PART THREE: Keystone EIS looks in-depth at the railway to Prince Rupert option for bitumen and crude

There have always been commentators who believe that if the Northern Gateway Pipeline is rejected by the Joint Review Panel or stopped by other means, that the bitumen from Alberta should be carried by rail to Prince Rupert.

A pipeline to Prince Rupert has already been rejected by Enbridge as impractical given the mountainous terrain and the narrow footprint along the Skeena River from Terrace to Prince Rupert.

That means taking bitumen by rail to Prince Rupert has not been seriously studied—until now.

The State Department Environmental Impact Study (EIS) on the controversial Keystone XL pipeline from Alberta to the US Gulf, does give serious consideration to the rail to Rupert option.

That’s because under its mandate the State Department had to consider alternatives to Keystone. The detailed look at carrying crude to the west coast is contained in the “No Action Alternatives” section of the Keystone report (that is telling President Barack Obama what might happen if he takes no action on Keystone)

The EIS took a brief look at the possibilities of rail to Kitmat, but concentrates mostly on Prince Rupert.

As for sending bitumen to the Gulf,via rail and tanker, the Keystone report concludes, as have most analysts that even if bitumen was shipped by rail to Prince Rupert, it would be cheaper to send it to markets in Asia than through the Panama Canal to the US Gulf Coast.

If pipelines to the Canadian West coast are not expanded or approved, even incurring the additional cost of rail transport to the West Coast ports (Vancouver, Kitimat, or Prince Rupert), estimated at $6 per barrel, results in a total transport cost to Asia that is still 40 percent cheaper than going via the Gulf Coast.

Absent a complete block on crude oil exports from the Canadian West Coast, there would belittle economic incentive to use the proposed project as a pass through. The high costs of onward transport to other potential destinations tend to mitigate against WCSB [Western Canada Sedimentary Basin] heavy/oil sands crudes being exported in volume from the Gulf Coast.

As an alternative to Keystone, the State Department examined a scenario where bitumen and possibly Bakken shale crude oil would be:

• Loaded onto rail in Lloydminster and transported to Prince Rupert, British Columbia;

• Transferred to a new/expanded marine terminal at Prince Rupert; and

• Shipped via Suezmax vessels to the Gulf Coast area (Houston/Port Arthur) through the Panama Canal.

If the tanker cars are hauling bitumen, they would be actually loading “railbit” which the report says is “similar to dilbit but with less diluent added” (Dilbit is the standard diluted bitumen in pipelines) There is also, according to the EIS, a possibility that the tank cars would carry raw bitumen without dilutent (although this requires insulated rail cars with steam coils)

New facilities in Prince Rupert would consist of a large rail terminal complex, most likely on themainland, where off-loaded crude oil would be stored until it could be loaded onto tankers, and an expanded port. The entire facility would cover 4,700 acres (1,900 hectares), including 3,500 acres (1,400 hectares) for storage and off-loading/on-loading facilities at the rail terminal and approximately 1,200 acres (487 hectares) of land at the expanded port.

The new tank terminal construction would consist of the following:

• Fourteen petroleum storage tanks (11 oil and three condensate);

• A security fence to encompass the tank terminal;

• A 180-foot-wide (55 metre) firebreak area around the outside perimeter of the terminal;

• Electrical supply and distribution (this terminal would be serviced by the Texada Island

Reactor substation); and

• Buildings (control center and civil infrastructure including roads).

Related Link Prince Rupert Port Authority Performance Report

 

The scenario calls for adding approximately 13 trains with 100 tanker cars per day on the 1,100 miles (1,770 kilometres) of CN and Canadian Pacific rail lines between Lloydminster and Prince Rupert.

(On the other hand, media mogul David Black who has proposed a refinery at Onion Flats half way between Kitimat and Terrace is considering a rail link to Kitimat if the Northern Gateway pipeline is stopped. Black estimates there would be six trains per day, 120 cars in each direction. While there is usually only one train a day to Kitimat or less, that idea would increase traffic along the Skeena and in his news release Black says 

If BC remains set against a pipeline the oil will come to the refinery by rail. CN and the oil companies are keen on this. A great deal of crude in North America is being moved by rail now. The costs are not that different in this case and no permits are required. Rail tankering is, however, not as safe and it is more disruptive. Small towns along the route with level crossings would rue having 12 more trains running through every day.

