Special report: Clio Bay cleanup: Controversial, complicated and costly
Haisla Nation Chief Counsellor Ellis Ross at Bish Cove, June 19, 2013. (Robin Rowland/Northwest Coast Energy News)
Haisla Chief Counsellor Ellis Ross says that capping the logs at Clio Bay was a Haisla idea, taking advantage of the opportunity to use the marine clay from Bish Cove to bring back the Clio ecosystem.
The Haisla were told by experts who video taped the bottom of Clio Bay that are between 15,000 to 20,000 sunken logs in Clio Bay.
“I know because I’ve spent a lot of time down there plus my dad actually worked for the booming company for years and knew what was going on out there,” Ross said. “There are two extreme areas we’re talking about, if you look at Clio Bay where it’s estimated that there 15,000 to 20,000 logs down there, imagine what Minette Bay looks like? And it’s all iron, it’s steel. It’s not just wood, there are a lot of cables down there.
Cables retrieved from Ward Cove, Alaska, during dredging and capping in 2001. (EPA)
“The Haisla have known about the degradation of our territory for years. The problem we have as Haisla members is to restore the habitiat is that nobody wants to clean up the habitat. This was our idea, after review from technical experts from DFO as well as our own experts. We’re looking for a three way solution, with the company, DFO and the Crown and the Haisla.”
“I’d love to go and catch halibut and cod, like my ancestors used to.”
He said that the Haisla have beem aware of environmental problems from sunken logs for decades and have been asking for cleanup of degraded areas since 2004, not just at Clio Bay, but in the Kildala Arm and at Collins Bay, which were studied by DFO in 1997.
“The logs are down there, they are oxidizing, but no one wants to do anything about it, including the company and including the Crown. We had independent people come in and review it and have them come up with a recommendation. There was a small scale project [involving marine clay] that proved that this could work.
“This system here is killing two birds with one stone, get rid of the clay and try to remediate some of the habitat,” Ross said.
He said that the original estimate of marine clay excavated at Bish Cove was 10,000 cubic metres. That has now risen to about 3.5 million cubic metres because the KM LNG project is digging deeper for the foundation of the LNG terminal. The original plan called for disposing 1.2 million cubic metres at sea and another 1.2 million cubic metres on land.
“The original idea was to dump the clay in the middle of the ocean. In small amounts it could have been mitigated, but in large amounts we said ‘no.’ If we try to dump clay in the middle of the channel, we have no idea where it’s going to end up, what the effect is going to be.” Ross said. “We did the same thing here for the terrestrial side, we said ‘OK that with the rock quarries above Bees Creek,’ use the clay to help remediate that as well, bring it back.”
Asked about Ward Cove in Alaska, where the US Environmental Protection Agency ordered a cleanup, Ross said. “The difference here is that no one is ordering these companies to clean up the sites, they walk away. No one is taking responsiblity, The Haisla are trying to do this within the parameters they’ve given us.So if someone could come in and order these companies and do something, we’ll look for something else to do with the clay. Until that day comes, the Haisla are still stuck with trying to bring back this land by ourselves. If the District of Kitimat wants to pay the bill, great. Let’s see it.
“We need to put pressure on the province or Canada to cleanup these sites. We’ve been trying to do this for the last 30 years. We got nowhere. Before when we talked about getting those logs and cables cleaned up, it fell on deaf ears [at DFO]. They [DFO] had no policy and no authority to hold these companies accountable. So we’re stuck, we’re stuck between a rock and hard place. How do we fix it?”
Ross also noted that Shell’s LNG Canada project also faces remediation problems, “Shell is going to have the same problem, their’s is going to be different, they’re going to have get rid of contamination on the ocean bottom and beneath that it’s basically going to be gravel, it’s not clay, they’re going to have get rid of that product.”
Special report: Clio Bay cleanup: Controversial, complicated and costly
Ward Cove, Alaska, in 2005, after the remediation of the bay was completed in 2001 and old industrial buildings were being demolished. (EPA)
Ward Cove, just eight kilometres west of Ketchikan, Alaska, was so polluted by effluent from pulp and saw mills and a fish plant, and filled with 16,000 sunken lots that it qualified for a U.S. Environmental Protection Agency Superfund cleanup.
The Ward Cove project is now considered a benchmark for cleaning up similar bays. Alaska officials emphasized to Northwest Coast Energy News, that while Ward Cove does provide guidelines for capping and dredging logs, they were not aware of any project where logs were capped that did not have other forms of contamination.
If you take a look at satellite images of Clio Bay, BC and Ward Cove side by side you immediately you see the similarities and differences between the two bodies of water. (Note due to parameters of Google Earth, images are slightly different scales)
Google Earth image of Clio BayGoogle Earth image of Ward Cove, Alaska
Both Clio Bay and Ward Cove are 1.6 kilometres long, somewhat elbow shaped, off a main channel and surrounded by mountains.Ward Cove is 0.8 kilometres wide. Clio Bay is about 0.5 kilmetres wide, 0.8 at its widest point. Both have steep slopes from the mountains. Ward Cove is 61 metres deep at the mouth of the cove, descreasing toward the head. Clio Bay is deeper, 182 metres at the mouth, 90 metres in the centre and between 20 metres and 9 metres at the head.
Both Clio Bay and Ward Cove are subject to tidal circulation. Both Clio Bay and Ward Cove are also influenced by fresh water. Ward Cove is fed by Ward Creek, a smaller Walsh Creek and runoff precipitation the enters the cover from the steep mountain slopes. Clio Bay is fed by one creek, a number of small streams and mountain slope runoff, especially during the spring melt.
Haisla Chief Counsellor Ellis Ross estimates there are between 10,000 and 20,000 sunken logs in Clio Bay. The official summary from the United States Environmental Protection Agency said there were 16,000 sunken logs in Ward Cove.
The major difference with Ward Cove is that it was the site of major industrial development including a pulp mill, a sawmill and a fish plant. That meant the level of pollutants in Ward Cove were much higher than in Clio Bay, which has never been used for an industrial plant. It was the pollutants in Ward Cove, mainly ammonia, hydrogen sulfide, and 4-methylphenol combined with the thousands of sunken logs that made the cove a target cleanup and the associated studies.
A fish plant, Wards Cove Packing opened in 1912 and ceased operations in 2002. The Ketchikan Paper Company mill began operating in 1954 and closed in 1997. Prior to 1971, with the rise of the enviromental movement no permits were required by KPC for discharging effluent into the cove. After that the US Environmental Protection Agency issued a discharge permit and monitored effluent. Throughout the time the KPC mill was operating, the EPA says, “high volumes of log storage (approximately 7 billion board feet) caused accumulation of bark waste and sunken logs at the bottom of the cove.” Gateway Forest Products, a sawmill and veneer plant, continued to store logs in Wards Cove until 2002.
A 2009 monitoring report, conducted by the US Army Corps of Engineers after the cleanup for the EPA noted:
An ecological risk assessment was also conducted using a food-web assessment to estimate risks of bioaccumulative chemicals to representative birds and mammals at the top of the Ward Cove food web. The chemicals evaluated were arsenic, cadmium, mercury, zinc, chlorinated dioxins/furans, and PAHs. The results of this assessment indicated that there are no unacceptable risks to higher trophic level organisms in Ward Cove.
A human health risk assessment was conducted to identify potential risks posed by chemicals detected in sediments or seafood (e.g., fish, shellfish). Ingestion of seafood that may contain chemicals bioaccumulated from the sediments was identified as the only complete exposure pathway for humans. The chemicals that were evaluated included: arsenic, cadmium, mercury, zinc, phenol, 4-methylphenol, chlorinated dioxins/furans, and PAHs. Results concluded that sediments in Ward Cove do not pose an unacceptable risk to human health.
