a time in this country when some ministers of the Crown took their responsibilities seriously. That idea that has decayed over the years and now has been gutted by the adminstration of Stephen Harper. As Ottawa pundits have noted recently, only a small handful of cabinet ministers in the Harper government have any real responsibility and only those are permitted to answer questions by themselves in the Commons. According to most Ottawa insiders, the less important ministers, like Shea, are basically told what to do by the prime minister’s office.
Gail Shea, Minister of Fisheries and Oceans, visited the Canadian Coast Guard Ship Leonard J. Cowley on Friday, December 6, 2013, to examine the fast rescue craft launching mechanism for offshore fishery patrols with Regional Director, Fleet, Stephen Decker and Captain Kerry Evely, Commanding Officer. The Cowley conducts fisheries patrols and monitors fishing activities under Canada’s commitment to the Northwest Atlantic Fisheries Organization. (DFO)
If the House of Commons under Harper could fall any lower, Shea’s attitude (or more likely the PMO’s attitude) on ship and coastal safety takes the Commons and ministerial responsibility to a new low—the bottom of the sea.
Nathan Cullen, NDP MP for Skeena Bulkley Valley, who represents Haida Gwaii first asked. “Mr. Speaker, on Friday, a Russian ship carrying more than 500 million litres of bunker fuel lost all power just off the coast of Haida Gwaii.The Canadian Coast Guard vessel, the Gordon Reid, was hundreds of kilometres away, and it took almost 20 hours for it to reach the drifting ship. Thankfully, favourable winds helped keep the ship from running aground, and a private American tugboat eventually towed it to shore. Is the minister comfortable with a marine safety plan that is based on a U.S. tugboat and blind luck in order to keep B.C.’s coast safe?”
Shea responded.
“Mr. Speaker, luck had nothing to do with the situation. The Russian ship lost power outside Canadian waters in very rough weather. The private sector provides towing service to the marine industry. We are grateful that the Canadian Coast Guard was able to keep the situation under control in very difficult conditions until the tug arrived from Prince Rupert.”
Cullen tried again:
“Mr. Speaker, if the government really wanted to show its gratitude to the Canadian Coast Guard maybe it would not have cut $20 million and 300 personnel from its budget. Even after the Gordon Reid arrived, its tow cable snapped three times. The Russian ship was only about a third as big as the huge supertankers that northern gateway would bring to the very same waters off the west coast. How can Conservatives, especially B.C. Conservatives, back their government’s plan to put hundreds of oil supertankers off the B.C. coast when we do not even have the capacity to protect ourselves right now?”
Shea replied: “Mr. Speaker, this Russian ship lost power outside of Canadian waters. The Canadian Coast Guard responded and kept the situation under control, under very difficult conditions, until the tug arrived from Prince Rupert.
We as a government have committed $6.8 billion through the renewal of the Coast Guard fleet, which demonstrates our support for the safety and security of our marine industries and for our environment.”
Next to try was Liberal MP Lawrence MacAulay from Cardigan.
“Mr. Speaker, the Russian container ship that drifted off the west coast raises serious concerns about the response capability of the Canadian Coast Guard. This serious situation was only under control when a U.S. tugboat arrived.”
Again Shea read her script: “This Russian ship lost power outside Canadian waters. On the west coast, the private sector provides towing services to the marine industry.’
The final attempt by Liberal Joyce Murray, from Vancouver Quadra, also led to a scripted answer. “ this was a private towing vessel that came to tow the vessel that was in trouble.”
Shea’s answers, especially her repeated reference to “territorial waters” set off a series of “What the…?” posts on Twitter from west coast mariners and sailors, wondering if Shea knew anything about maritime law.
The first question one must ask was Shea actually not telling the whole truth to the House of Commons (which is forbidden by House rules) when she said the Simushir was outside Canadian waters? The Haida Nation, in a news release, (pdf) says the Simushir was “drifting about 12 Nautical Miles North West of Gowgaia Bay located off Moresby Island off Haida Gwaii.”
International law defines territorial waters as a belt of coastal waters extending at most 12 nautical miles (22.2 km; 13.8 mi) from the baseline (usually the mean low-water mark) of a coastal state.
As Shea’s own DFO website says Canada has exercised jurisdiction over the territorial sea on its east and west coasts out to 12 nautical miles since 1970, first under the Territorial Sea and Fishing Zones Act and now under the Oceans Act. The baselines for measuring the territorial sea were originally set in 1967. While the exact position can and should be confirmed by the ship’s navigation logs and GPS track, it is clear that the container vessel could have been at one point after it lost power within Canada’s territorial waters.