The State Department scenario says that if the Prince Rupert option actually happened there would be “one to two additional Suezmax tanker vessels per day (430 tankers per year) would travel between Prince Rupert and the Gulf Coast area refinery ports via the Panama Canal.”

The concept of the Suezmax tankers is critical to the west coast, even if none of the scenarios eventually happen, because the State Department report notes that the Panama Canal is now being expanded, so that larger ships, including tankers, can go through the canal after 2014.

The current size is Panamax (maximum size for the current Panama Canal) to Suezmax (the maximum size for the Suez Canal), and, according to the State Department that means even if the even bigger Very Large Crude Carriers are not calling at west coast ports, the newer, larger Suezmax tankers may  be.

It should be noted, however, that if WCSB crude oil reaches a Pacific port, regardless of whether by rail or by pipeline, the economics for movement via tanker would favor shipping the oil to Asia rather than the Gulf Coast area. The cost of transporting crude oil via tanker from Prince Rupert to Houston and Port Arthur is estimated to be approximately $4.70/bbl, whereas the transport cost via tanker from Prince Rupert to refinery ports in Asia (e.g., Ulsan, South Korea and Dalian, China), is estimated to be only approximately $1.70 and $2.00/bbl, respectively. The lower transport cost to Asia versus the Gulf Coast area is attributable to shorter trip duration (30 to 37 days to Asia versus about 45 days to the Gulf Coast area), avoiding the Panama Canal toll(about $0.70/bbl), and being able to use a larger tanker because it would not be constrained by the Panama Canal (a VLCC tanker to China would have a capacity of almost 2 million bbl versus a Suezmax tanker to the Gulf Coast area with a capacity of about 884,000 bbl).

So what would happen if there was a scheme to truck bitumen and crude to Prince Rupert and ship via the Panama Canal to the Gulf?

The State Department EIS says:

 the transport of the crude oil via tankers from Prince Rupert to the Gulf Coast area refineries would not have any effects on geology, soils, groundwater, wetlands, vegetation, land use, socioeconomics, noise, or cultural resources, other than in the event of a spill.

It goes on to note:

The Gulf Coast area refineries already receive crude oil shipments via tankers from Mexico, Venezuela, and other locations; the Rail/Tanker Scenario is expected to simply displace these sources of crude oil with WCSB crude oil. Therefore, no new construction or new operational impacts are expected to occur as a result of this scenario at the Gulf Coast area refineries or surrounding habitats or communities.

In its study of a possible expanded Prince Rupert terminal that would welcome tankers, the State Department says:

The proposed Northern Gateway terminal at Kitimat, British Columbia was used as a surrogateto estimate the marine facilities needed at Prince Rupert. The Northern Gateway facility isdesigned to handle about 525,000 bpd of crude delivered by pipeline for loading on vessels to theWest Coast and Asia. In addition, it is designed to receive about 193,000 bpd of diluent (a verylight oil obtained from natural gas production) from cargoes arriving by water and discharging into storage at the terminal and moving back to Alberta via a parallel pipeline. The total volumeof about 718,000 bpd approximates the volume of WCSB heavy crude oil that would be loaded at Prince Rupert.

 

 

More Details:
Northwest Coast Energy News Special report links

What the Keystone Report says about Kitimat and Northern Gateway
What the Keystone Report says about the Kinder Morgan pipeline to Vancouver.
What the Keystone Report says about CN rail carrying crude and bitumen to Prince Rupert.
The State Department Environmental Impact Study of the railway to Prince Rupert scenario.

State Department news release

State Department Index to Supplemental Environmental Impact Study on the Keystone XL pipeline

 

Two days left for public input on BC “heavy oil” spill response plans

oilspillresonsepaperResidents of British Columbia have just two days to file information and opinions on the province’s  plans for “options for strengthening BC’s spill preparedness and response policies and capacity.”

A page on the BC Ministry of the Environment’s web site  wants public input as part of “BC’s five conditions necessary for support of heavy oil projects.”

Premier Christy Clark announced her controversial five conditions for pipeline development in BC in July 2012. Clark’s announcement was aimed both at the Northern Gateway Pipeline which would have its terminal in Kitimat, and the proposed Kinder Morgan pipeline expansion which has its terminal in Vancouver.