A 2007 report on the Wards Cove remediation from the Alaska Department of Environmental Conservation, noted:
The continuing residues impairment in Ward Cove is caused by the historical accumulation of wood waste on the bottom of the cove. The waste includes an estimated 16,000 sunken logs over at least 75 percent of the bottom and decomposing pulp, wood, and bark waste in sediments in thicknesses up to 10 feet over at least 50 percent of the bottom. Wood waste residues can displace and smother organisms, alter habitat, release leachates, create anoxic conditions, and produce toxic substances, all of which may adversely affect organisms that live both on top of sediments and within sediments.
That is a similar problem to Clio Bay.
The report notes that problems with oxygen increase with depth, noting:
The dissolved oxygen impairment was due largely to the fish-processing waste discharge from the seafood processing facility until 2002, and it was limited to the summer months in deeper waters of the cove (below the picnocline, or stratification layer, approximately 10 meters deep). With that discharge removed, limited monitoring in August and September 2003 indicated that dissolved oxygen impairment might remain near the bottom in waters at depths of 30 meters and greater at certain times and locations due to low natural levels of dissolved oxygen and the continuing decomposition of wood waste. Above 30 meters depth, the waters of the cove appeared to meet the [Alaska state] standard for dissolved oxygen. However, there may be limited capacity for waters at 30 meters and deeper to receive additional loading of oxygen-demanding materials and still meet the standard in summer months.
That should mean that the worries about oxygen depletion at Clio Bay are justified due to Clio’s greater depth.
Studies of the biology of Ward Cove began in 1951, with more in the 1960s and one in 1974. In 1995, Ketchikan Paper Company signed a consent decree with the EPA that called for remediation of Ward Cove, In 2000, KPC and Gateway Forest Products signed a second consent decree with the EPA. Those agreements called on the companies to dredge sediments to improve navigation, remove logs and other debris from the dredging areas and “placing a thin-layer cap of 15-30 cm (six to 12 inches) of sand over about 11 hectares (27 acres) of sunken logs.”
The major studies of Ward Cove began in 1995 after first consent decree. The remediation did not take place until the initial studies were complete in 1999, with dredging and capping taking place from November 2000 to March 2001.
The EPA positioned 13 water quality monitoring stations which operated from 1997 to 2002, to measure salinity, temperature and disolved oxygen, nine inside Ward Cove and four outside the cove in Tongass Narrows. Those studies showed that levels of dissolved oxygen in the cove varied by season, depth and location. Many species from salmon to mobile bottom dwellers like crabs were often able to detect and avoid low oxygen areas.
The plan
The EPA and the companies involved planned the remediation so that it included both dredging, capping logs and sediment and leaving some areas where nature would take its course.
The reports say that complete dredging, removal and disposal of the contamination would have cost $200 million, The total actual cost of the Ward Cove Remediation Project, beginning with development of the Remedial Design Work Plan, was estimated to have cost $3,964,000 (in 2000 US dollars).
The EPA says cost for the capping component of the project “including preliminary field investigations and reporting, design and plans development, post construction engineering, procurement, construction management, project management, mobilizationm demobilization, engineering/QC and science support, surveys, and capping items” was $2,563,506. Based on the volume of capping material placed, the unit cost of log capping for the Ward Cove Remediation Project was $110 per cubic yard.
Old logs retrieved from Ward Cove, Alaska during dredging operations to improve navigation. (EPA)
The plan called for dredging about 17,050 cubic yards in the area near the cove’s main dock and the dredging of 3,500 yards metres nearby to improved navigation. Before the dredging, 680 tonnes of sunken logs had to be removed. After dredging, a “thin-layer cap of clean, sandy material” was placed in dredged areas unless native sediments or bedrock was reached during dredging.
In other areas, most covered in sunken logs, the plan called for placement of a thin-layer cap (approximately 6- to 12-inches) of clean, sandy material, with the possibility of “mounding” dropping mounds of sand on specific areas. The 2009 report says the area of sand deposits actually increased “due to the fact that thin layer placement was found to be successful over a broader area, and it was not necessary to construct mounding.”
The plan called for natural recovery in areas where neither capping nor mounding was practicable and so about 50 acres was left alone. (DFO says it plans to leave some parts of Clio Bay uncapped as “reference areas.”) Slope and sand
A dredging barge depositing clean sand (originally from Sechelt, BC) during capping operations at Ward Cove, Alaska in 2001. (EPA)
Two studies were carried out as part of the remediation at Ward Cove that do not appear to be contemplated at Clio Bay. The first looked at the “ability of the organic material to support the weight of 15 to 30 centimetres of sand.” Standard engineering equations used at other fill and capping sites were used as part of that study. A second study was carried out to determine the “minimum safety for a given slope,” which given the steep mountains that line Clio Bay, are likely to be factor in the deposit of marine clay. That study determined “For a silty fine sand and a factor of safety of 1.5, the maximum slope would be approximately 40 per cent.”
Those studies led to the conclusion that for the Ward Cove remediation project, the material to be placed on the fine organic sediment could not be gravel and course sand.”
That’s because the larger gravel and course sand “would tend to sink into the sediment and would not provide quality benethic (seabottom) habitat.”
The project decided to use “fine to medium sand with minimal fines.” It also concluded “Because of the very soft existing sediments and steep slopes at Ward Cove, the … material must be released slowly so that the settling velocity is low and bed impact minimized.”
That meant that the EPA had look for a source of quality sand that met their criterion. The sand was found at Construction Aggregates in Sechelt, BC, loaded on 10,000 tonne deck barges, tugged up the coast, unloaded onto land using a conveyor and stockpiled while more tests were done to determine how to deposit the sand on the sunken logs.
Dredging bucket modified to deposit sand during capping operations at Ward Cove, Alaska. (EPA)
Sand was placed on a smaller barge and taken to the deposit site. Initial tests were done with a mechanical dredge equipped with a clamshell bucket. The operator deposited the sand using “swaths” released from the bucket. To make it work properly, the bucket, as supplied by a manufacturer had to be modified by welding baffle plates to the bucket and lengthening the chains to insure consistent deposition of the sand. Two computers with special software called WINOPS, designed for dredging operations “provided the operator and deck engineer the precise locations of the derrick barge position” in order to ensure precise deposition of the sand. WINOPS dredge positioning and guidance software. The WINOPS system made use of three differential global positioning receivers. One GPS receiver was located at the top of the derrick and provided the center positioning of the dredge bucket. Two fixed receivers, one near the starboard center spud and one near the center aft, provided the barge position and heading.
Although using marine clay is likely to produce different engineering challenges at Clio Bay, it is not currently clear that the project has contemplated the level of precision that was used at Ward Cove.
While KM LNG must find a way to dispose of the marine clay from the Bish Cove excavation site, there is a silver lining for the Haisla Nation’s aim of restoring both Clio Bay and the other 50 sites in their traditional territory, since the Kitimat Sand Hill would likely be a ready resource for any future projects. Monitoring
The EPA considered the project finished in September 2001, and long term monitoring began, with major updates every five years in 2004 and 2009.
An EPA report on the 2004 review showed that the three sand-capped areas and one shallow natural recovery area (not sand-capped) had achieved biological recovery; three other natural recovery areas tested had not achieved biological recovery but were making significant progress.
The 2004 studies showed that benethic (sea bottom) communities in uncapped areas showed “species commonly found in areas where organic enrichment is low or declining.” adding “In three other natural recovery areas, benthic communities have not progressed as far toward recovery but are making significant progress.
By the time of the 2009 update, most of the old industrial infrastucture on land at Ward Cove had been demolished and the land area was slated for redevelopment. Many of the companies that had been there had either gone out of business or had declared bankruptcy and the land was taken over by the Ketchikan Gateway Borough,mostly through foreclosure.
The EPA declared that “The remedial action construction is complete, and the remedial action is an operating or ongoing remedial action.”
The 2009 report says that the project was successful in eliminating sediment toxicity. The area was then quickly being recolonized by a diverse bottom dwelling macroinvertebrate species and those species were spreading beyond the specific study areas, so recovery of Ward Cove is expected to continue.