Even if the Simushir wasn’t exactly within territorial waters, the ship was in what again Shea’s own DFO website calls the “contiguous zone “an area of the sea adjacent to and beyond the territorial sea. Its outer limit measures 24 nautical miles from the normal baseline zone.” In any case, the Simushir was well within what Canada says is its “exclusive economic zone” which extends 200 nautical miles from the coastal baseline.
Law of the Sea
So here is the first question about Shea’s competence.
How could she not know that the Simushir was well within Canadian jurisdiction, as defined by her own department’s website? Even if the minister hadn’t read the departmental website, wasn’t she properly briefed by DFO officials?
The second point, is that whether or not the Simushir was in actually in Canada’s territorial waters is irrelevant. Custom going back centuries, and now the United Nations Convention on the Law of the Sea and even the Canada Shipping Act all require the master of a capable vessel to render assistance once that vessel receives a distress call or sees that another vessel is in distress.
… the master of a ship at sea which is in a position to be able to provide assistance, on receiving a signal from any source that persons are in distress at sea, is bound to proceed with all speed to their assistance, if possible informing them or the search and rescue service that the ship is doing so.
And the Canada Shipping Act requires
Every qualified person who is the master of a vessel in any waters, on receiving a signal from any source that a person, a vessel or an aircraft is in distress, shall proceed with all speed to render assistance and shall, if possible, inform the persons in distress or the sender of the signal.
The master of a vessel in Canadian waters and every qualified person who is the master of avessel in any waters shall render assistance to every person who is found at sea and in danger of being lost.
Note the phrase any waters. Not just in Canadian territorial waters as the Shea, the minister responsible for the ocean seemed to imply in her Commons answers.
That once again calls into question Shea’s fitness to be a minister of the Crown.
If she did not know about the UN conventions on the law of the sea, of which Canada is signatory, or the Canada Shipping Act, she is not up for the job as Minister of Fisheries and Oceans.
If, as the minister responsible for oceans, she knew the law and was told by the PMO to mislead the House of Commons, she is is irresponsible and MPs should ask the Speaker if she actually broke the rules of the House.
Regulation Seven of the Annex on Search and Rescue Services states
Each Contracting Government undertakes to ensure that necessary arrangements are made for distress communication and co-ordination in their area of responsibility and for the rescue of persons in distress at sea around its coasts. These arrangements shall include the establishment, operation and maintenance of such search and rescue facilities as are deemed practicable and necessary, having regard to the density of the seagoing traffic and the navigational dangers, and shall, so far as possible, provide adequate means of locating and rescuing such persons.
Note that the regulation does not say within territorial waters, but “around its coasts.”
Rendering assistance
Canada has always rendered assistance to distressed vessels not just up and down the coast but around the world. Take the case of HMCS Chartlottetown. On February 3, 2008, HMCS Chartlottetown on anti-piracy and anti-terrorist patrol in the North Arabian Sea, spotted a rusty barge with some men stranded on the deck. It turned out the men were from Pakistan and that the vessel towing the barge had sunk with all hands, leaving only the men on the barge alive. The North Arabian Sea is far out side Canadian territorial waters.
In February, 2008. the crew of HMCS Charlottetown rescued the crew of a Pakistani barge that was drifting in the North Arabian sea after the tug that was hauling the barge sank. (Cpl Robert LeBlanc,/Canadian Forces Combat Camera)
On must wonder then if the Harper Government, or at least Minister Shea is suggesting that this country ignore centuries of maritime law and custom and, in the future, pass that barge by because it was not in Canadian waters?
Perhaps buried in the next omnibus bill we will see the Harper Government restrict rescue at sea to Canadian territorial waters. Farfetched? Well that is what Minister Shea’s answer in the Commons seems to suggest.
Given the cutbacks to the Coast Guard services over the past few years, and if there are going to be large tankers, whether LNG or bitumen, on the west coast, it is an open question whether or not the Harper government has actually made those “arrangements shall include the establishment, operation and maintenance of such search and rescue facilities as are deemed practicable and necessary, having regard to the density of the seagoing traffic and the navigational dangers, and shall, so far as possible, provide adequate means of locating and rescuing such persons.”
Now comes the question of the use of the tug Barbara Foss and the two Smit tugs that later joined to tow the Simushir into Prince Rupert harbour.