It is not clear how long the web page has been up,  but the call for input from the public has received little, if any, publicity. The deadline for public submissions is February 15, 2013.

(Northwest Coast Energy News was alerted to the story by a Kitimat-based hiking club)

A separate call for academic papers had a deadline of January 25. The province plans a conference on oil spill response  in Vancouver from March 25 to March 27. The website says”

As part of British Columbia’s commitment to a world leading preparedness and response regime for land based spills, it is hosting a symposium March 25-27, 2013 in Vancouver, BC. Due to the anticipated high interest in the symposium, attendance is by invitation only.

One question would be if invitation only is designed to exclude activist groups who may wish to participate or demonstrate. The Northern Gateway Joint Review panel banned public input at hearings in Vancouver and Victoria earlier this year to try, not always successfully, to head off demonstrations. The webpage says:

In keeping with the established polluter-pay principle, and recognizing the increase in development activities across the province, the Ministry of Environment (the ministry) is reviewing industry funded options for strengthening BC’s spill preparedness and response policies and capacity. Land based spill refers to any spill impacting the terrestrial environment, including coastal shorelines, regardless of the source.

This review addresses three aspects of land based spill preparedness and response: World leading regime for land based spill preparedness and response

Effective and efficient rules for restoration of the environment following a spill

Effective government oversight and coordination of industry spill response The ministry has developed a policy intentions paper for consultation (intentions paper) on the three aspects of the province’s land based spill preparedness and response regime under consideration.

The purpose of this intentions paper is to describe the ministry’s proposed policy direction and seek input on enhancing spill preparedness and response in BC. The intentions paper is a discussion document and your feedback will influence the policy approach.

Although the call for input is on the ministry website, the contact is a management consulting firm C. Rankin & Associates.

Editorial: It’s time for the District of Kitimat to play hardball on Gateway

EDITORIAL

Who speaks for Kitimat?

Someone has to speak for Kitimat on the Northern Gateway project.

The District of Kitimat Council no longer has a choice. It’s time to play hardball with Ottawa and Enbridge on the Northern Gateway Pipeline.

You can’t negotiate from a position of weakness.

The game of pipelines changed forever in recent weeks, when the Conservative government introduced Bill C-38, the Budget Implementation Act.

Bill C-38, which passed Second Reading on May 14, 2012 is an affront to basic democratic principles, a 425 page omnibus monster that will not permit the kind of careful consideration of major changes in Canadian society that what was once normal in a free and democratic society. The omnibus bill not only concerns the federal budget but also repeals the environmental assessment process and guts fisheries protection for the smaller spawning streams where salmon are born. By giving the federal cabinet the power to overrule the National Energy Board, the decision on the pipeline rests with just one man, Prime Minister Stephen Harper, who has made no secret that he intends to push the project through no matter how fierce the opposition to the project.

This week has seen devastating cutbacks along the west coast, to environmental monitoring and pollution control, to Coast Guard protection.  It is now clear that protection of the environment  along the BC coast and the lives of the mariners who sail those waters are of little importance to Ottawa, and of no importance to the war room types counting votes in Alberta and suburban ridings outside Toronto and Vancouver.

The District of Kitimat Council has voted to wait to make a decision until after the report of the Joint Review Panel, when “all information” is available.

The news this week that the Joint Review Panel decided to bypass Kitimat, that the town that is to be the terminal of the proposed pipeline is irrelevant to the process, shows more than any other move what the JRP thinks of Kitimat. Not much.

The Joint Review Panel has lost all credibility. Even if the JRP does produce a fair and honest report with valid recommendations for conditions and restrictions, it is highly unlikely that those recommendations will be fully implemented, because the final decision will be made in the Prime Minster’s Office and that decision will be build, baby, build.

Media reports in recent months have shown that Enbridge has easy access to the senior levels of the Conservative government and Enbridge lobbying preceded the changes to the Fisheries Act in Bill C-38.  Enbridge  walks the halls of power in Ottawa. Kitimat, on the other hand, counts for little, as the JRP schedule clearly shows.

So, for example, even if the Joint Review Panel recommends strict conditions on the pipeline to insure the safety of Kitimat’s water supply, and if Enbridge doesn’t like those conditions, there is no guarantee that Harper and the cabinet will implement those recommendations. That would leave the District of Kitimat holding the water barrel for several years.