However the 2004 report went on to say that “the achievement of stable benthic biological communities with balanced species composition in more than 75 percent of the area with documented coverage by wood residues on the bottom of Ward Cove” would happen within 40 years from the 2004 study.
The next review of Ward Cove is slated for August 2015.
Diagram of a sand capping operation from a barge. (US Army Corps of Engineers)
Diagram of a sediment capping operation knowing as diffusion (US Army Corps of Engineers)
Diagram of a Japanese system called tremie that uses a hose system to deposit capping material on the seabed. (US Army Corps of Engineers)
Special report: Clio Bay cleanup: Controversial, complicated and costly
Floating logs at Clio Bay, September 14, 2013. (Robin Rowland/Northwest Coast Energy News)
The forest industry has been operating on the Pacific coast from Oregon to Alaska for more than a century. Over that time, it is likely that millions of logs from booms and other operations have sunk to the bottom of bays, cove, estuaries and inlets along the coast.
During that century, scientists in both Canada and the United States have been studying the effects of the those sunken logs on the sea bottom. It is only in recent years that the cumulative effect of all those logs has become an environmental concern.
As well as logs on the sea bottom, ranging, depending on location, from a couple of hundred to the tens of thousands of logs, there are wood chips, wood fibre and discarded log parts and bark. Often metal cables, bolts, ropes, and other manufactured material either dropped accidentally or deliberately discarded are also found among the old logs, further contaminating the seabed. Compounding the problem of the sea bottom is organic material that would occur naturally on the seabed, including tree trunks, roots, branches, conifer needles, deciduous leaves and other material from terrestrial plants.
Anyone who sails Douglas Channel after a storm can see with all the floating tree trunks in the Channe. That means that storms and spring run off ads debris to the natural pile up of old logs and debris. At logging sites, this natural material, brought in by creeks and rivers, piles up on the already sunken logs.
Over the years, depending on the salinity, teredos, more popularly known as ship worms eat the wood, often leaving a tube of bark that eventually collapses. The rotting wood, bark and other material is often, depending on conditions, pounded into fragments by the action of waves, currents and outflow from rivers. Some species of teredo can live in brackish water, but since teredos are not a fresh water species, that means that logs in fresh or mostly fresh water last longer.
A DFO report on sunken log sites on Douglas Channel, published in 2000, noted:
very few comprehensive, quantitative field studies describing the effects of wood and bark have been published and those that did focused on log handling and storage sites which handled high volumes of more than one million cubic metres.
The DFO report said that thick bark and wood debris deposits resulting from log handling can cause substantial, long-term negative impacts to benthic (sea bottom) ecosystems. Under the worst conditions, the cumulative debris can deprive an area of oxygen and, according to DFO, “virtually eliminate aerobic” sea bottom animal life.
The report noted that studies had shown that “negative biological impacts were localized,” but added that “the cumulative effect of several hundred sites located on the B.C. coast is currently unknown.”
Studying the problem has been a low priority for DFO and other agencies and that meant a limited budget and few studies. Other problems is that, according to the DFO, parts of BC fjords are steep and “much of the likely impacted habitat is beyond diver range.” There is also pressure to study the effect on “economically or socially important species.” Although the use of remotely operated vehicles has increased since the 2000 report, using an ROV can also be a budget buster for a low priority project.
As the ready timber supply in British Columbia particularly old growth forest declined in the last part of the twentieth century, the DFO report says “forest companies have harvested areas where access is more difficult and cut-blocks are smaller.” That meant many smaller dump sites were developed that were used for only one to five years. Plans for log handling at the time, DFO said, were evolving to ensure ensure that fisheries resources and overall fish production capability were not adversely affected by development of log handling facilities and planning was focused on ensuring that sites for log handling facilities did “not have sensitive fish habitats or fisheries resources (such as eel grass beds or shellfish resources) which may be affected by the log handling,”
One of the reasons for the disagreements over Clio Bay is that while some people call it “dead” saying there are no halibut and fewer cod, others say that Clio Bay is very much alive, pointing out that it is easy to catch crab and rock cod.
The studies that have looked at life on the bottom of log dumps sites have shown that it can be highly variable even within one bay or cove, with many factors creating small local ecosystems, including depth, nature of the sea bottom, for example sand, mud, clay or a mixture, whether or not the sea bottom sediment is “enriched,” the flow of currents, fresh water flow into the site, the percentage of wood on the bottom, the percentage of bark on the bottom, whether the wood and/or bark debris is “continuous’ or “discontinuous,” whether or not the seabed is contaminated as was the case with the cleanup of pulp mill sites at Ward Cove and Sitka, Alaska.
Ward Cove had been so polluted for decades by pulp mill effluent that it was eligible for US Superfund clean up funding and was estimated to hold 16,000 sunken logs. At the same time, an EPA report on Ward Cove noted that at the point Ward Creek emptied into Ward Cove was “a popular sport fishing location during salmon season, including commercially guided fishing. Some sport fishing and personal-use crab pot fishing has taken place in the past and may continue in the waters of the cove.” At the same time of the cleanup, the EPA identified that the degradation of Ward Cove put at risk eight species of salmon, 75 “non-salmonid esturine and marine fish species and benthic invertebrate fauna.” (The EPA says Ward Cove is recovering after the reclamation and fishing is continuing)
In other words, those say Clio Bay is in danger and those who say Clio Bay is a rich source of life are likely both right.
For example, while Chris Picard’s (then with the University of Victoria, now with the Gitga’at First Nation) study of Clio Bay said: “Dungeness crabs were observed five times more often in the unimpacted Eagle Bay than in Clio Bay,” and tied that to log dumping and low oxygen.
Picard’s study noted that both Dungeness crabs and sunflower seastars, while more abundant in Eagle Bay, in Clio Bay “both species were several-fold less abundant in wood-dominated habitats in Clio Bay than in non-wood habitats in that bay.”
Several people have pointed out that since Clio Bay is one of the closest crabbing spots to both Kitimat and Kitamaat Village, while Eagle Bay is further down Douglas Channel, overfishing at Clio may be a factor in the reported species decline.
The DFO study noted
The dumping of logs into water down skids can result in the generation of a considerable amount of bark and wood debris. The abrasive action of boom boats and waves during the sorting and storage of bundles can also generate quantities of wood debris. Bark and wood lost during dumping often forms thick, continuous, anoxic fibre mats extended from the base of the dump skids. The debris mat tends to dissipate with distance from the entry point; however, wood debris can often be observed substantial.” distances from the dump skids as seen at all four of the sites sampled. Debris deposits can also be generated as logs resting on the sea floor decay. Wood boring organisms (e.g., Toredo) quickly reduce the wood fibre content of logs, but the bark of some species (e.g., western red cedar (Thuja plicata) which has a high lignin content) is left relatively untouched. The amount of wood debris generated during handling and storage can be different depending on tree species, tidal levels, and dumping methods. Debris accumulation, distribution, and the resulting biological impacts are affected by physical factors including depth, sea floor slope, dump site aspect, water currents, and wind or wave exposure.
One of the main problems with log dumping is that it has the potential to deplete vital oxygen, especially at deeper levels. Seasonal variations can mean that, even if there are thousands of logs at the bottom, the levels of dissolved oxygen can vary. Years of studies at the cleanup site at Ward Cove, Alaska showed how the oxygen levels can vary by season. In Minette Bay, near Kitimat, a DFO study showed that the Minette is somewhat stagnant and therefore has naturally occurring low oxygen levels, but also that the low levels usually last from May to November and are worst in July.
The DFO study went on to say that oxygen poor thick anoxic bark or wood fibre deposits are likely to cause damage to bottom dwelling species, although in the short term, logs may not cause any impacts. It says that some studies have indicated that large pieces of wood debris can, for a time, increase diversity by providing suitable base for some filter feeders as well as food and cover for epifauna and wood boring organisms. Several species not normally found in sand-bed have occasionally been found in log and rock debris.