It is the responibility of the owner or manager of a disabled vessel, large or small, to contract with a tug or towing service to safely take it back to port. But, and it’s a big but, the tow begins only when it is safe to do so, if there is a danger of the ship foundering, sinking or running aground, it is the obligation of all the responding vessels to render assistance, not just the tug contracted to do the job.
(There are reports that the Simushir owners chose to hire the Barbara Foss rather than the heavy duty Smit tugs available at Prince Rupert. Jonathan Whitworth, CEO of Seaspan told Gary Mason of The Globe and Mail that there are about 80 boats on the west coast, capable of heavy-duty towing, but noted that as in the case of the Simushir, those vessels may not be available when needed)
While around the Lower Mainland of BC, even a small boat that has run out of gas or has engine trouble can get commercial assistance from many service providers, the same is not true of the north coast, or at Haida Gwaii, where are no such regular services. Seapan’s Whitworth told The Globe and Mail there is often a 6,000 horsepower log hauling tug that works off Haida Gwaii. but he also noted that it would be too expensive to have a tug permanently moored on the archipelago.
That means mariners who run out of gas or have engine trouble, say on Douglas Channel, have to call Prince Rupert Coast Guard radio and request assistance either from nearby vessels or from the volunteer Royal Canadian Marine Search and Rescue service. RCMSAR policy says that a the rescue boat will not tow a vessel if “commercial assistance is reguarly available.” If commercial assistance is not available RCMSAR is only obligated to tow the boat as far as a “safe haven,” where the boat can tie up safely or contract for that “commercial assistance.”
Here on Douglas Channel the safe haven is usually Kitimat harbour and thus during the summer frequently either a good Samaritan vessel or RCMSAR take the disabled vessel all the way to MK Bay.
Shea’s pat answer to the Opposition questions only betrayed the fact that the east coast minister is woefully ignorant of conditions on the northern coast of British Columbia.
In the old days, a minister who screwed up so badly would be asked to resign. That never happens any more. Ministerial responsibility has sunk to the bottom of the sea.
The bigger picture question seems to be. Why, if the Harper government is so anxious to get hydrocarbons, whether bitumen or natural gas to “tide water” does it keep going out of its way to show its contempt for the people who live on Canada’s west coast?
A note for the voters of Prince Edward Island, where Shea is the member for Egmont. Consider this, if a ship gets into trouble outside the 12 mile limit, trouble that could threaten your beautiful red sandy beaches, you’re likely on your own.
The Shell-led LNG Canada project unveiled its commitments to Kitimat at a ceremony at the community information centre at the old Methanex site on October 7, 2014.
LNG Canada has forged the commitments in a sheet of aluminum that is bolted to the wall of the community information centre. Kitimat Mayor Joanne Monaghan unveiled the aluminum sheet, assisted by Kitimat Fire Chief Trent Bossence. Afterward, Susannah Pierce, Director, External Affairs, LNG Canada, signed the sheet, followed by Mayor Mongahan, Chief Bossence, other LNG Canada officials and members of the community.
Guests at the unveiling of LNG Canada’s commitment to the Kitimat community watch a video prior to the unveiling ceremony. (Robin Rowland/Northwest Coast Energy News)
LNG Canada’s Community Commitments
LNG Canada is proud to outline its commitments to the community, created through a collaborative effort with local residents. In April, June and September 2014, LNG Canada met with the Kitimat community to develop and refine the commitments our company will meet to ensure we are a valued member of the community throughout the lifetime of our project. We are grateful to the many individuals who took part and shared their wisdom and experience.
Our Commitments to the Community
1) LNG Canada respects the importance residents place on companies being trusted members of their community. We aspire to gain this trust by proactively engaging with the community in an honest, open and timely manner; by listening and being responsive and accessible; and by operating in a safe, ethical and trustworthy way.
2) LNG Canada understands that the ongoing well being of the community and the environment are of paramount importance. LNG Canada will consider the health and safety of local residents, employees, and contractors in every decision it makes.
3) LNG Canada recognizes that the environment and natural surroundings are vital to the community. We will be dedicated to working independently and with the community to identify and carry out ways to reduce and mitigate the impact of our facility footprint on the natural surroundings – in the Kitimat Valley, the Kitimat watershed and the Kitimat airshed.
4) LNG Canada is aware of the importance to the community of maintaining and improving access to outdoor recreational opportunities. We will work with the local community to facilitate the creation of new projects that protect or enhance the natural environment and that provide access to the outdoors and the water.
