Analysis: The earthquake in Kitimat’s labour relations. It’s time for cooler and expert heads.

 

Tuesday night’s District of Kitimat Council meeting, crowded with striking members of Unifor 2300 deteriorated to what became a shouting match between the bargaining committee and Mayor Phil Germuth.

If the hostility and anger continue, it is quite likely the strike will last for months. The fallout will last much longer. It is often said that the bitterness following a strike is directly proportional to its length and the repercussions can last for a decade or more.

That is not good for the future of Kitimat.

There’s talk of mediation, and that’s a good idea, but mediation only works when both sides are willing to sit down and actually listen and talk through the issues. So mediation doesn’t appear to be practical, at least for a few weeks, until both sides are feeling a lot more pain, which is unfortunate.

The Unifor 2300 bargaining team makes it case before District of Kitimat Council, Tuesday, April 7, 2015. (Robin Rowland/Northwest Coast Energy News)
The Unifor 2300 bargaining team makes it case before District of Kitimat Council, Tuesday, April 7, 2015. (Robin Rowland/Northwest Coast Energy News)

Even if mediation isn’t possible at the moment, it’s time for both sides to stop and bring in some outside experts, experts with cool heads and no personal axes to grind,  to guide each side in the negotiations.

Do they know what they’re doing? Unifor 2300, apparently not as stunt, but to get their point across, attempted a clause by clause negotiation of certain points at public meeting of council, in front of a partisan crowd. Negotiating in public seldom works, especially if the other side isn’t really listening.

Do they know what they’re doing?  It appears that mayor and council didn’t bother to actually take a copy of the union offer and read it, at least so they would  know what the District bargaining committee was doing. “Did anybody on council actually look at the whole document? No. We didn’t ask for it, we asked, give us an update,” Mayor Phil Germuth said.  (Having been through the 2005 CBC lockout, I know that most union members do look carefully at the proposed changes in a contract, especially if there is trouble on the horizon. Management usually does the same. In this case, council is the responsible body and should have taken the time to actually read the proposals.)

There is  too much confusion and contradictory statements from mayor, staff and council over the timeline of when they saw the offer from Unifor, even it was just a summary.

Mayor Phil Germuth listens to Unifor members at the council meeting (Robin Rowland/Northwest Coast Energy News)
Mayor Phil Germuth listens to Unifor members at the council meeting (Robin Rowland/Northwest Coast Energy News)

The trouble with a small town like Kitimat is that this has already become too personal, and both sides are losing perspective. That’s why cooler, outside heads are needed.

 


UPDATE:  Deescalation not Escalation  

A few moments after this analysis was initially posted, Mayor Phil Germuth issued a open letter, threatening to withdraw the District’s offer:

If the Final Offer is not accepted by the Union by Sunday, April 12, 2015 at 4 p.m. the offer will be withdrawn. The District will then retain the services of an external negotiator who will have the mandate to conclude a Collective Agreement. That negotiator can make decisions on the best way to achieve this goal, including mediation or arbitration.

When this piece was written, our idea of bringing in outside experts was to deescalate the volatile situation, not escalating and making it worse. If the District of Kitimat brings in a hard ball “outside negotiator” that will be a long term disaster for the region, even if a settlement is reached (or forced), because as we say above the long term bitterness could last for a decade or more.   When we said an outside negotiator respected by both management and labour, we meant just that, an expert in industrial relations that can deescalate the anger. One has to wonder just who is advising mayor and council on this issue?

In this analysis calling for Unifor 2300 to also bring in outside experts,  we were hoping for  deescalation, in a small town where the dispute has become very personal.  If the District brings in that outside negotiator, Unifor 2300 will have to call headquarters and bring in the “big guns” and call for national support (which has happened in other labour disputes).

Unless there is immediate deescalation, the situation can only get worse.


Get on the phone

That means Unifor 2300 business agent Martin McIlwrath, Unifor Local 2301 President Rick Belmont who does have some experience, and the rest of the bargaining team should get on the phone to Unifor headquarters today and ask that an experienced negotiations facilitator and an experienced researcher get on a plane for Kitimat immediately and stay here for the duration. (McIlwrath has told reporters he has consulted with other labour leaders by phone. That’s not good enough. This situation needs experts here, on the ground).

For Unifor 2300 members, part of your dues goes to union headquarters, so that’s what you’re paying for. A “One Big Union,” which is what Unifor is, has bench strength for situations like this.

For Mayor Phil Germuth and CAO Ron Poole, that means immediately hiring an experienced industrial relations consultant, one who is respected by both management and labour, who can also tell the obviously dysfunctional negotiating team what works and what doesn’t.

A union researcher and the staff of the labour relations consultant could soon find out what (from their perspective) what is economically feasible given the uncertainty of Kitimat’s future.

The Immediate Problem: No picket line protocol

 

CBC managers and non-union staff spend their time waiting in line to enter the Toronto Broadcast Centre, August 28. 2005. (Robin Rowland/Northwest Coast Energy News)
CBC managers and non-union staff spend their time waiting in line to enter the Toronto Broadcast Centre, during the lockout,  August 28. 2005. (Robin Rowland/Northwest Coast Energy News)

It was very clear at the council meeting on March 2, when there was a loud picket line at the meeting and now with the secondary picketing of the museum and the public library, that Unifor 2300 has failed to establish a proper picket line protocol.

Old time union activists may not like it, but the idea of “never crossing a picket line” is becoming obsolete in the 21st century, especially in situations where there is no longer one single plant gate. These days what usually happens where striking or locked out workers may be picketing office buildings where there are other businesses or where members of other bargaining units may still be working is to establish a picket line protocol.

The accepted procedure these days is to establish a waiting time before entering a location. Often this is even agreed between management and the union (where they are still on speaking terms) before a strike or lockout begins.

In 1999, the CBC management locked out the then technicians’ union, NABET/CEP. The Canadian Media Guild had settled and was bound by the no strike/lockout clause in the collective agreement. That meant everyone else; CMG, non-union staff and management crossed the NABET/CEP picket lines. The protocol was that everyone waited ten minutes before entering the buildings. At shift change the lines could be quite long and sometimes the wait was as long as a half hour (in Toronto, in January, in the snow).

By the time of the 2005 lockout, NABET at CBC had merged with the Canadian Media Guild and everyone was out. Protocols were put in place, management and non-union staff lined up for ten minutes before entering the building.