(One of the many reasons, it seems, that the JRP wants to have all the northwest hearings is in Prince Rupert is so the high-priced energy lawyers from Calgary can have comfortable accommodation. So, if any protests from the District and the Haisla Nation are successful and there actually are final hearings in Kitimat,  perhaps the District could arrange for the lawyers to camp in Radley Park, so they can actually grasp the realities of living in Kitimat by the Kitimat River.)

The District of Kitimat Council has a duty to make sure that this region is protected.

So what does this mean?

“Armed neutrality”

It is now too late for the District Council to take a position for or against the pipeline. It no longer matters whether Mayor and Councillors support the pipeline, are sitting on the fence or oppose the pipeline. Bill C-38 has made the decision for the Council.

Council must assume that Stephen Harper will impose the pipeline on Kitimat and will impose conditions that could be determinable to the District in favour of Alberta and Enbridge.

From now on Council must unify and work to protect the District from Stephen Harper. The Council must make sure that the District is an aggressive force at any negotiating table or court battle.

That means Council should retain its position of neutrality, leaving opposition to the pipeline to others like Douglas Channel Watch. Given the growing witch hunt against the environmental movement, an official position of neutrality is negotiating from a position of strength and protects the District from any accusation that “radicals” are distorting the District’s position.

In international affairs, countries like Switzerland and Sweden are neutral, robustly neutral. Both Switzerland and Sweden practice what is called “armed neutrality.”

“Armed neutrality” means that Kitimat Council can no longer continue its current wishy-washy neutrality, arguing over the nuances of words in letters to the Joint Review Panel and Enbridge. To protect Kitimat, Council must adopt its own policy of “armed neutrality,” an aggressive stance that represents the entire community, both opponents and supporters of the pipeline.

So what now?

Professional advice

The announcement this week that Shell is planning to build a liquified natural gas facility in Kitimat, in combination with the KMLNG and BC LNG projects plus Enbridge, means it is vital for the District to have independent, professional advice on energy issues.

The District must immediately start paying much closer attention to the all the relevant documents that are filed with the Joint Review Panel. The District Council and staff must have their own independent advisers rather than juggling the views of Douglas Channel Watch and Enbridge and hoping for the best. That means hiring more professionals to supplement current staff that will understand the technicalities of both the Enbridge pipeline and the LNG projects; staff who can advise the senior administration and Council about how to proceed where the issues of the pipeline construction, terminal construction and management of the terminal come under municipal jurisdiction or could adversely affect the municipality.

That takes money, even though money is tight, Council must budget for that staff. When it comes to negotiating factors within the responsibility of the municipality, Kitimat must be at the table at full strength.

All the way to the Supreme Court

It is now certain that after Stephen Harper orders the pipeline to go ahead, disputes over the Northern Gateway Pipeline will end up in the courts. Lawyers are already talking about the constitutional necessity to consult First Nations, that pushing the pipeline across aboriginal traditional territory will violate Rights and Title.

First Nations across British Columbia are already represented by some of the best lawyers in Canada.

Vancouver is already looking at what powers a municipality has to make sure that city is fully protected in case of a catastrophic tanker accident from the Kinder Morgan pipeline and project.

Yes, the District is wary because of the long and bitter fight over power allocation, but that is in the past. Again Bill C-38 gives the District no choice but to prepare for new legal battles, probably all the way to the Supreme Court of Canada.

The District of Kitimat must immediately budget for, seek out, retain and instruct a law firm that  can advise the District on its rights and responsibilities now and in the future once the Harper government imposes the pipeline on Kitimat. As we have seen from the Joint Review and other National Energy Board hearings, the energy industry hires the best lawyers money can buy.

If Kitimat has to face those lawyers, the District can’t act like a Junior B team facing the NHL All-Stars. That law firm should be able to advise Kitimat on the constitutional issues involved and what powers a municipality has to protect the community from unwanted and unwarranted aspects of pipeline and tanker development. That law firm must also be able to participate in hardball business negotiations.

Seeking Alliances

The District must build better bridges with the Haisla Nation and find where there is common ground in the Kitimat region as Stephen Harper imposes the pipeline on the northwest. They may be arguments before the courts or with Enbridge where both the Haisla and the District of Kitimat are allies in a fight.