5) LNG Canada recognizes it will be one company among other industrial companies operating in the community. We will work with other local industry leaders to manage and mitigate cumulative social and environmental impacts, and create opportunities to enhance local benefits associated with industrial growth.
6) LNG Canada acknowledges that the commitments we make are for the long term. We will work with the community to develop an environmental, social and health monitoring and mitigation program that meets regulatory requirements and we will share information on the program with the public for the life of our project.
7) LNG Canada understands the need for the community to benefit from our project and values the contributions all members of the community make to the region. We will work with the community to ensure that social and economic benefits from our project are realized and shared locally.
8) LNG Canada acknowledges the importance the community places on our company being an excellent corporate citizen and neighbour that contributes to the community. In addition to providing training, jobs and economic benefits, we will make social investments important to the community to positively impact community needs and priorities.
Kitimat mayor Joanne Monaghan, Susannah Pierce, Director, External Affairs, LNG Canada and Fire Chief Trent Bossence after the ceremony unveiling the community commitment. (Robin Rowland/Northwest Coast Energy News)
The world’s business media are paying rapt attention to Glencore’s now stalled attempt to take over Rio Tinto.
Late Tuesday, the company issued a news release which says
Glencore announces that in July 2014 it made an informal enquiry by telephone call to Rio Tinto, seeking to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the two companies. Rio Tinto responded that it was not interested in pursuing these discussions.
Glencore confirms that it is no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto.
As a consequence of this announcement, the Panel Executive has determined that Glencore is for a period of 6 months from the date of this announcement subject to Rule 2.8 of the City Code on Takeovers and Mergers in relation to Rio Tinto. Glencore however reserves its rights to make an offer in the future with the consent of the Takeover Panel, either with the recommendation of the Board of Rio Tinto, in the event of a third party offer for Rio Tinto, or in the event of a material change in circumstances.
The board of Rio Tinto notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore.
The Rio Tinto board confirms that no discussions are taking place with Glencore.
In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore.
The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto’s shareholders.
The board’s rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter.
According to Bloomberg, Glencore’s secretive CEO Ivan Glasenberg made a verbal stock offer to Rio Chairman Jan Du Plessis in July. The Rio Tinto board rejected the offer in August, which means under that UK law, Glencore must wait six months before making another bid.
Glasenberg’s informal July bid carried no significant premium, said the person, who asked not to be identified as the information is private.
Bloomberg’s television arm reports that the Glasenberg’s offer was in stock, an attempt, apparently, to get Rio Tinto “on the cheap.” Earlier Forbes reported that there were rumours of an offer from Glencore to Rio Tinto of a “share-swap merger”
Bloomberg goes on to report that.
After being rebuffed by the board, Glencore has reached out to Rio’s biggest investor, Aluminum Corp. of China, to gauge its interest in a potential deal in the next year, according to people familiar with the matter.
After the initial report on the takeover Monday, business writers used epic analogies.
Meanwhile, behind its premium paywall Lex, the Financial Times is comparing the Glencore bid for Rio Tinto to the Game of Thrones.
The analysts are saying there are two main factors, Rio Tinto’s balance sheet has been weakened by a downturn in the iron ore market while at the same time Glencore aims to overtake Rio Tinto rival BHP Billiton. If it acquires RT, then Glencore will become the world’s largest mining and resource company.
The business media all say Glencore is already the world’s biggest trader in commodities.
China is a major force behind this corporate Game of Thrones. China wants more access to world resources for its increasingly hungry industry and population,while at the same time it has apparently all the iron ore it needs and iron ore is Rio Tinto’s biggest asset. The key player is a giant Chinese aluminum company now under investigation as part of the country’s corruption crack down.
Glencore is already huge, listed as Number 10 on the Fortune Global 500 list . Rio Tinto is far down at number 201. (Walmart is number one. Companies involved with Kitimat are Shell in second place, Sinopec in third and the China National Petroleum Corporation in fourth. Chevron is in 12th spot.)
Glencore is a major player in the aluminum business with assets around the world, some in partnership with the Russian giant aluminum group Rusal . According to Wikipedia, Glencore owns 8.8 per cent of a joint venture with Rusal, and the Sual Group (Siberian-Urals Aluminium Company) . That joint venture, Wikipedia says, has created the “World’s largest aluminium and alumina producer with 110,000 employees in 17 countries.”