Similar protocols are put in place elsewhere. There have even been cases where truckers entering a multi-company facility wait for ten or fifteen minutes before being waved through.  In some of the recent university disputes, students and non-striking staff have had to wait in line before entering campuses.

The other problem is the secondary picketing of the museum and library. Neither are parties to the core dispute, although they do receive funding from the District. Museum staff are non-union and library staff are members of CUPE. So the employees at both locations are not part of the dispute.

The other problem is that with the library there is collateral damage for the users, especially for students who may want to complete assignments as the school year comes to an end. Students have already been hurt by the teachers’ disputes and this is another burden on their education. Did the Unifor 2300 leadership think about that?

In addition, secondary pickets are usually information or leafleting pickets. If Unifor wants to continue to picket the library and museum, it should be clear that line is for information only. If Unifor continues to insist on picketing the two institutions, (which is unfair to those involved) there should be a wait time protocol. Unifor should call CUPE and agree on one. The museum non-union staff should follow whatever CUPE and Unifor agree to.

If, in the future, Unifor wants to picket council meetings, which is a democratic and elected body, even if it is party to the dispute, and should be free and open to the public, then a proper waiting time protocol should be either negotiated or, if the union moves unilaterally, they must make it clear what the protocol is.

Members of Unifor 2300 march to the District of Kitimat Council Chambers on April 7, 2015. (Robin Rowland/Northwest Coast Energy News)
Members of Unifor 2300 march to the District of Kitimat Council Chambers on April 7, 2015. (Robin Rowland/Northwest Coast Energy News)

Issues

The labour relations earthquake

As we found out this week, with the study of the Haida Gwaii earthquake, a tremor happens when locked in strain is suddenly released. So the Kitimat labour relations earthquake was caused when grievances going back 30 years landed on the table this year.

Why were the grievances, the strain, allowed to build up for three decades? There is obviously blame on both sides. At Tuesday night’s meeting, there were shouts of bring back Joanne Monaghan. Really? Monaghan was a member of council or mayor for most of those 30 years when the problem was building.

Why put all the blame on the current council, which only took office in December? Two members of Council, Larry Walker and Claire Rattée are brand new. Phil Germuth was on council for one term and only became mayor a few months ago. Other council members have been there a lot longer.

Both CAO Ron Poole and Deputy Warren Waycheshen are fairly new as well, but they should have been aware of the problems. As far back as early fall, the District’s senior staff told me they were expecting fairly smooth negotiations. My Unifor sources now tell me, at the same time, the union was conducting extensive research on other collective agreements to look for language to improve the poor work environment at the District of Kitimat.

The responsibility here lies with the line managers of the District. What did they know and when did they know it? Did they tell Poole, Waycheshen, mayor and council that there were problems escalating?  If the line managers knew and didn’t tell, they should be fired. If they didn’t know, then their management of their departments is incompetent, or if they were ignoring the problems, as my union sources allege, then they are part of the problem. If everyone knew and did nothing about it, then that raises questions about management incompetence across the board.  Again heads should roll. (And staff managers shouldn’t make snide comments in a public meeting about speakers before council, especially if those managers sit beside the media table. It shows they’re unprofessional and bolsters the union’s case).

Unifor 2300 business agent Martin McIirath makes his case to District of Kitimat Council, April 7,2015. (Robin Rowland/Northwest Coast Energy News)
Unifor 2300 business agent Martin McIlwrath makes his case to District of Kitimat Council, April 7,2015. (Robin Rowland/Northwest Coast Energy News)

There is also blame on the union. Labour relations were not an issue during the municipal election. If the problems have been building for 30 years, why wasn’t it an issue?

Members of Unifor 2300 can’t shout “Why did I vote for you?”  If what the union calls  “a poisoned work environment” has existed for years, why did it never come up during the election or the debates? In any situation where a labour dispute is building, the rumblings inside the shop and outside are obvious months in advance. If the line managers and senior managers were either ignoring the problems or were part of the problem, then it was the responsibility of Unifor 2300 to make it an issue in the election.

Salaries and management

Given the current situation in Kitimat, the current high salaries for senior staff are somewhat justified. Kitimat is not just a small town, it is a small town working with at least four major industrial projects, the Rio Tinto Alcan Kitimat Modernization Project, Shell-led LNG Canada, Chevron-led Kitimat LNG and the Altagas floating LNG project. This involves negotiations and meetings with both government and corporate officials with even much higher pay grades. There is also the ongoing issue of trying to mend the long history of poor relations with the Haisla Nation.

The workload for senior staff has been increased exponentially in the past four or five years. I am told by sources that burnout is becoming a factor and that staff, both management and union, involved in industrial development, infrastructure and related issues are taking lots of time in lieu, since most don’t get overtime. Some members of the professional staff are members of the Unifor 2300 bargaining unit.  That means workload and burnout for those professional members should also be an issue, one that hasn’t, so far, been raised in union media releases.

District Chief Administrative Officer  Ron Poole at Monday's council meeting (Robin Rowland/Northwest Coast Energy News)
District Chief Administrative Officer Ron Poole at Monday’s council meeting (Robin Rowland/Northwest Coast Energy News)

Here again we see a lack of leadership, both with current management and with the current and previous councils. Any competent manager would have understood that the high salaries for senior staff, however justifiable those salaries may be, would bring questions from the union rank and file and would be a factor in current contract negotiations. (If none of the LNG projects actually proceed, then the salaries for managers and professionals will have to be reassessed).

At Monday’s meeting, Phil Germuth said the District had decided to hire a health and safety manager? Why now? Why not years ago? This is a town that lives and breathes on health and safety briefings. Every time, as a member of the media, I visit the RTA Smelter, the Bish Cove site or any other construction or industrial site, I get a health and safety briefing. If you go fishing, whether it’s on a charter or with a friend, there is safety briefing before leaving the dock. This seems to prove the union’s contention that health and safety was a low priority with the District.

If the District is going to hire a health and safety manager, why not also hire a Human Resources Manager? The current HR staff at the District are “overworked payroll clerks” (to quote a union source). A qualified HR manager would take that burden off the administrative officers, be aware of proper industrial relations procedures and negotiations practices and be the manager who would implement and enforce anti-harassment procedures.