(Studies have shown that salmon the ability to detect low oxygen areas and avoid them and some active invertebrate species can migrate away from a low oxygen area.)
In the long term, logs do decay and the wood and bark left behind can contribute to the wood debris accumulation. One study cited by the DFO survey of Douglas Channel found found that crabs avoided bark deposits when given a choice but when they were forced to live among bark deposits, they were had fewer offspring, had lower feeding rates, and had a decreased survivorship.
One theory is that the decaying organic material produces hydrogen sulphide in combination with ammonia and other unmeasured toxicants. One study of Dungeness crabs, living at a log dump in southeast Alaska with elevated hydrogen sulphide and ammonia concentrations in the bark debris, shows the colony had less than half as many reproducing females as a control population.
The EPA and Alaska reports from Ward Cove show that sand capping does help restore the seabed environment.
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Special report: Clio Bay cleanup: Controversial, complicated and costly
The Department of Fisheries and Oceans has declined an invitation from District of Kitimat Council to appear at a special meeting on Monday, September 30 to discuss the Clio Bay remediation project. A representative of Chevron will be in the council chambers at the Kitimat branch of Northwest Community College to make a presentation and answer questions.
The letter from DFO to the council from Dave Pehl works at DFO office in Kamloops says:
Thank you for the invitation to attend District of Kitimat Council meeting on September 30, 2013 to address plans by Chevron Canada and Apache Canada(Kitimat LNG) to remediate habitat conditions in Clio Bay. Regretfully, Fisheries and Oceans Canada (DFO) is unable to attend the scheduled council meeting.
Fisheries and Oceans Canada has reviewed a proposal to dispose of soil materials, generated at the Kitimat LNG plant, in Clio Bay, Clio Bay has been used as a log handling site for decades which has resulted in areas of degraded habitat from accumulations of woody debris materials on the sea floor. The project intends to cap impacted areas with inert materials and restore soft substrate seafloor. The remediation of the seafloor is predicted to enhance natural biodiverstiy and improve the productivity of the local fishery for Dungeness crab. The project area does support a variety of life that will be impact and therefore the project will require authorization from Fisheries and Oceans Canada for the Harmful Alteration, Disruption or Destruction (HADD) of fish and fish habitat.
Mapping of the seafloor in Clio Bay has been completed and the project plans prioritizes capping on areas of dense woody debris, followed by areas of soft substrate with woody debris distributed throughout. Mapped areas that are avoided include hard substrates and sensitive habitats such as freshwater streams and eelgrass beds. Buffers have been allocated around sensitive areas and no capping will be conducted in areas of less 10m in depth. Proposed mitigation to avoid potential impacts to areas outside Clio Bay includes avoiding deposition of material within 500m of the confluence of Clio Bay and kitimat Arm. Some areas of degraded or partially degraded habitat will not be capped to serve as reference areas.
Chevron will be required to conduct a pre-construction, construction and post construction monitoring program. Pre-construction monitoring will include collection of baseline information that will be used to assess effectiveness monitoring during and at the completion of the project. Water quality monitoring for turbidity and total suspended solids will be undertaken during construction to determine if established performance criteria are met. The monitoring plan for the project will evaluate
1. Water quality near the sea floor.
2. Fish habitat quality and quantity
3. Biodiversity of the seafloor ecosystem and
4. Distribution of a fishery resource (Dungeness crab)
Reference sites will be used to make comparison between capped and uncapped habitats. Monitoring will continue for a period of five years following the completion of the works. The proponent will be required to report the follow-up monitoring program to DFO in years 1,3 and 5 following construction.
Special report: Clio Bay cleanup: Controversial, complicated and costly
Here is the text of a statement Chevron spokesperson Gillian Robinson Riddell sent to Northwest Coast Energy News
The Clio Bay Restoration Project proposed by Chevron, is planned to get underway sometime in early 2014. The proposal is fully supported by the Federal Department of Fisheries and Oceans and the Haisla First Nation Council. The project has been put forward as the best option for removal of the marine clay that is being excavated from the Kitimat LNG site at Bish Cove. Chevron hired Stantec, an independent engineering and environmental consulting firm with extensive experience in many major habitat restoration projects that involve public safety and environmental conservation. The Haisla, along with Stantec’s local marine biologists, identified Clio Bay as a site that has undergone significant environmental degradation over years of accumulation of underwater wood debris caused by historic log-booming operations. The proposal put forward by the marine biologists was that restoration of the marine ecosystem in the Bay could be achieved if marine clay from Chevron’s facility site, was used to cover the woody debris at the bottom of the Bay. The process outlined by the project proposal is designed to restore the Clio Bay seafloor to its original soft substrate that could sustain a recovery of biological diversity.
In preparing this restoration project proposal for Chevron, Stantec conducted independent field studies carried out by their own marine biologists who are registered with BC College of Applied Biology. Two of the studies used in the development of the proposed project were previously published scientific studies on the effects of log-boom activity and log boom activity in Clio Bay that determined log boom and storage activity has had a negative impact on marine diversity. There are previous case studies where capping activity has been used in marine environments.
Stantec’s, and previous studies, have determined that Clio Bay has changed from a once highly productive marine bay characterized by plentiful predatory species such as Dungeness Crab and sunflower stars to a less productive environment hosting more opportunistic and resilient species such as squat lobster and sea anemones. One such study found that compared to Eagle Bay, which has not been affected by logging activity had five times the Dungeness Crab population of Clio Bay. Independent studies conducted before Chevron began working at Bish Cove found that if Clio Bay is left in its current degraded condition, the woody debris will continue to foster and abnormal, species-deficient habitat for several decades. Extensive fieldwork carried out by Stantec’s marine biologists used SCUBA and Remote Operated Vehicle surveys to observe and record all flora and fauna in the bay and its levels of abundance. Stantec’s observations echoed the previous studies which determined that the massive amount of wood has harmed Clio Bay’s habitat and ecosystem.
Most importantly, when considering the work Chevron is proposing to carry out in Clio Bay, it is important to note that a primary objective of all Chevron’s operations is to protect people and the environment. A good example of how we have done that on other projects can be seen in the construction of Chevron’s Gorgon LNG plant in Australia on Barrow Island, which is a Class A nature reserve. Although identified as one of the most important wildlife refuges in the world, and the site was chosen only after a thorough assessment of the viability of other potential locations, and after the implementation of extensive mitigation measures, including a vigorous quarantine program for all equipment and materials brought on to the Barrow island site to prevent the introduction of potentially harmful alien species. Those same high environmental standards are being applied to the Kitimat LNG project and the proposed Clio Bay Restoration project. The proposed work would be carried out with a stringent DFO approved operational plan in place and would be overseen by qualified environmental specialists on-site.
Special report: Clio Bay cleanup: Controversial, complicated and costly
Editorial:
Hire the experts. This is not the time to be learning on the job.
Everyone in the Kitimat and Kitamaat Village are facing a dilemma, a dilemma that should have been solved a year ago, when it was first known that the KM LNG project at Bish Cove had grossly underestimated the amount of marine clay and other material that has to be removed for the liquified natural gas terminal, a total of about 3.5 million metric tonnes.
The Haisla and Chevron are proposing that much of the clay be deposited over sunken logs in Clio Bay.
Chevron, which only took over operations at KM LNG in December 2012, is still learning on the job.
When the Clio Bay capping plan became public, far too late in the process, only then did Chevron begin to take a serious look public worries about the environmental problems that might result from depositing all that marine clay in Clio Bay.
Chevron hired Stantec, a well-known international consulting firm with close ties to the energy industry and some experience in remediation to evaluate Clio Bay. Although Chevron said in a statement that Stantec is a company “with extensive experience in many major habitat restoration projects,” it appears that Stantec, in the case of Clio Bay, is a jack of all environmental trades and master of none, just learning on the job.