Glencore along with Rusal has an undisclosed interest in Rusal’s Windalco alumina operation in Jamaica. Glencore also has an undisclosed interest in the Alumina Partners of Jamaica. It owns 44 per cent of Century Aluminum in Monterey California. Glencore has also undisclosed interests in idle aluminum smelters in Washington State and Montana. It has an undisclosed interest in Kubikenborg Aluminium AB in Sweden, Aughinish Alumina in Ireland and Eurallumina in Sardinia.
In the northwest, Glencore, through its agricultural subsidiary Vittera, is a partner, along with Cargill Ltd. and Richardson International in the Prince Rupert Grain Terminal. In Vancouver, Glencore owns Vittera’s Cascadia grain terminal in Vancouver.
located on the south shore of Burrard Inlet. Vittera Inc. owns and operates Canada’s largest grain handling network. The terminal handles wheat, durum, feed barley, malting barley, canola seed and specialty products, with storage capacity of 282,830 tonnes of product, handling loading from its 244 metre berth with a depth of 14.6 metres. –
Glencore is also developing a metallurgical coal mine near Chetwynd.
A Glencore stock photo of slag tapping at the Sudbury Smelter. (Glencore)
Glencore, through the earlier 2013 take over the mining company Xstrata owns the famous Kidd copper and zinc mine near Timmins, Ontario. The operation has 1300 employees. (Xstrata earlier took over the well-known Canadian mining company Falconbridge). It also operates the Horne copper Smelter in Rouyn-Noranda, Québec, which employees 700 and the CCR copper Refinery in Montreal, Québec which employees 650.
In Sudbury, Glencore is reviving the Errington-Vermillion Project, two deposits were that were previously mined in the 1920s and 1950s. It says the project has potential for approximately nine million tonnes, polymetallic- zinc, lead,copper, silver, gold or a rate of 2,900 tonnes per day.
The other factor for Kitimat with Glencore is that, unlike Rio Tinto, which is mostly a mining and smelting company, Glencore has interests in natural gas, oil and shipping and it is reported that the company wants to expand its hydrocarbon business from extraction to shipping.
According to Forbes, many Rio Tinto shareholders are not happy about the costs of the takeover of Alcan
The chairman of Rio Tinto, Jan du Plessis said the board was happy with the leadership of managing director, Sam Walsh, and finance director, Chris Lynch.
Interestingly, that might not be a view shared by all Rio Tinto shareholders who are still smarting from the $40 billion written off after the ill-timed acquisition of the Alcan aluminium business, followed by a $3 billion write-off after an equally poorly executed coal asset deal in Africa.
(It should be noted that Walsh was not the CEO at the time of both acquisitions, but was brought in to put Rio Tinto back on track after those huge losses)
The Rio Tinto news release says it’s business as usual:
Rio Tinto remains focused on the successful execution of its strategy, which the board of Rio Tinto is confident will continue to deliver significant and sustainable value for shareholders….
The board believes that the continued successful execution of Rio Tinto’s strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders. Rio Tinto’s shareholders stand to benefit from the very considerable value that this will generate.
RBC Capital Markets analyst Timothy Huff said: “A potential merger with Rio would enable Glencore to get hold of the lowest-cost iron ore business in Australia. This is likely just a shot across the bow from Glencore and we expect Glencore to play the long game with any highly desired acquisition target. While asset divestments may have to play a larger part in a Glencore/Rio tie-up, we think the broader strategy for an enlarged group makes sense.”
The Globe and Mail Report on Business says
It is an open secret that Mr. Glasenberg, a multibillionaire South African, has every intention of using mergers and takeovers to greatly extend Glencore’s reach along the commodities value chain. Glencore’s strategy is to control the mines, the warehouses, the ports, the ships and the trading networks that produce and distribute commodities.
The question is whether Rio’s management and shareholders would endorse a deal that could come with no takeover premium. Some analysts think not.
One problem with Glencore’s approach to Chinalco is that the company is part of the wider probe by the Chinese government of corruption. As Reuters reported
Aluminum Corp of China general manager Sun Zhaoxue is suspected of “serious violations” of the law, a euphemism for corruption, according to a notice published by China’s Central Commission for Discipline Inspection.
Sun is also the vice chairman of Chinalco’s listed subsidiary, Aluminum Corp Of China Ltd. He is the former president of China National Gold Group Corp, the country’s biggest gold producer.