Summer students

The one group caught in the middle of all this are the summer students. Summer students are hired by many organizations to fill in for vacationing staff and to work on special projects. Summer students should not, as the union is claiming, be used to ensure that casual staff do not get enough hours to qualify for seniority. Reducing the number of summer students, however, is going to have a long term negative effect on the community. Jobs for young people are far too scarce, student loans are becoming such a burden that Millennials who have graduated and those who actually have jobs, can’t afford to buy houses. A lack of summer jobs in Kitimat would be an incentive for young people to leave town or if they are away at college or university, to stay away. Unifor is also not doing the future of the union movement any good by alienating a new generation of potential union members. The summer student program should be restored as much as possible.

Senior and youth health

In a larger community, youth counselling and medically necessary therapeutic pool or gym exercise for seniors and those with disabilities could move to other venues. In Kitimat that is not an option since there are no other locations, so an interim agreement to resume those activities should be high on the agenda—if both sides actually resume talking.

The future of Kitimat’s economy

Today Royal Dutch Shell, the main company behind the LNG Canada project, took over BG Group which had proposed an LNG project at Prince Rupert. The price of oil is bobbing around the $50 a barrel mark. That means David Black’s refinery project, which depended on high oil prices is “vital signs absent.” The long term prospects for the LNG market are good given the increased demand in Asia. The short term prospects are poor, given that the energy sector’s income from oil has dropped and that means those companies have less money to spend on new projects.

The council is being prudent in refusing to lock itself in to long term expenditures based on projects that may never materialize. At the same time, the cost of living in Kitimat, up until recently a mini-Fort McMurray, has skyrocketed. That means the union request for a salary increase should not have been unexpected. It also means that a large number of Kitimat residents, who are paying more for goods and services, many of whom do not have the higher paying project jobs, cannot really afford an increase in property taxes. A compromise on this is essential.

That’s why outside experts, with cool heads, research staff and no personal stake in 30 odd years of hostility, should be brought in to bring both sides to an agreement as soon as possible.

On the CBC picket line at the Toronto Broadcast Centre, August 28, 2005,  As the union photographer I was on  the line but with my camera not a sign. I did wear union buttons.
On the CBC picket line at the Toronto Broadcast Centre, August 28, 2005, As the union photographer I was on the line but with my camera not a sign. I did wear union buttons.

Disclosure: I am the current chair of the Board of Directors of the Kitimat Museum and Archives. My term expires at the end of May. I am a retiree member of the Canadian Media Guild/Communications Workers of America from my time at CBC. When I freelance, depending on whether or not the specific job is covered in a collective agreement (some are, some are not) I work under CMG jurisdiction for CBC and the wire services and under Unifor jurisdiction for Global TV and certain newspapers.  In 2005, CBC management locked out employees from  August 15  to October 10. During the period of the lockout, my assigned “picket” duty was as one of the CMG’s official photographers.

 

CORRECTION: This post has been corrected.  The events took place on Tuesday, not Monday.

 

Is Kitimat ready for a “big one?”

Kitimat Emergency Coordinator Bob McLeod
Kitimat Emergency Coordinator Bob McLeod at the earthquake postmortem Oct. 29, 2012 (Robin Rowland/Northwest Coast Energy News)

Studies of the October 2012 magnitude 7.8 Haida Gwaii earthquake show that the region is vulnerable to a “major megathrust” earthquake along a newly confirmed fault line west of the islands.

That earthquake was felt in Kitimat and Kitamaat Village and a tsunami warning was issued within a few minutes.

So have the District of Kitimat, the Haisla Nation Council or Rio Tinto Alcan changed or upgrading their earthquake and tsunami plans in the past couple of years?

“Devastating megathrust earthquake” a “substantial hazard” for Haida Gwaii, Canada-US study warns

New Douglas Channel geological studies near completion

Bob McLeod, who recently retired as the District of Kitimat’s emergency coordinator, told Northwest Coast Energy News: “I think we’ve done quite a bit. One of the biggest issues in the first one was trying to get information out. We’ve come a long way on that. Whether you reach everyone or not, that’s another thing, because you never reach everybody. One of the critical things to me is getting the information out so you avoid all this Facebook, Twitter speculating and rumour. The communications aspect has improved a hundred fold.

“We did more work on the mapping and planning. Over the course of the last year, there were a lot of meetings with industry and various stakeholders, discussing emergency preparedness in general but touching on some of these other things as well.

“One of the things we did was to try to set up some shelter points. We have an agreement with the Baptist Church, the Catholic Church and the Seventh Day Adventists. They’re strategically located and could be gathering points for the various neighborhoods if necessary.

“We’ve also done quite a lot of work on Riverlodge as a group lodging centre, thinking in terms of an earthquake where there may be damage and you have to move people.

“We did look at the evacuation planning and we’ve had a couple of exercises involving that, looking strategically about how can you move people from certain neighborhoods, asking which neighborhoods would be at the most risk if you ended up with a tsunami situation.

As for tsunamis, McLeod said, “From everything we’ve heard and been told, tsunamis in extremely deep water like that is not going to be as dangerous as one in shallower water, but the possibility is still there.

“The thrusts are the killers when it comes to tsunamis, but there is a very good warning system on the tsunamis. We do get very very rapid feedback on the earthquakes.

“The only danger in that regard is if you have a severe earthquake and you have part of a mountain drop into the salt chuck, you’re going to get a massive wave and you’re going to get no warning whatsoever, like the Moon Bay collapse in the seventies.

“The emergency plan is in good shape. We scheduled a number of exercises last year through training programs.

“One of the things I personally push is personal preparedness. I think as a community, we fail greatly at that. That was evident even during the snowstorm. People are not just prepared to look after themselves, it’s unfortunate. You just have to keep chipping away.”

Last week, Northwest Coast Energy News asked Rio Tinto Alcan and the Haisla Nation Council if either could comment on updated earthquake or tsunami response plans. So we have received no answers.

 

Related links
Kitimat to issue tsunami hazard and evacuation map

After earthquake Kitimat must immediately upgrade emergency communications

The earthshaking difference between Enbridge and LNG

DFO study on ancient Douglas Chanel tsunamis show minimal impact on Kitimat, devastation at Hartley Bay

Geological Survey of Canada identifies tsunami hazard, possible fault line on Douglas Channel

Scientists identify major Japanses style tsunami hazard for west coast

 

Phil Germuth takes over as Kitimat mayor, new council sworn in

Kitimat’s new mayor, Phil Germuth (left) sworn in by Chief Administrative Officer Ron Poole (far right) as RCMP Sgt. Graham Morgan and Staff Sergeant Phil Harrison watch. (Robin Rowland/Northwest Coast Energy News)
Kitimat’s new mayor, Phil Germuth (left) sworn in by Chief Administrative Officer Ron Poole (far right) as RCMP Sgt. Graham Morgan and Staff Sergeant Phil Harrison watch. (Robin Rowland/Northwest Coast Energy News)

The District of Kitimat’s new council was sworn in a special ceremony at the Council Chambers at Northwest  Community College, Monday, Dec. 1, 2014.