Stephen Harper and his government are prepared to impose the pipeline, terminals and tanker traffic on northwestern British Columbia, again no matter what local municipalities and regions say. All the environmental and Coast Guard safeguards that might have brought acceptance of the Enbridge project are being cut to the bone. That means Kitimat must also forge alliances with those municipalities and regions, again to make sure that local rights and responsibilities are fully protected once the government decides to impose the pipeline on the northwest.

It is highly likely that the constitutional consultation and Rights and Title cases on the pipeline will end up at the Supreme Court of Canada. If there are other cases, perhaps raised by Vancouver or other Lower Mainland or northern communities or even the Province of British Columbia, it may be that the Supreme Court, as it has with some cases in the past, could consolidate all the pipeline cases into one. That means Kitimat will need to be a participant in any case on the pipeline before the Supreme Court.

Unless District of Kitimat Council starts playing hardball, Stephen Harper will drive a bulldozer down bank of the Kitimat River to Douglas Channel, ignoring the council standing and watching from the hill looking over the pipeline trench. 

Government move has “utterly destroyed” JRP, no excuse to wait for final report on Gateway, Cullen says

Nathan Cullen
MP Nathan Cullen makes a point during an NDP leadership campaign stop in Kitimat, Nov. 11. 2011 (Robin Rowland/Northwest Coast Energy News)

The Northern Gateway Joint Review process has been “utterly destroyed” by the Conservative government, Skeena Bulkley Valley NDP MP Nathan Cullen told reporters Friday, April 20, adding a warning those who were waiting for the JRP to complete its hearings before making up their minds, “all those people like the premier and others who said there’s a good process in place, that excuse has been ripped away.”

Earlier that week, Natural Resources Minister Joe Oliver announced that the government that would introduce legislation to “streamline” the review process for major resource developments that would include such provisions as limiting the time and the number of participants and allowing the cabinet to overrule any decision or recommendation from the National Energy Board.

Cullen, who was just named Opposition House Leader, was holding his regular conference call with northwest BC reporters.

He called the changes proposed by the Conservative government for environmental assessment, ”brutal,” adding, “the already weakened rules have become fundamentally more weak.” He said it seems that the government is going to further weaken the role of the Department of Fisheries and Oceans in checking environmental impacts.

The bill, which has yet to be tabled in the Commons, will download federal responsibility for the environment to the provinces, which Cullen said could be subject to a constitutional challenge.

On the controversial Enbridge Northern Gateway project, which would see twin bitumen and condensate pipelines from Alberta to Kitimat, Cullen said, while the government’s Northern Gateway policy was not mentioned in the news conference or briefing documents, it was buried deep on the website and that indicated “it will not be up to the NEB anymore, they will retroactively apply these new rules it will now become a purely political decision. The prime minister, with all his wisdom, is going to make the final decision on the pipeline, totally undermining the process we are in now across the region.”

(The key bureaucratic phrase actually reads:  “Establish clearer accountability for decisions on major pipeline projects in the national interest by giving government authority to make the “go/no go” decisions, based on the recommendations of the National Energy Board.” )

 

Cullen said he is already hearing that people in the northwest are frustrated and angry by the announcement. “They feel that they’ve been duped and the credibility of the panel has been destroyed by this government. And so all those people like the premier, who said the process was what they were waiting for, that process has now been utterly, utterly, destroyed.”

Cullen was inferring any decision to support or oppose the pipeline is now back in the courts of BC Premier Christy Clark and groups like District of Kitimat Council and Terrace Chamber of Commerce who have, up until now, remained neutral, waiting for the final report from the Joint Review Panel.

The Terrace Chamber of Commerce, for example, said:

We want the objective panel of experts to assess the concerns of affected parties and contrast them with procedures and equipment being positioned to mitigate any and all perceived risks. It is important that all voices are heard and all questions are asked and answered.

“The process was always threatened, a lot of people suspected that Stephen Harper would not accept a ‘no’ when it comes to this pipeline and now that’s been made explicit. And all those people like the premier and others who said there’s a good process in place that excuse has been ripped away,”  Cullen said.

Cullen said he believes that people should still participate in the hearings but the panel now has to justify its existence.