Some business analysts say even if Rio Tinto shareholders are not happy with current management they may not want their holdings affected by a possibly corrupt Chinese company.
On the other hand, as the Telegraph points out, it is really the Chinese government that will make the decision, not the company itself.
China’s government holds the key to a deal despite Rio Tinto’s public rejection of Glencore’s interest. State-owned Aluminum Corporation of China is the largest shareholder with around 10 per cent and Glencore reportedly started talking to the Chinese in the summer to sound out their interest in an exit. Although China is the world’s largest consumer of iron ore and owning such a significant stake in one of the world’s biggest mining groups is strategic now could be a good time to exit. The world is flooded with iron ore and securing supplies for steel mills is no longer an issue for the Chinese government. Now is a good time to cash in.
The man behind the so-far failed deal, who is likely “patiently stalking” Rio Tinto is the highly secretive and private Ivan Glasenberg.
Pounce, leak and wait.
It is a classic strategy in the shadowy world of mergers and acquisitions and Ivan Glasenberg, the chief executive of Glencore, is a master of this dark art.
Although a potential $160 billion mega takeover of the world’s largest shipper of seaborne iron ore, Rio Tinto, was flatly rejected in August, don’t bet on Glasenberg walking away for good
Glasenberg was born in South Africa in 1957, and apparently now holds four passports, South Africa, Australia, Israel and as of 2011, Switzerland.
When Glencore went public on the London Exchange in 2011, which the Guardian called “the biggest stock exchange float in British history,” the British media received a letter from a London law firm warning the normally aggressive media not to probe into the private lives of the company executives.
Glencore executives, the letter said, “are extremely private individuals”, who expected scrutiny of their business activities, but not their personal lives. A warning followed about the “security risk” that could be posed by any reports about their homes or private lives.
It appears that for the British media the royal family and missing school girls are fair game but not Glencore’s executives.
Should Glencore ever takeover Rio Tinto, the Wall Street Journal says Glasenberg told the paper Glasenberg: We Don’t Do Work-Life Balance may be a indication of the future, especially for management.
Although he was referring mainly to the company’s main business, commodity trading, the interview is enlightening.
Asked in an interview with The Wall Street Journal if the company has a work-life balance, the 57-year-old billionaire, a former coal trader, says: “No. We work. You don’t come here to take life easy. And we all got rich from it, so, you know, there’s a benefit from it.”
This competitiveness, he says, is smart business. “If I’m not pulling my weight and setting an example” and “traveling 80% of the time”, his charges would complain to the board and try to get him fired….
Mr. Glasenberg says the phenomenon is still at play. “I see it happening. Some guy suddenly decides: ‘I want to take it easier, I want to spend more time with the family’… an attack will come.”
Mr. Glasenberg, who had been CEO of Glencore since 2002, says he is insistent on instilling this culture at Xstrata, a mining company. Glencore had amassed a portfolio of mines over the past decade. “I thought if we could put our hard-working culture as traders into the asset management it will be a great combination and we did do that,” he says.
One area where Glasenberg does get soft however is on worker mobility, noting that blue collar miners can work their way up to earning the eight-figure salaries enjoyed by his squadron of commodities traders. Just try him.
“You want to be a trader, come be a trader,” he told Wall Street Journal. “You want to travel six days a week, you want to travel the world, the door’s open. I earn more than you. Come be a trader. Please, the door’s open.”
If the Glencore news release is correct, that means in six months, on April 7, 2015, the next move in the future of Rio Tinto will come, unless, as the Glencore news release states “if there is a material change in circumstances”
One thing is clear, Kitimat can now add Rio Tinto and Rio Tinto Alcan to the mix of uncertainty along with Shell, Chevron, Enbridge, Apache and the rest of the corporate movers. In other words, we are all extras in the corporate Game of Thrones.
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)
Apache Corporation today announced it has agreed to sell its interest in two LNG projects, Wheatstone LNG and Kitimat LNG, along with accompanying upstream oil and gas reserves, to Australila’s Woodside Petroleum Limited for a purchase price of $2.75 billion.Based on current estimates, Apache’s net proceeds upon closing are expected to be approximately $3.7 billion. Receipt of proceeds from this transaction will trigger an estimated $650 million cash tax liability, approximately $600 million of which is associated with the income tax due on Apache’s Overall Foreign Loss account balance. Upon incurring this income tax liability, Apache estimates that it will have the flexibility to repatriate cash generated from foreign operations and/or future international strategic transactions with minimal U.S. cash tax impact.