View the complete photo gallery.

 

Phil Germuth, Enbridge’s “What the….” moment and what it means for British Columbia

Phil Germuth
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.

In January, 2015, Phil Germuth will take the centre chair as mayor at the Kitimat Council Chambers.

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.

Ray Philpenko
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.”

 

election signs
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.

Joanne Monaghan, a model mayor for a small town

Joanne Monaghan’s 35 year political career came to halt (at least for now) Saturday when she came third in Saturday’s municipal mayoralty election, behind Phil Germuth and Trish Parsons.

Why?

The best analogy is that of the sports star or coach who stays one season too many. Monaghan had set her sights on 40 years in local politics. But in the 2014 mayor’s race she ran up against a strong sentiment that it was time for a change. She probably allowed that career goal to override any political instincts she may have built up over those years where a small town politician has to keep track of the pulse of events.

Joanne Monaghan
Joanne Monaghan’s poor performance in the all candidates debate hurt her campaign (Robin Rowland/Northwest Coast Energy News)

Monaghan has an impressive track record: municipal councillor since 1980, mayor since 2009. That means Monaghan was mayor during some of the toughest times that Kitimat has faced after the Eurocan pull out.

She served two terms as the head of the Union of BC Municipalities (the first woman) the third woman to be president of the Federation of Canadian Municipalities. She was Chair of the Regional District Kitimat Stikine for eight years and Vice Chair for nine. She has served on the British Columbia Heritage Trust, the Northwest Community College Board, the Provincial Tourism Council, and the Provincial Transportation Committee. Monaghan is also a member of the Northern Development Initiative, and is chair of the University of Northern B.C. Advisory Committee.

The Canadian International Development Agency sent her to Ecuador on a “Municipal Government Technology Transfer between a community in Ecuador and Kitimat. She also facilitated workshops in “Women in Politics” in South Africa and Ghana.

Monaghan served on many local committees, both community bodies mandated by council as well as volunteer groups.

Her 35 years in local politics mean that she knows everyone in town. Her 35 years in municipal politics allowed her to build up valuable contacts in other municipalities, provincial and federal politics as well as the media.

Joanne Monaghan was a model mayor for a small town, for 35 years she was always available to members of the Kitimat community, always ready to respond to a phone call or an e-mail from a Kitimat resident, working hard on issues from restoring old sidewalks to bringing new industry to the valley. She was always available to show up at a local event, even if it was just for a few minutes.

So want went wrong with her campaign?

Monaghan was successful in bringing Tim Horton’s to Kitimat, an asset to any community. She worked hard to bring other business small and large to Kitimat.

If nothing much ever happened in Kitimat, if it was a small one industry town expanding into tourism, Monaghan would probably have been re-elected on Saturday.

If Kitimat was a town facing one major issue, Monaghan might still be mayor.

What made Joanne Monaghan a great small town mayor was also her weakness, trying to do too much and thus while trying to handle a growing number of cascading important issues, becoming overwhelmed by them.

Kitimat is facing Northern Gateway, three liquified natural gas projects, Rio Tinto Alcan Kitimat Modernization, the airshed problems from all those projects, the housing crisis, bettering relations with the Haisla, just to name a few, as well as sorting out normal municipal priorities like maintaining sidewalks.

As early as a year ago, a feeling began to grow in Kitimat that Monaghan wasn’t skeptical enough about some of the companies coming to town bearing gifts. Monaghan tended to avoid the tough questions on Northern Gateway, punting issues (to continue the sports analogy) until the Joint Review Panel reported. Monaghan was not alone among council in burying its head in the sand over the Joint Review Panel but as the leader of a group that is supposed to operate with collegial consensus, Monaghan blocked any real involvement by the District in the JRP.

While Monaghan had helped bring Kitimat from gloom after Eurocan to current fragile boom with the KMP and LNG, there was a feeling that hungry for good news, she was too often willing to accept the assurances from the big corporations dealing with council.

At council, other members began to outshine Monaghan. On different sides of most issues, Phil Germuth and Mario Feldhoff, despite both working full time, always came prepared, files full of documents, facts and figures. Rob Goffinet was always ready to ask a skeptical question. Rookie Edwin Empinado wore his idealism on his sleeve, although he sometimes struggled expressing his focus on issues. Monaghan, on the other hand, often seemed unprepared and inflexible on major issues.

Throughout the summer, there was speculation and conversations around Kitimat, about whether Joanne Monaghan would stand for another term as mayor. In a metropolitan city, polling would have confirmed that there was a growing feeling that it was time for a change. If Monaghan noted the warning signs, and they were noticeable in a small town, she chose to ignore them.

When Monaghan said in her campaign literature that she would “stand up to outside influences and special interest groups” who did she mean by “special interest groups?” If she meant Douglas Channel Watch the most prominent “special interest group” in town or the no vote in the plebiscite in general, she narrowed her options, since Trish Parsons was the “pro-development” candidate.

all candidates debate
Both Trish Parsons and Phil Germuth put forward strong arguments in the all candidates debate while Monaghan appeared to be upnprepared. (Robin Rowland/Northwest Coast Energy News)

If there was a moment where Monaghan really lost the election, it was her performance in the all candidates debate at Mt. Elizabeth Theatre. Phil Germuth shone in the debate and Trish Parsons was a close second. They were clearly prepared and rehearsed, ready with their statements and with their answers to the questions, winging the questions that were totally out of left field. The generational difference between Monaghan and her rivals was clear on stage. It appeared she hadn’t properly prepared, her answers rambled and she was frequently cut off by the moderator for going over the time limit. A solid debate performance might have brought some of Monaghan’s former supporters back into her camp but that never happened.

Although Parsons performed well in debate, the feeling in the community was that, despite her work with the Chamber of Commerce and community groups, she should have “paid her dues” by at least one term on council before trying for the mayor’s chair. So Parsons was unable to build support beyond her pro-development base.

With Monaghan’s support slipping away and Parsons stalled, the community vote went strongly to Phil to Germuth.