In answer to questions by Northwest Coast Energy News, Chevron cited two studies supplied to them by Stantec. One was Chris Picard’s (now with the Gitga’at First Nation) study of Clio Bay which anyone can find by using a Google Search. The second was an overview chapter of west coast North American logging practices from a book published 22 years ago.
Any of the web saavy undergraduate journalism students I once taught at Ryerson University could have done better. This semi-retired reporter, without the resources he once had in a major newsroom, easily found the studies of the log filled Ward Cove, the State of Alaska’s recommended remediation practices, the capping procedures recommended by the US Army Corps of Engineers and more. Chevron did not mention Stantec citing the 1995 DFO study of nearby Minette Bay which can easily be found on the DFO website.
A letter from Fisheries and Oceans to District of Kitimat Council only mentions Dungeness crab and not the Haisla desire to restore halibut and cod to Clio Bay. That can only raise suspicions that the DFO is also depending solely on Chris Picard’s limited survey of Clio Bay.
In Alaska, at Ward Cove, there were almost five years of studies on the ocean environment before part of the cove was dredged and parts of the cove with thousands of logs there were capped with fine sand.
The people of Kitimat and Kitamaat want the LNG project to proceed. Everyone wants a clean and sustainable ocean enviroment, whether in Clio Bay, Minette Bay or down Douglas Channel. The problem of that 3.5 million cubic metres of marine clay must be handled in a timely fashion so the LNG terminal can move to the next step in the coming months. There is no time for five years of studies before proceeding.
This site would not normally endorse one large corporation over another.
There isn’t time for Chevron and Stantec to be learning on the job, its technicians racing in their boats between Clio Bay and Bish Cove trying to figure out what is going on and casually asking people what they think. No time at all.
The clock is ticking. Chevron and Apache, in partnership with both the Haisla and the District of Kitimat, should immediately hire the companies that do have the expertise in remediating a northwest Pacific coast bay filled with sunken logs, the companies that cleaned up Ward Cove in Alaska. Integral Consulting was the main environmental consulting contractor at Ward Cove, assisted by another large firm, Exponent and by Germano and Associates, a company that according to its website specializes in “rapid seafloor reconnaissance”. Both Integral and Exponent are, like Stantec, giant international consulting firms. In this case, experience has to count. While Stantec’s website does list remediation projects, none are similar to Clio Bay.
A letter from Fisheries and Oceans to the District of Kitimat says that:
Chevron will be required to conduct a pre-construction, construction and post construction monitoring program. Pre-construction monitoring will include collection of baseline information that will be used to assess effectiveness monitoring during and at the completion of the project. Water quality monitoring for turbidity and total suspended solids will be undertaken during construction to determine if established performance criteria are met.
From the reports available from both the EPA and the State of Alaska it appears that the companies that cleaned up Ward Cove did just what DFO is asking, assess and monitor. Another reason to hire the experts rather than the newbies.
Why a three way partnership? Chevron/Apache and the Haisla Nation are already partners in the Clio Bay plan. Adding the District of Kitimat would establish trust and make sure that the results of any scientific and engineering studies, plans and operations would be available to the people of Kitimat (as well as some Haisla members who feel they were excluded) as part of the ongoing process. The partnership would make up for the lack of transparency up until now, make sure the public is kept up-to-date and not just by Chevron’s and DFO’s communications people since reports to the District could be reviewed by the engineering staff and members of council.
It is likely that those companies that worked at Ward Cove could quickly let everyone know whether the idea of capping at Clio Bay with marine clay is a viable option and if it is viable how to do it properly rather than just dumping the clay from a barge using a hose. If marine clay is not viable for Clio Bay, it is likely that those firms could advise whether one of the original plans, to dump the clay in the deep ocean, is a better solution, or if there is another alternative that no one has thought of.
Kitimat and Kitamaat are lucky. The recommended practice for capping sunken logs is using sand. There is here a ready source at the Kitimat Sand Hill. If marine clay is not a viable option, or for future projects, the Sand Hill can easily be used to fulfill the aims of both the Haisla Nation and the residents of Kitimat to clean up Clio Bay, Minette Bay and eventually all 50 other sites identified along Douglas Channel by DFO in 1997. Those consulting firms have the expertise in this area and that expertise should be utilized.
Learning from the job
Even though sand has a track a record in capping, using marine clay from Bish Cove to cap the logs at Clio Bay is probably a good idea, after all that marine clay was once at the bottom of the Ice Age Douglas Channel.
The use of sand for capping sites is well-known, there are established engineering parameters. At Ward Cove, there were studies of the angle of the slopes and how much weight of sand that the debris could hold. Sand is very different from marine clay. At the moment, there are no engineering parameters for marine clay. It appears that no one has thought of doing slope analysis and load bearing engineering studies at Clio Bay.
Marine clay is a potential cap for all the sunken log sites on Douglas Channel and on the whole Pacific coast from Oregon to Alaska. That means that Clio Bay is a pilot project that should be planned as carefully as possible, within the time constraints needed for construction of the LNG terminal, but not regarded as a rush job to get rid of that clay. That means taking the time needed to do all the necessary scientific and engineering studies before the first drop of clay heads to the bottom. That is another reason to hire experts who actually know what they are doing so everyone can learn from the job.
Standards
No matter how the cleanup of Clio Bay proceeds, KM LNG, the Haisla and the District of Kitimat are facing another dilemma. What standards and benchmarks should be applied to the project?
By law, the Department of Fisheries and Oceans is responsible and will, of course, be monitoring the cleanup.
Despite assurances in a letter to the District of Kitimat, it is clear that DFO too is learning on the job.
At the moment, DFO has no standards for remediation, because the Conservative omnibus bills have gutted environmental standards in Canada. Even before the omnibus bills and the LNG rush, cleaning up log dumps was on the DFO low low priority list.
The letter from DFO to District of Kitimat council shows what knowledgeable sources have told us, DFO will be navigating Clio Bay from a desk in Kamloops (of all places). The same sources say that the Prince Rupert office of DFO, which has the expertise on the northwest coast is out of the loop on this project. The residents of the northwest coast already know there are not enough fisheries officers to properly monitor the coast. DFO “estimates” the annual recreational halibut catch (perhaps by using fish entrails rather than the traditional chicken?). DFO has retired or laid off many scientists who have studied the coast. Others have left on their own. The remaining scientists are muzzled by the Harper government, with anything they could say filtered by the Prime Minister’s Office, so it is likely that no one in the northwest will actually trust what they say.
Normally in a free and democratic society, the government tells local residents when a major operation like the remediation of Clio Bay is going to occur. In this case, Fisheries and Oceans did not tell anyone in Kitimat anything until the District of Kitimat Council requested information.
On Monday, Sept. 30, a representative of Chevron will make a presentation to District Council. DFO did nothing more than send a letter that said: “Regretfully, Fisheries and Oceans Canada is unable to attend the scheduled council meeting.” Nobody, in the whole department? One is tempted to say, “That’s not good enough.” Then you remember that if DFO appeared before Council, the presenter would have to face possibly awkward questions from both members of Council and the media. That just doesn’t happen in Stephen Harper’s Canada, not in Ottawa and certainly not in Kitimat.
Despite what DFO has said in its letter, this regulatory vacuum leaves the Kitimat region no choice. Since Canada has no standards, when the Clio Bay project proceeds, the best available standards are those set by Alaska, which has the same type of coast and climate. The Clio Bay clean up should therefore be measured against those Alaska standards.
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A humpback whale, seen here by its small dorsal fin, swims past the Chevron Apache KM LNG site at Bish Cove on Douglas Channel, August 21, 2013. (Robin Rowland/Northwest Coast Energy News)
Updated with comments from Gitga’at First Nation, Nathan Cullen and Shell Canada.