“At the same time.“ Cullen said, “the government has shut down the oil response group in Vancouver and moved it 5,000 kilometres to Quebec, they’ve cut funding on our ability to protect the coast, even after the auditor general has pointed out that the current ability to protect our waters is lacking, so it looks that they are going to do everything and anything to approve this pipeline and put at risk so much of what we care about. It’s a shame but I don’t think it will lessen the resolve of people.”

Cullen called Joe Oliver’s statement that there would be more money for enforcement of environmental regulations a “shell game.”

“They cut they cut $80 million and put back $13 million and tried to pretend that’s an increase.
There is less protection for our ocean environment. At the same time, they’re pushing two major pipelines to the west coast and increasing the risk dramatically. Shutting down the operations in Vancouver, while trying to put a pipeline right into Vancouver, smacks of some sort of hypocrisy or arrogance. I mean they’re claiming budget cuts, but the prime minister is spending more on is own office, and they’re not making a single dollar cut to the F-35, which are in the billions. It’s peanuts they’re pretending to save here and it’s putting very important things at risk in our oceans.”

He expects the bill changing the rules for resource development to be introduced next week. But, Cullen added, that it is clear that government has been planning this for sometime, a fact that further undermines the credibility of the Northern Gateway Joint Review Panel. “What the government has just said is, ‘We simply don’t care. We’ve already made up our minds before hearing any testimony.’ I think they’ve made up their minds in advance of this but now it’s obvious that it was always true. You don’t put legislation like this together in a week. The bill that they are going to introduce and the press conference they had last weekend were months in the making. I know how Ottawa works. This has been around for a long time and they knew this for a long time. It’s entirely cynical.”

He expects the government will try and ram the legislation through the House and one of his jobs as NDP and Opposition House leader will be to slow it down.

“I think the very cynical anti-democratic move by the government is only going to increase the number of Canadians that will be opposed to this. So getting the message out specifically, getting people rallied around this cause and letting the government know they’re not going to steamroll us…. Continuing to try to bully us into submission is about the dumbest tactic imaginable, but I guess that’s the only one available to them. If the only tool you have the toolbox is a hammer, I guess every problem is a nail.

“Fundamentally this is a question of trust, do we trust that this government will protect the environment when it comes to oil and gas projects? And I can’t imagine an oil pipeline that Steven Harper doesn’t love. Maybe if the project went right through his living room, he may have some questions about it, but outside of that, there isn’t been a single thing that the oil industry has wanted from this government that they haven’t got, not one thing. So do you trust them to protect fisheries, do you expect them to protect us from oil spills? The answer has got to be no.”

Hundreds protest in Victoria to stop the Northern Gateway pipeline and to protect “Mother Earth”

Anti-Enbridge protest in Victoria, April 12, 2012
Hundreds of protesters march down Douglas Street in Victoria, BC, Sunday, April 12, 2012. The Day of Action Against the Enbridge Northern Gateway pipeline, also had a larger aim, organizers said, to protect Mother Earth. (Robin Rowland/Northwest Coast Energy News)

About a thousand people gathered in front of the British Columbia legislature on Sunday, April 12, 2012, for the Day of Action Against the Northern Gateway pipeline. But unlike protests, marches and gatherings here in the northwest of British Columbia, which are often tightly focused on the controversial pipeline and the associated tanker traffic and the potential dangers to northwestern BC, the protests in Victoria had a wider focus.  Speakers on the steps of the legislature spoke, not only of stopping the pipeline and protecting the coast against tanker spills, but also of protecting “Mother Earth” and the wider BC environment.

The speeches on the steps of the legislature began with a group of children from the Oak and Orca Bioregional School in Victoria, who spoke of their fears for the future of the planet.

Lisa MerCure, who spent years searching for First Nations roots, only to discover her Cree family lives in Fort Chipewyan in Northeastern Alberta  and are suffering from cancer. She spoke of the dangers from the bitumen sands development, from the tailing ponds and the effluent in the Athabaska River.

Other First Nations speakers spoke of the dangers to the rivers and coast of northern BC.

The recent announcement that Kinder Morgan would greatly increase the capacity of its pipeline from Alberta to the Vancouver area added new impetus to the protest.