So what is Joanne Monaghan’s legacy? That legacy is that she is the model small town mayor who answered everyone’s phone calls and e-mails, who listened to everyone’s points of view, even those she clearly disagreed with, while also being the model small town mayor who worked hard to tackle district wide issues.

As far as the national media is concerned, Toronto’s notorious Rob Ford created his Ford Nation supporters through a personal touch, by always returning phone calls, making sure Toronto responded to even the most minor complaints. But even before Ford’s personal problems became worldwide media fodder, it was clear that Ford was too often neglecting handling the big picture, the Toronto wide issues, for a constituent’s crack in a sidewalk.

Monaghan was working on that personal touch when Ford was still in high school. Monaghan was smarter than Ford (if Monaghan was a A, Ford was an F), for 35 years she balanced the personal touch with active concern and dogged work for the entire District.

Between 2011 and 2014, Kitimat jumped from the minor leagues to the Premier League, and there was a clear demand for fresh blood to strengthen the political team. The voters decided that the veteran team coach should retire. But Coach Monaghan still does have a shelf full of trophies from those 35 years. If this really was the sporting world, her number should be retired as well and lifted to the rafters.

 

Phil Germuth wins as Kitimat mayor, emphasizes “relationship building”

Phil Germuth won a decisive victory Saturday November, 15, 2014 to become  the new mayor Kitimat for the next four years.  Incumbent mayor Joanne Monaghan came a distant third with Chamber of Commerce director Trish Parsons in second place.

Germuth outpaced his rivals with 1828 votes, Parsons received 530 and Monaghan 447.

Speaking to reporters at the District offices after the results were tabulated, Germuth said,  “Relationship building has to be our number one thing. We really need to build a relationship with the Haisla on all the issues here for industry, in recreation and all the other things.”

Phil Germuth
Kitimat mayor -elect Phil Germuth speaks to reporters at the District of Kitimat offices after winning the mayor’s chair, Nov. 15, 2014. (Robin Rowland/Northwest Coast Energy News)

Germuth said, “We have to deal with affordable housing, we only just got the land from RTA, so we’re going to start trying to work on that and… do everything we can to support industry who wants to come here.”

“I would definitely want to give a thanks to Joanne Monaghan for her 30 plus years of dedicated service, so many good things have come to this community because of her time on council and her time as mayor. Joanne really deserves a big thank you from the community of Kitimat,” Germuth said.

monaghancouncilReached at her home late Saturday, Joanne Monaghan said, “I’m disappointed that I can’t finish some of the things I started doing. It’s going to be very different for me because I’ve given half my life working for the people of Kitimat, it’s going to be different. so I’m going to have to do something else but what will it be I have no idea, I guess when God takes one thing away He gives you another, so we will have to see what it is.

At first Monaghan said she had no specific comment on Germuth’s win but then she added,  “He had the support of the union behind him and usually when you have the union behind you, you usually come out on top.”

Four incumbents are returning to Council,  Rob Goffinet, Mario Feldhoff, Edward Empinado and Mary Murphy, Two newcomers took the seats vacated when Germuth stood for mayor and Corinne Scott  stepped down.  Larry Walker who came to Kitimat to retire and  22 year old art enthusiast Claire Rattee owner  of the DivineInk Tattoos & Piercing  studio.

Unofficial results were Rob Goffinet: 1997; Edwin Empinado: 1966; Mario Feldhoff: 1918; Mary Murphy: 1577; Claire Rattee: 1381 and Larry Walker: 1129

RTA donates part of Minette Bay waterfront to District of Kitimat

Updates with corrected figure 156 acres from Rio Tinto Alcan and District of Kitimat

Rio Tinto Alcan has donated 156 acres (63 hectares) of waterfront land on Minette Bay to the District of Kitimat, Gaby Poirier, RTA  General manager BC Operations, said Wednesday, November 12, 2014. It’s a major step in getting people in Kitimat access to the waterfront which is being closed off by industrial development.

In a news release, Poirier said.

It is with great pleasure that Rio Tinto Alcan confirms today a gift to the people of Kitimat of  approximately 56 acres of water front land that make up District Lot 471, located in Minette Bay.

For more than half a century Rio Tinto Alcan has participated with pride in the development of  Kitimat and Northwest British Columbia. In the 1950’s Rio Tinto Alcan developed a company  town from mostly undeveloped land. Today it is a mature, vibrant, and highly liveable northern  community. We are very proud of our involvement in making this happen.

Now, 60 years later, a new era of industrial development is on our doorsteps. Rio Tinto Alcan’s  BC Operations is looking forward to having new neighbours beside us near the smelter site and  port terminals. It is important now, more than ever, to ensure the people of Kitimat continue to  have direct ocean access.

Minette Bay
A view of Minette Bay June 5. 2014. (Robin Rowland/Northwest Coast Energy News)

To that end, Rio Tinto Alcan is pleased and committed, in this our 60th Anniversary year, to  transfer ownership of the water front lot DL 471 to the District of Kitimat in trust for its citizens use for all time.

Minette Bay beach
Map shows land that Rio Tinto Alcan has donated to the District of Kitimat (RTA)

 

Ron Poole, District of Kitimat Chief Administrative Officer, tells Northwest Coast Energy News, “As part of the gifting of Lot 471, RTA has agreed to guaranteeing road access across their property to access this lot.”

“It has roughly one kilometre of waterfront on Minette Bay,” Poole says. “We do not have preliminary plans for the site, however, council for years has been negotiating with RTA to provide water access and this is one lot they owned that meets the public need.”

If the Shell-led LNG Canada project goes ahead, with LNG Canada taking over the old Eurocan dock (it already owns the old Methanex dock), that means Rio Tinto Alcan would have to expand its port facilities at “Terminal A” (the original port) and that would cut off access to Hospital Beach which has been the only beachfront available to residents since the 1950s.

Editorial Part I: Kitimat needs a world class council

kitimatlogoKitimat voters in the upcoming municipal election should carefully, very carefully, consider who are the best candidates that will, as much as humanly possible, produce a “world class” municipal mayor and council.

Northwest Coast Energy News will not endorse any individual for mayor or council in the 2014 municipal election.

However, this election is probably the most important in the District’s history and so this editorial will outline the issues facing the District of Kitimat.

When that council takes office in January 2015, it must have one item high on the agenda. Plan B. That’s B for Bust. In the past few days, just as the nomination process closed for municipal candidates, the world’s commodity markets began showing a sharp downturn and that commodity downturn will be a factor, like it or not, during the years that the new council will be in office.