Gil Island is a “critical habitat” for the world’s humpback whales, whose numbers are increasing in Douglas Channel, Wright Sound, Estevan Sound and Camano Sound and nearby waters, according to a study released Wednesday, September 11, 2013. The study also goes on to warn that potential tanker traffic through the “geographic bottleneck” on Douglas Channel to and from Kitimat could threaten that crucial “pit stop” for the humpback whales.
The study, “Abundance and Survival of Pacific Humpback Whales in a Proposed Critical Habitat Area,” by Erin Ashe, of the University of St. Andrews, in Scotland, Janie Wray of Oceans Initiative on Pearse Island, Christopher Picard of the North Coast Caetacian Society in Hartley Bay and Rob Williams of the Gitga’at Nation Lands and Marine Resources Deptartment, is published in the jourrnal PLOS One.
The research team estimated the abundance of Pacific humpback whales by using photo-identification surveillance of adult humpbacks. They found that the number of humpback whales in this region increased each year, and doubled from 2004 to 2011, resulting in a total of 137 identifiable whales in 2011. The survey was conducted year-round. Abundance was estimated only during the summer months of July to September, when the migrating whale population is largest.
The survey focused on summer feeding regions in the northwestern BC coastal fjords that serve as a “pit stop” for whales between migrations. Migrating whales travel to the BC coast from calving grounds as far away as Mexico, Hawaii or Japan. After several months without feeding, the humpbacks arrive in BC, and, the study says, show “strong site fidelity to local feeding grounds” around the entrance to Douglas Channel.
The authors estimated that “survivorship,” the average probability of an adult whale surviving from one year to the next on the northwest coast of British Columbia is among the highest reported anywhere for the species. During “this critical refueling stage in these waters, the whales are more vulnerable to environmental stressors, such as those potentially created by increasing tourism and industrial development in the region.”
The study also says that study area has also been identified as candidate critical habitat for northern resident killer whales and notes the region “has been recolonized by fin whales in recent years.” (With details on the fin whales to come in future studies)
The study estimates there were once about 15,000 humpback whales in the North Pacific when whalers began hunting the animals. That number was down to 1,400 when whale hunting was stopped in Canada in 1966. “It is therefore good news that the segment of the population using our study area is growing and adult survival is near the limit that one would expect for this species. That said, although the population is recovering, there is no evidence that it has yet fully recovered to pre-exploitation levels in BC and we do not wish to become complacent.” the study says.
It goes on to say:
Humpback whales may be facing increasing threats in at least one of their proposed critical habitats in BC. Numerous port facility expansions and new terminal proposals, including numerous crude oil and liquefied natural gas (LNG) export proposals, could substantially increase deep-sea shipping traffic through BC’s north and central coast waters. Such developments could exacerbate oil spill, acoustic disturbance, and ship strike risks to humpbacks. In particular, the Gil Island proposed critical habitat area where our work was conducted, spatially corresponds with all shipping routes leading to Kitimat, BC port facilities that are currently being considered by regulatory agencies for high-volume crude oil and LNG tanker traffic and other increased shipping activities.
The monitoring program showed that “a relatively large fraction of BC’s humpback whales rely on the waters around Gil Island, given the small size of the study area.”
The tail fins of a humpback whale are seen in Douglas Channel near Bish Cove, as a fishing boat speeds toward Kitimat harbour in a rain storm on Aug. 21, 2013. (Robin Rowland/Northwest Coast Energy News)
The study warns:
This high reliance on relatively small fractions of available habitat has important implications for conservation and management. It lends support to the proposal to designate the current study area as part of the population’s critical habitat…
This also suggests that area-based management for cetaceans can effectively target small areas if these areas are chosen carefully. The corollary to this, though, is that a tendency for animals to be concentrated or aggregated in small areas lends them vulnerable to catastrophic events like oil spills and ship strikes. Critical habitats like the Gil Island waters are therefore a mixed blessing when high densities of whales are found in geographic bottlenecks that also funnel and concentrate shipping traffic. Anthropogenic threats to this must be evaluated not only in terms of the proportion of available habitat that this area represents, but also in terms of its critical importance to large numbers of whales for critical life-history processes. The risk and ecological consequences of an oil spill in this region would increase substantially if proposals were approved to ship large volumes of oil and LNG traffic through the Gil Island waters. Studies in Pacific waters similar to our study area suggest that oil spills can have severe and chronic impacts to cetacean populations and it is uncertain whether affected populations can recover from such perturbations.
One reason for the study is that while the humpback is considered an endangered species in the United States, in Canada it is listed as “threatened” under Canada’s Species at Risk Act and the increasing numbers could mean that the humpback is downgraded to “special concern.”
The study was based on what is called “community based science,” a cost-effective partnership between scientists, the Gitga’at Nation and other First Nations, NGOs and the Department of Fisheries and Oceans.
As part of its Pacific humpback whale recovery strategy, DFO has proposed four areas as candidate critical habitat. One criterion for designating critical habitats within northern BC coast feeding grounds is that inlets are used for specialized ‘‘bubble-net’’ feeding behaviour (where the humpbacks create a fishing net of bubbles to catch their prey).
At the start of the study, the team had noted that “mainland inlets have been somewhat under-represented in habitat studies” and so they began working on the photo-identification of the humpbacks, using two research groups, the North Coast Cetacean Society and the Gitga’at Lands and Marine Resources Department. Surveys were conducted as weather permitted throughout the year from April to November (with occasional trips in February, March and December), from 2004 to 2011.
The aim of the study was to “collect as many high-quality photographs of individually recognizable humpback whales as possible within the study area [referred to in the study as ‘Gil Island waters’’] from Estevan Sound in the west to Ursula Channel in the east. One 27 foot and one 18 foot boat were used to conduct the surveys. A total of 374 photo- identification surveys conducted over 47 months resulted in a catalogue of 177 high-quality, unique identifications of individual humpback whales.
Information also came from “an informal sightings network including local fishermen and tourism operators who reported humpback and killer whale sightings over VHF radio;” hydrophones monitored for vocalizing humpback whales; and visual monitoring from the land-based Cetacealab facility on the south end of Gil Island.
When a humpback was sighted, they were identified by the fingerprint like tail flukes and the numbers cataloged.
The study was funded by grants to Cetacealab and Gitga’at First Nation from Julie Walters and Sam Rose, and from Fisheries and Oceans Canada (Cetacean Research Program, Species at Risk Program). There was also support from King Pacific Lodge.
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“The importance of our territorial waters for humpback and other species of whales, should give pause to those who would propose tanker routes through the Douglas Channel,” said Arnold Clifton, Chief Councillor of the Gitga’at First Nation. “The increase in whales in our territory coincides with low shipping traffic, however current proposals would increase shipping traffic to unprecedented levels. We remain resolute in our determination to protect whales and the natural heritage of our territory from tankers and other developments that would put them at risk.”
“Our study shows that while still vulnerable, humpback whales are recovering, and this area plays an important role in supporting their numbers,” said lead author, Erin Ashe, a PhD candidate at the University of St. Andrews and a co-founder of Oceans Initiative. “Identifying and protecting critical habitat is one of the most effective ways to support endangered species recovery.”
The waters around Gil Island are especially rich habitat for humpback whales, due to high abundance of their preferred foods, such as krill and herring and due to the remote nature of the coastal fjords. Humpbacks, which rely on acoustic communication, are sensitive to noise pollution from ship traffic.
“It is Cetacea Lab’s contention that all levels of government must collaborate with the Gitga’at First Nation and others in protecting humpback whales from the risk of increased tanker traffic,” said Janie Wray, whale researcher with Cetacea Lab. “This study represents the best available scientific information about the importance of this area to humpback whales. Over the course of our study, we have observed the population more than double, with mothers returning year after year with their calves, introducing the next generation of juvenile whales to the nutrient-rich feeding grounds of Douglas Channel to Caamano Sound.”