After the rally at the legislature, the protesters marched along Douglas Street to Centennial Park for an afternoon of workshops.

Slideshow  “Our Coast Our Decision” Signs of Protest

 

Protest sign  Our Coast Our Decision

 

 

 

Kinder Morgan announces plans to increase capacity of Trans Mountain pipeline to Vancouver

Trans Mountain pipelne
The Trans Mountain Pipeline (Kinder Morgan)

Kinder Morgan, of Houston, Texas,  said Thursday, April 12, 2012, it plans to proceed with expansion of the Trans Mountain pipeline system from Alberta to the BC Lower Mainland. The company made the announcement after what the energy industry calls an “open season,” a search for customers where it received “strong binding commitments” from existing and new shippers. They pledged commercial support to an additional 660,000 barrels per day of bitumen sands crude from the pipeline. Demand has been high and reports say Kinder Morgan has had to ration petroleum products for its existing customers.

The 20 year commitment from the customers means the pipeline capacity would increase to 850,000 barrels per day from 550,000 barrels. That would make the eventual capacity of the Kinder Morgan pipeline much larger than Enbridge Northern Gateway’s proposed 525,000 barrels per day.

In a release,  Ian Anderson, president of Kinder Morgan Canada said, “We are extremely pleased with the strong commercial support that we received through the open season, which reinforces the appeal of our project and our approach. This strong commercial support shows the market’s enthusiasm for expanding market access for Canadian crude by expanding an existing system.”

Now Kinder Morgan has to get approval from the National Energy Board and acceptance from the local communities along the pipeline route from the Alberta bitumen sands to the terminals and refineries in Vancouver and in Washington state and for tanker export.

“This support from the market better defines the project and enables Kinder Morgan Canada to fully engage the local communities. We are still early in the engagement process of the project,” Anderson said in the release. “We share respectful, open relationships with many communities and organizations interested in our business. We are committed to an 18 to 24 month inclusive, extensive and thorough engagement on all aspects of the project with local communities along the proposed route and marine corridor, including First Nations and Aboriginal groups, environmental organizations and all other interested parties. We will also consider providing financial support to local communities for environmental initiatives. We have been planning for this day for many years and we are keen to start in depth engagement this summer.”

Kinder Morgan says the preliminary scope of the proposed project includes:

 

  • Projected capital cost of approximately $5 billion.
  • Twinning the existing pipeline within the existing right-of-way, where possible.
  • Adding new pump stations along the route.
  • Increasing the number of storage tanks at existing facilities.
  • Expanding the Westridge Marine Terminal.

Anderson added, “We anticipate filing a facilities application initiating a regulatory review with the National Energy Board in 2014. If our application is approved, construction is currently forecast to commence in 2016 with the proposed project operating by 2017.”

In addition to extensive engagement, the company will conduct traditional land use and environmental and socio-economic studies, and undertake detailed engineering and design studies, the release says.

The Trans Mountain proposal, like the Enbridge Northern Gateway pipeline is a “facilities application,” and one uncertainty facing the company will be the highly controversial decision by Stephen Harper’s Conservative government to speed up all future project applications of that type. Environmental groups have already expressed strong opposition to the speed up, while the energy industry has said faster application approval is long over due.

As well as the facilities application, Kinder Morgan says it will file “a commercial tolling application to review the company’s proposed commercial structure for the expansion. This filing, which is anticipated in summer 2012, will seek National Energy Board approval on how the company will charge its customers for transporting their product through the proposed expanded pipeline.”

Kinder Morgan says that for almost 60 years, the 1,150-km Trans Mountain pipeline system has been safely and efficiently providing the only west coast access for Canadian oil products, including about 90 percent of the gasoline supplied to the interior and south coast of British Columbia.

However, the continuing controversy over the Enbridge Northern Gateway and other pipeline projects, together with some accidents including the spill of 100,000 barrels of light crude near Abbotsford, has raised the profile of the Kinder Morgan line and therefore will likely bring more public scrutiny. Any increase in the capacity of the pipeline will also mean more tanker traffic in the already crowded waterways of the Vancouver harbour system and along the west coast.

Last June, Kinder Morgan also proposed the building of second pipeline from the bitumen sands to the west coast, roughly following the route of the Northern Gateway pipeline to Kitimat. There was no mention of that project in today’s announcement.