So the District of Kitimat, elected officials and staff will have to consider both a possible boom if LNG goes ahead or a bust if the world’s commodity markets tank, as some are already predicting. (Although it should be noted that apocolyptic news is good “click bait” in part two we will discuss the consequences of the current commodity down turn)

Why a “world class” council?

The term “world class” has been bandied about a lot recently, especially by BC Premier Christy Clark and Prime Minister Stephen Harper. But that “world class” term has largely been political spin. For Clark it gives her government a hall pass if they decide, in the end, that Northern Gateway isn’t worth the trouble. For Stephen Harper, “world class” is nothing more than a propaganda term.

When it comes to Kitimat, however, it is wise to take the term “world class” seriously. How many small town councils have to deal with the world’s second largest corporation, Royal Dutch Shell, the twelth, Chevron and, if Glencore takes over Rio Tinto, the tenth? How many small town councils have to deal daily with federal and provincial governments, governments that while praising Kitimat for its potential really want to bury it by taking for themselves much of the advantages that industrial development could bring here?

There is already one world class local council in the region, just down the road in Kitamaat Village, the Haisla Nation Council, which shows that with strong, intelligent and determined leadership, a small group can come out ahead in tough negotiations with giant transnational corporations and the governments. Yes, rights and title do give the Haisla Nation a negotiating and legal advantage, but a paper advantage is useless without vision and as Chief Counsellor Ellis Ross has said in interviews, the abiity to learn from mistakes and apply those lessons. We’ve heard people say that if Ellis Ross ever chose to run for mayor of Kitimat (which he wouldn’t because he is focused on improving the lives of the Haisla) he would win in a landslide.

The present council has had a couple of major failures, both with the Northern Gateway project. The first was the failure to participate in any way with the Joint Review process. Council chose to be neutral, and stubbornly maintained that neutrality meant sitting out the entire Joint Review hearings rather than participating in such a way that the Kitimat was properly represented during the hearings without taking a stand one way or another. The Haisla intervenors ablely not only represented the interests of the Nation, by default the Haisla often represented the interests of the entire district before the JRP. The second was the plebisicite which had a convoluted question and protracted disageement on how the plebisicite should be managed.

The question for voters is have those candidates for mayor and council who are part of the present adminstration shown a willingness to learn from those mistakes and do better in the next four years?

Which candidates for mayor and council have the intelligence, determination and vision to quide Kitimat during the next four years. Which candidates have the negotiating saavy and yes (whether male or female) cojones to get the best deal for the District in the coming years?

Access to the ocean

The big issue in this election, whether or not we are in a boom or a bust, is action to ensure that the residents of Kitimat have unimpeded access to the ocean for both casual recreation and for boaters. That means Kitimat needs a tough, determined council that is willing to really represent the residents in in the water access issue.

When it comes to the Regional District’s actions on the sale of MK Marina, the District of Kitimat has acted like a wimp. The attitude seems to be well, Kitimat has only one vote on regional council and the rest of the region doesn’t really care, so there’s nothing we can do about it. True leadership would be finding an imaginative way to make sure the interests of the people of Kitimat in gaining access to the ocean are not lost in regional council indifference.

It also means that there must be better relations with the Haisla Nation and a way around the fact that Rio Tinto controls far too much of the waterfront.

There’s also the long term problem that the federal government decreed two years ago, without consulting either the District or Rio Tinto, that the private port would become a public port. We’ve heard nothing about that since but the Harper government’s potential interference with the port of Kitimat cannot be ignored.

That may mean hiring additional staff. This site has said time and time again the District needs its own in house staff city solicitor who can deal with all the issues that come up, rather than depending on occasional legal advice from a lawyer on retainer. If the district can hire smart planners and economic development officers, it should also bring back the position of “harbour master” which existed on paper some years ago and that way there would be one district staffer who could use that title (even if conflicts with the feds) to work full time on ocean access.

Experience counts

One thing is certain, all members of the current District Council have had a huge work burden during the past three years, a work burden far beyond anything that is normal for a small municipal council in a town of 8,000 people. That work burden will likely increase during the next four years.

Experience counts. Voters should ask which councillor and mayoral candidates have handled that work burden the best? Which of the candidates, new or old, are genuinely willing to take on that burden, which will range from negotiating (within the powers of a municipality) with some of the world’s giant corporations, many with a century of more of negotiating experience, while at the same time dealing with perennial issues like snow clearing in the winter, garbage collection during bear season and deciding which of Kitimat’s unique system of sidewalks need to be fixed this year?

New blood

There are at least two positions on council that are up for grabs by new comer candidates. Who ever wins those positions will change the makeup of council, may even change the voting pattern (which during the current situation was often four to three one way or another, with Corrine Scott who is not running again, often, but not always, casting the deciding vote). So the voters should listen carefully and decide no matter what their position on all issues, who are the candidates that will strengthen the overall council.

One issue candidates

While we won’t know for certain until the debates, there appear to be a number of one issue candidates running, candidates that, it seems, want to refight both sides of the Northern Gateway plebisicite.

Unless these candidates show a wider vision the voters should reject those candidates.

On the “pro development” side there is a strange notion that if Kitimat could only elect a council that welcomes any industry, any time, then the world will beat a path to our door. That’s not only a fantasy, it’s a bad negotiating tactic as Christy Clark has found out. Clark in her provincial election campaign put all her political eggs in the LNG basket and (to mix metaphors) now the LNG industry is calling her cards and Clark has very little in the pot and a very weak hand. The big corporations would love a council that comes begging, cap in hand and will take any handouts the company may offer. Just look at Petronas and what it is demanding (not asking) from British Columbia.

On the other hand, a candidate who is stubbornly on the environmental side is also a danger to the future of the district, since that candidate may also be an impedement to tough negotiations needed to protect the district’s environment including the Kitimat airshed, the Kitimat River and the Kitimat Arm.

Electing a council that is unbalanced either on the pro development side or the pro environment side will solve nothing and will only increase the polarization in the community.

Electing one issue candidates who care only about one side or the other energy debate while it may give some voters satisfaction, will likely mean that these candidates, if elected, will not be working hard on the day-to-day municipal issues like water, sewerage, snow clearing, how many books the library has or unraveling the recycling condundrum.

So cast your ballot for those candidates best suited to take on the world, while at the same time making sure the sidewalks are safe.