In his biweekly conference call with Northwest BC reporters, Skeena Bulkley Valley MP Nathan Cullen said: “I don’t get a sense from the way that the federal government has designed this [referring to Enbridge Northern Gateway] project, that on the marine side, any of these things are important to Mr. Harper. When you start to place down the most important values and certainly for British Columbians and Canadians, protecting a humpback feeding ground would seem like an important value in the Great Bear Rainforest, you start to see where the limits and the restrictions are on any idea of moving oil super tankers through such a narrow place. It’s just another bit of evidence, a bit of science that says this is difficult, if not impossible, and Enbridge’s project has made so many of those arguments more and more clear as we start to bring science to the table.
“It’s so frustrating for people that evidence, our opinions and our values just don’t seem to matter to the federal government. They already said yes to this thing years ago and damn the science, damn anything that comes their way. That’s not going to work, not going to work for us and not going to work for the humpback whales.”
A spokesperson for Shell’s LNG Canada project, noting that the company officials had not yet read the study, said, “It’s early days for the proposed project and the start of a thorough regulatory process. We welcome contributions and thoughts on important matters. We will look at this study. As with any project in Canada we work with local First Nations and local communities to minimize the impact of our activities.”
Neither Enbridge Northern Gateway nor Apache, a partner in the KM LNG project, responded to a request for comment.
Could the future of northwestern British Columbia’s hoped for natural gas boom depend on the outcome of this weekend’s Australian general election?
While the mainstream media in North America has mostly been following the personal feud between Prime Minister Kevin Rudd and Opposition Leader Tony Abbott or speculating whether or not Wikileaks founder Julian Assange’s party will make a ripple or a splish, a natural gas crisis has rocketed high on to the Australian election agenda.
I’ll be the first to admit that I know very little about Aussie politics, but I couldn’t ignore all the LNG and natural gas Australian election related stories that suddenly started showing up in my alerts.
LNG train “on ice”
This morning came the alert that Chevron has put the development of another train at its giant Gorgon LNG facility “on ice” (as a pun enabled headline writer in the Western Australian put it)
Chevron and its partners in the Gorgon LNG project on Barrow Island are expected to postpone work on detailed design and engineering of a fourth processing line at the mega project until at least next year as they battle to contain the soaring cost of the foundation development.
As reported by WestBusiness at the weekend, Chevron’s latest internal cost review is understood to have placed a final cost on Gorgon’s three-train venture of up to $US59 billion ($65.6 billion), or 13 per cent above the last confirmed budget revision of $US52 billion.
Chevron is refusing to discuss the status of the cost review and is understood to have told its Gorgon team to “value engineer” in the hope of substantially reducing the latest overrun on a project that was originally supposed to cost $US37 billion to complete.
Raw logs all over again
For a resident of northwestern BC, one thought comes to mind from the media reports on the LNG situation in the Australian election, it’s raw logs all over again.
It appears from those media reports that while Australia has huge reserves of shale-based natural gas, the way the country has structured its LNG boom, major industries and consumers are becoming alarmed that domestic natural gas prices for both will soon skyrocket. There are calls for whatever party wins the election to pass legislation that would create “domestic gas reservation” so that Australians won’t see the gas exported while they pay higher prices for what’s left over.
Most of the shale gas reserves are in Western Australia, while the population—and industry– are concentrated far away on the east coast.
That is leading to another controversy, demands that eastern Australia develop its coal gas reserves, which, of course, brings to mind Shell’s decision to forgo development of coal gas deposits in the Sacred Headwaters and the ongoing fight by the Tahltan First Nation to stop Fortune Minerals’ open pit coal mine in the Sacred Headwaters at Klappan.
Then there’s another vexing issue that northwestern BC is facing and soon have to deal with. In the election, some Australian politicians and unions are calling for curbs on the use for temporary (and not so temporary) foreign workers.
Another factor is the growing cost of natural gas extraction and LNG export, which has, in the midst of the election campaign, pitted Chevron against Australian unions, with Chevron executives (as they did in other contexts before the election call) pointing to Canada—that means Kitimat, folks — as the cheaper alternative.
Rising prices
The Australian has reported that a poll, commissioned by the nation’s manufacturers, so it is somewhat suspect, that:
Manufacturers will today claim that most Australians want a policy of domestic gas reservation and that this would sway voter intentions, a move set to renew the acrimonious debate over rising gas prices.
Manufacturing Australia will release a survey it commissioned where 35 per cent of people said it was “quite likely” and 13 per cent “extremely likely” that it would sway their decision at the election if a party made a policy pledge on the issue.Those uncertain stood at 21 per cent.
Bob Katter flew through Gladstone as fast as the wind whistled through Spinnaker Park on Monday, where he told local media he wanted to reserve a domestic gas supply for Australia and scrap the 457 visas that bring foreign workers into the country….
Mr Katter said mineral processing was under enormous pressure in Australia with copper processing wiped out in northern Queensland and to counter that, the Katter Australia Party would reserve 1% of the gas supply for Queensland.
“Because of the escalating skyrocketing cost of coal, gas and electricity in the past eight years, one per cent of the gas will be reserved for the benefit of the people in Queensland if not Australia,” he said.
“That gas will be used to produce electricity at prices our retirees can afford, and young families can afford, and most importantly that our mineral processing plants have prices for processing they can afford.”
Coal gas
Another story in The Australianquotes James Baulderstone of the Australian energy company Santos:
THE NSW gas industry has warned of higher gas prices, job cuts and a significant risk to the state’s energy security if the coal-seam gas sector is not developed.
James Baulderstone, vice-president of eastern Australia at Santos, said without indigenous gas of its own, NSW had no ability to control its energy supply security.
“NSW faces prospective gas shortages as long-term contracts underpinning the state’s gas supply expire over the next two to three years, the very time in which the commencement of LNG exports from Queensland will see annual gas demand in eastern Australia triple,” he said.
“Looming natural gas shortages in NSW could be avoided by the timely and balanced development of the state’s already discovered reserves of natural gas.”
Also embroiling the election is the growing dispute between Chevron and the Australian unions. As the Australian Financial Review reported, Chevron is claiming that high costs are slowing the LNG projects and blaming the government of Prime Minister Kevin Rudd.
The federal government has rejected claims from Chevron that Australia’s high-cost economy is threatening the nation’s biggest energy project, Gorgon, even as the Maritime Union of Australia demands a 26 per cent pay rise and more than 100 other benefits for its members, including Qantas Club memberships and iTunes store credits.
As Chevron’s $52 billion Gorgon project became embroiled in the election campaign, trade union officials accused Chevron of seeking to dodge responsibility for poor labour productivity and high costs.
The union’s demands for employees working for 19 offshore oil and gas contractors around Australia include a 26 per cent raise over four years, no foreign labour without consultation, union control of hiring and four weeks holiday for every four weeks work.
(Note there are accusations of biased reporting during this election, especially from the media owned by Rupert Murdoch. I could find no independent confirmation of union demands for airline memberships and iTunes credits)
The Australian Labour minister, Gary Gray, who is from Western Australia, and according to reports, in a tough re-election fight, is blaming Chevron and the other energy companies for “failing to control the costs of their staff and contractors.”
“We do need our companies to get better in managing their productivity issues,” he said.
Prime Minister Kevin Rudd said he had studied China’s latest five-year economic plan and concluded Australia’s industrial relations system wasn’t hurting the industry.
Boom or bust?
The Australian Financial Review quotes Chevron Australia managing director Roy Krzywosinski as saying Australia has a two-year window to get policy settings right and fix industrial relations and productivity or risk losing out on billions of further investment in liquefied natural gas projects.
It goes on to make a reference to Shell and operations in Canada—again that’s Kitimat folks.
after the unprecedented rush of LNG investment in the past four years, Australia has become the most costly place worldwide for new plants, while new competition is emerging in North America and east Africa.