Editorial Part II:Commodities dropping: Whether it is a correction or a cyclical downturn, Kitimat needs a plan B

You might not be seeing it at the gas pumps at the moment, but you soon will, the price of gas has gone down by 30 per cent since June.

Prices of key commodities, oil, coal and iron ore are dropping. And the weakness in the market for two of those commodities oil and iron ore should be setting off the alarm bells in Kitimat and the northwest.

The declining price of oil will soon affect all those energy-related projects that are supposed to bring an economic renaissance to northwest British Columbia.

As for iron ore, people might ask, what does iron ore have to do with us, there are no iron mines or steel mills around here.? However, in the highly integrated world economy, Rio Tinto is one of the world’s largest producers of iron ore, the decline in iron ore prices is affecting Rio Tinto’s bottom line and that is why, analysts say, the company may be vulnerable to a take over by the little known commodities giant Glencore.

There are two possibilities with commodity prices. Some analysts see the decline in commodity prices and the accompanying drop in prices on the world’s stock exchanges as a “correction” phase. However, others like Reuters analyst John Kemp says the downturn is an indication that the commodities “supercycle” has reached its peak and is on the way down.

The oil industry has always experienced very long, slow and deep cycles in supply, demand and prices: the current downturn is no exception.

Kemp says the current up cycle began around 2002, with rising oil prices. The financial collapse in 2007 and 2008 briefly interrupted the cycle but now according to Kemp and other analysts there is a glut of oil on the market and prices are falling world wide.

High prices meant not only new plays, especially in the Alberta bitumen sands, but also stronger efforts to save money by increasing energy efficiency and, yes, turning to cheap natural gas.

There are also new factors at play. In the past when there was a downturn in oil prices, OPEC led by Saudi Arabia, would limit supply to keep the price at a profitable level. However, the flood of oil on to the market from shale oil plays, mainly in the United States but also in Canada, has meant that OPEC can’t do that anymore. Too much competition. So the analysts say, the Saudis and other OPEC members are actually starting a price war to retain market share.
When Kemp was writing last week, he said the key marker, North Sea Brent crude:

if prices are adjusted for inflation (using average U.S. hourly earnings), Brent prices are at the lowest level in real terms since October 2007, exactly seven years ago.

There has always been a lot of skepticism among long term residents of Kitimat who have seen boom and bust cycles before and so they, rightly as it turns out, have been wary of industrial promises. Then there’s the current housing debate which may soon see the out of region speculators and developers caught with their pants down in the midst of a Kitimat January blizzard.

The commodity downturn also shows the foolishness of the politicians, business people and commentators who kept saying that BC is a “natural resource economy” and restrictions on corporations and strong environmental requlations will only hurt that economy. Who needs diversification? Who needs a fishing guide anway? It is fairly clear already that Christy Clark’s promises of a debt free province have as much credibility as speculating in Dutch tulip bulbs.

As for the idea among some here that if Kitimat had only voted in favour of Enbridge Northern Gateway, the gates to ecomonic paradise would open, that is foolishness. You can be certain when the Saudi princes decided on a price war to keep themselves in the luxorious lifestyle which they believe they are entitled, they didn’t consider whether Kitimat voted for or against Northern Gateway.

Editorial Part I: Kitimat needs a world class council

So what does Kitimat need to know

The nail in the coffin for Northern Gateway?

The Northern Gateway project was already in deep trouble before the downturn in oil prices.

Writing in The Globe and Mail last week, Jeff Rubin noted.

Part of the impetus behind constructing new pipelines to carry bitumen from northern Alberta to the U.S. Gulf Coast, Kitimat on the Pacific, or even all the way across the country to Saint John, N.B., was to help close the substantial discount between Canadian oil and world prices. Well, crude’s recent drop into the $85‑a‑barrel range has basically collapsed the once wide‑open spread that had existed between West Texas Intermediate and Brent crude with hardly any new lengths of pipe being laid into the ground at all.

Rubin went on to note that the decision by the Saudis to launch the price war has changed everything.

For pipeline companies with major proposals on the table, such as TransCanada and Enbridge, falling oil prices are a game‑changer of the same magnitude that rising prices were a decade ago. Back then, soaring prices created an urgent need to build new pipelines to connect North America’s burgeoning supply to coastal refineries and world markets.

We’re now in a different world. At the root of today’s problem is global demand that is no longer growing quickly enough to support the prices necessary to keep expanding expensive unconventional sources of supply such as the oil sands. Lower prices will effectively strand those reserves regardless of the transportation options that may become available. Even if President Obama approved Keystone XL or the National Energy Board gave the green light to Energy East, falling commodity prices mean that soon there might not be enough oil flowing out of northern Alberta to fill those new pipelines.

This week’s near disaster with the Russian container ship Simushir, where the coast of Haida Gwaii was saved by a change in the wind direction, hasn’t helped either.

Will the refinery fade to black?

Economists have always been skeptical about David Black’s plan for the Kitimat Clean refinery and Black has admitted that he also had not much support for the refinery idea either from the hydrocarbon indusry or from government.

Most important, Black has said that he as a businessman intends to eventually make a profit by selling refined product. In fact on his website, Black said he expected the refinery to go into profit after just seven  to ten years of operation.

But now comes the flaw in Black’s business plan. According to the website, the Kitimat Clean project is based on North Sea Brent Crude priced at $110 US a barrel. The refinery would take advantage of the “discount” on deliveries of Alberta bitumen crude which the site estimated at $35 a barrel. Black’s site says the refinery would be profitable if it could purchase bitumen at a $23 discount, making $12 a barrel over the world price.

Unfortunately, as of this writing, 11 am on October 20, the price of Brent Crude is now $85.79 and dropping slightly. West Texas Intermediate Crude, the other bench mark is even lower at $82.79 a barrel.

It looks like the drop in oil prices wipes out Black’s plan for profitability, since Brent Crude is already $25 a barrel cheaper than Black had projected.

What’s that got to do with the price of gas?

The falling price of crude oil is also going to have a major impact on the liquified natural gas projects in the northwest. The current economic situation will soon see the short term players and speculators cut and run, leaving, it is hoped, a couple of long term players in the west coast LNG terminal market. However the volatility in the dropping oil market may mean that the all important Final Investment Decisions are delayed yet again.

That’s because, at the moment, in Asia, the price of natural gas is calculated as a per centage of the price of crude oil, what is called the Japan Cleared Customs price. And as the LNG Journal has reported the price of LNG in Japan has dropped to the 2009 level.