Shell, which has slowed its $20 billion-plus Arrow LNG project in Queensland, said construction costs in Australia are now up to 30 per cent higher than in the US and Canada.
Mr Krzywosinski said LNG projects are “long-term projects that transcend governments” and Chevron would work with all sides of politics to get policy settings right.
The investment surge in LNG – often favourably compared with the Apollo moon program in its magnitude – is in some ways a bubble. Firms have rushed in, extrapolated an endless supply/demand imbalance for their product, ignored global competition, over-paid for assets and developed with little thought to what others were doing, grossly inflating input costs in the process.
The blogger goes on to say
This fallout is typical of the “built it and they will come” attitude that seized energy and mining executives in the final stages of the “commodity super cycle” boom. A similar story, with different dynamics, is playing out in coal and next year in iron ore.
The unions are largely not to blame for the cost blowouts even if they are a party to them. They are, after all, unions. What does capital think will happen if it hands them such a card to play?
Sound familiar? Australia a mirror of the BC election?
Again it appears from this far off shore, that the Australian election is somewhat mirroring the recent BC provincial election and not only because of the issue of LNG. The Labour PM Kevin Rudd returned to power after three years on the back benches, coming back after the party dumped PM Julia Gillard.
Like BC, the Australian Liberal Party is really conservative. The Liberal Leader Tony Abbott, wants to abolish Australia’s carbon tax but Abbott is also threatening to fine companies that don’t lower prices if (or when) the carbon tax is abolished.
The polls show that the Liberal Party is leading, but that Kevin Rudd is more popular than Tony Abbott. Rudd is running an attack campaign against Abbott, warning of the consequences of an (conservative) Liberal victory. Sounds a bit like Christy Clark.
Given the split in the polls, with the leader of one party more popular than the leader of the party that is leading the polls, this video of the editors of The Australian which accompanies this story shows their senior editors are awfully confident, perhaps over confident, about the polls. I know given what happened in BC, Alberta and even Israel, I’d be a lot more skeptical.
We’ll know the outcome of the Australian election by this time next week. As for LNG, given the volatility of the market, who knows?
(Editor’s Note: Tony Abbott and the Australian Liberal Party won a landslide victory in the weekend vote)
(Note some of the Australian media sites appear to be metered and allow only one viewing)
Kinder Morgan has filed a last minute objection to the Northern Gateway Joint Review Panel’s preliminary conditions for the Enbridge project.
One of the objections from Kinder Morgan is the provision in the JRP’s proposed Gateway conditions for “purpose built tugs” to escort tankers (a measure that Enbridge has proposed for the Gateway project). Another provision Kinder Morgan objects to is “secondary containment facilities at marine terminals” likely to become an issue if the Vancouver terminal is expanded by Kinder Morgan.
Overall, Kinder Morgan warns that if the JRP imposes some of the proposed conditions on the Northern Gateway, it could adversely affect future pipeline projects in British Columbia.
As well, Kinder Morgan, it appears, is already concerned that if the proposed oversight of Northern Gateway goes ahead, the Kinder Morgan plan to twin the pipeline from Alberta to Vancouver and expand terminal operations in Vancouver could face ongoing scrutiny and possible delays.
The Kinder Morgan document, from the company’s Calgary lawyer, Shawn Denstedt, of Osler, Hoskins and Harcourt, filed May 31, appeared among all the final arguments filed on Friday by intervenors and governments to the Joint Review Panel on Northern Gateway.
Kinder Morgan’s letter to the JRP comes long after the final deadline for such comments.
Kinder Morgan is a registered intervenor in the Northern Gateway hearings, but has only filed four previous documents during the entire multi-year process. The company does not appear on the list of intervenors scheduled to appear for oral final arguments in Terrace beginning on June 17.
On April 12, 2013, the JRP issued a preliminary list of 199 conditions for the planning, construction and operation of the Northern Gateway project.
Now Kinder Morgan is worried. Denstedt’s letter notes:
we believe a number of the proposed conditions may have a material impact on pipeline and infrastructure development in Canada and consideration should be given to the conditions from this perspective.
Diplomatically, Denstedt goes on to tell the panel:
Our comments are intended to assist the JRP in understanding the potential outcomes of the proposed conditions if they become generally applicable to industry.
Commercial considerations
Under what Detstadt calls “Commercial considerations”, Kinder Morgan says “we observe that several of the proposed conditions are likely to affect the manner and risks involved in procuring pipeline facilities and services.
The list points to
Three layer composite coating or high performance composite coating is required for the entire pipeline although other pipeline coatings are commonly used in the pipeline industry depending upon ground conditions encountered
.
Complementary leak detection systems must be identified that can be practically deployed over extended distances of pipeline.
The construction of purpose-built tugs involves significant cost and lead time
A volume is prescribed for the secondary containment facilities at the marine terminal without reference to existing codes.
The letter goes on to say that if the conditions proposed by the JRP for the Northern Gateway come into effect, in Kinder Morgan’s opinion, it could adversely affect other pipeline projects in the future.
If broadly applied to industry, such conditions may limit the ability of pipeline companies to obtain competitive quotes because there are few sources of the required materials or services. The effect of conditions that require the use of a particular material or service may be to grant commercial benefits to certain suppliers through the regulatory process beyond the requirements of existing codes. Since several export pipelines are currently proposed, there will be a heightened demand for labour and materials in the coming years. The commercial effect of conditions that may exacerbate shortages of labour and materials should be a relevant consideration for the JRP.
Timing
One of Kinder Morgan’s objections is to the timing the JRP proposes for the Northern Gateway project if it applies to other pipelines.
Several of the proposed conditions contain NEB approval requirements and filings deadlines several years prior to operations. For example, plans related to the marine terminal and research programs must be filed for NEB approval three years prior to operations.
We are concerned that requiring reports to be filed for approval several years before operations can create significant schedule risks for infrastructure development projects. For example, a project with a two year construction schedule could take three years to complete with such conditions. Any changes to the construction schedule and anticipated date of operations would affect the filing deadline. Project proponents need sufficient schedule certainty in order to plan major expenditures on labour and materials.
To mitigate such risks, it is relevant for regulators to consider whether the filing deadlines and approval requirements prescribed in conditions could materially alter a project’s schedule. Filing deadlines should be set at a reasonable time before operations in order to minimize the risk that such deadlines materially affect the critical path for a project.
Many of the conditions require NEB approval, and in some cases the participation of other parties in the approval process, in order to be satisfied. Fulfillment of those conditions will require additional time, a Board process and potentially litigation. For example, certain reports must be filed with the NEB for approval prior to commencing construction activities. Other conditions require reports to be filed for approval by the NEB prior to construction with a summary of how concerns from other government agencies and Aboriginal groups were addressed.
So Kinder Morgan says:
In our view, conditions that require subsequent board approvals and that attract the potential for additional regulatory processes should be the exception and not a new standard or norm. There must be clear, well understood rationales given as to why additional approvals are in the public interest.
And so Kinder Morgan asks:
As an alternative, the NEB may utilize its existing powers and processes to ensure that when filings are made to satisfy imposed conditions an additional approval process is not required.
Overall the company sees the rules for Northern Gateway as a step back to the days before deregulation.
A number of the conditions may be interpreted as reflecting a return to a prescriptive approach to regulation. These conditions prescribe detailed audit requirements instead of setting a goal oriented approach to allow the proponent flexibility in mitigating any adverse effects. Such conditions tend to focus on operational aspects that are covered by existing codes and regulations rather than setting goals for the proponent to mitigate any significant adverse effects.
Denstedt, again diplomatically, concludes by saying:
Kinder Morgan wishes to thank the JRP for the opportunity to present these high level perspectives regarding its proposed conditions. Our comments are intended to ensure that the wider implications of the proposed conditions on the pipeline industry and infrastructure development are given appropriate consideration in the deliberations and final recommendations of the JRP.