 East Asian Delivered LNG Indicator Price hit its lowest level since 2009 at $12.30 million British thermal units with European Brent crude oil prices collapsing to $82.85 per barrel. The East Asia LNG price is based on the Japanese Crude Cocktail method of assessing long-term contract cargo prices for Japan, based on oil which last hit current levels and then slipped below $80.00 per barrel during 2009.

The idea of LNG exports, especially since the Japanese earthquake in 2011, is that the companies can make a big profit by buying natural gas at low North American prices, exporting and then selling at the higher Asia price. In a free market world, however, the Asian countries and companies have, for the past few years been balking at buying at the higher JCC price and attempting to buy at the much lower North American Henry Hub price which at this writing was $3.72 MMBTu. Today’s JCC LNG price was $12.75, still higher than the North American price, but as LNG Journal notes, at a five year low.

Bloomberg reports that slump in oil prices is already threatening the Northwest’s greatest rival in LNG, Australia.

Weaker oil prices may put proposed LNG projects “to sleep for a number of years,” Fereidun Fesharaki, chairman of Facts Global Energy, an industry consultant, said in a phone interview. “For the projects that are already under construction, it hits their pocketbooks seriously.”

Prices below $80 a barrel may be a “disaster” for some projects, said Fesharaki, who forecasts Brent may decline to $60 a barrel before the end of the year, then rebound to about $80 by the end of 2015.

and

“There’s no doubt if we were to see the type of crude oil prices we’re seeing now continue they would be looking at lower LNG prices,” Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group Ltd., said by phone. “On face value, it would put pressure on margins.”

Long term LNG prospects

On the other hand, long term prospects for LNG exports are good. Demand in the Asian markets is still growing.

LNGpricesAccording to the Nikkei Asian Review, the Japanese  Ministry of Economy, Trade and Industry projects that by 2020, 70 per cent of Japan’s LNG will come from Australia and North America. That doesn’t mean that Canada won’t have rivals, the projections say that the United States, which is just starting many of its LNG export projects could be Japan’s third largest customer with Canada in fourth place.

There are big benefits to getting LNG from North America and Australia. The unlikeliness of pirate attacks is one. There is also less political uncertainty. And then there is the price. U.S. shale gas, for example, costs about 20% less than what Japan currently pays for LNG.

Diversification

With the Rio Tinto Alcan Kitimat Modernization Project construction phase winding down, with some uncertainty about the future of Rio Tinto itself and with more possible delays in the Final Investment Decisions for LNG Canada and Kitimat LNG, Kitimat needs a Plan B (and a Plan C or D or E).

The idea of a retirement community is no longer viable, costs of housing, even if they drop, are just too great.

Kitimat’s second strength has always been tourism and fishing. In 2015, there must be stronger efforts of support both fishing and tourism, which, in the long term will support that regions economy through good times and bad.

That means the new council must be firm in demanding (yes demanding) full access to the Kitimat waterfront and that includes a well-managed marina or marinas that have the capacity for recreational, adventure and fishing guiding and industrial use.

The District of Kitimat must come up with a plan that will promote the advantages of the region as a tourist and fishing destination. While the Chamber of Commerce has being doing a good job, up to now as the main promoter of tourism, Kitimat’s public image across Canada and the world is soley industrial and the District should assume more responsiblity for changing that image. The economic development staff at the district have been working largely on large scale industry. It should devote more time and money to the natural wonders of the area.

The plan B should also mean balance. Balance between industry and environment. The sneering contempt for those who want to protect the environment of the northwest is short sighted thinking, because a large proportion of the economy will depend for decades to come on attracting visitors to the wild beauty of of this part of British Columbia. That means, as much as it can within municipal powers, the new council must strengthen environmental protection in Kitimat.

Back in the 50s, Kitimat was planned for a future, a future that didn’t exactly work out when the price of aluminum slumped in the early 60s. Now we’re facing a slump in energy prices, so those plans will change. The plan B must include, as much as possible, creating a mainstay base that will smooth out the boom and bust of the commodities cycle.

The motto on the Kitimat snowflake logo is “A marvel of nature and industry.” The new council should make sure that motto is applied during the coming years.

Sending the Northern Gateway Pipeline to Prince Rupert: A dumb, dumb, dumb idea—and here are the photos to prove it.

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)
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)
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.

A couple of days ago, the Prince Rupert’s Mayor Jack Mussallem told The Globe and Mail in Mayor, port authority say no room for Northern Gateway pipeline in Prince Rupert

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)
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.

While Kitimat Council long stood neutral on the issue, the councils at Prince Rupert, Terrace, Smithers as well as the Kitimat Stikine Regional District and the Skeena Queen Charlotte Regional District had voted to oppose the Northern Gateway.

Audio Slideshow; No to Tankers Rally, Prince Rupert, February 4, 2012

The Skeena Route

The Skeena is one of the greatest salmon rivers on the planet. The Petronas LNG project has already run into problems because its planned terminal at Lelu Island would also impact the crucial eel-grass which is the nursery for young salmon leaving the Skeena and preparing to enter the ocean. Note that northern BC is generally in favour of LNG terminals, if the terminals are in the right place, so expect huge protests against any bitumen terminal at the mouth of the Skeena.

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.

Now I’ve said this all before, two years ago, in a piece for the Huffington Post, Get Over it! A Pipeline to Prince Rupert Is Bust

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)
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 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.

aberdeencreek1

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.

aberdeencreek4

A closer view of the highway and rail corridor just east of Aberdeen Creek.

aberdeencreek3

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.

 

aberdeencreek2
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?

aberdeencreek5

There’s another turnoff on the other side of the headland east of Aberdeen Creek, looking back the way we came.

khyex1

The final small turnoff is just by the Kylex River. Again you can see how narrow the highway and rail corridor are.

basalt

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.

Rowland_CN_container_Skeena

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.

telegraph1

telegraph2

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.

 

telegraphmarch2013Two 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)

telegraphmarch2013_1

 

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 

Proposed natural gas pipeline. (TransCanada)
Proposed natural gas pipeline. (TransCanada)

The BG Group and Spectra Energy are also contemplating a pipeline…although details on the website are rather sparse.

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)

Related links

The Save Our Salmon website has a different view, arguing that federal government and the energy companies have a plan to create an energy corridor for bitumen pipelines to Prince Rupert.