National Geographic maps Haisla and other First Nations’ traditional territory, pipeline routes and BC ‘s wild salmon

The September issue of National Geographic includes a large map of British Columbia it calls “Claiming British Columbia.”

natgeohaisla3
(National Geographic)

The map has three themes: First Nations’ traditional territory, the routes of proposed pipeline projects, both LNG and diluted bitumen, and it features a sub map that looks at what the map calls the “Troubled Salmon” fishery.

The cartographers at National Geographic are being very careful, avoiding such troubling issues as competing land claims among First Nations, unresolved land claims with the federal and provincial governments and treaty status.

natgeohaisla
(National Geographic)
(National Geographic)
(National Geographic)

So by and large the map groups First Nations by language group unless there are definite treaty or reserve boundaries. Large reserves under the Indian Act are on the map, but given the post stamp size of many reserves in British Columbia, those reserves are too small to be seen on the map. Towns and cities are identified as “First Nations” communities which often overlap with settler communities. Again the map misses many smaller communities, so Kitimat is on the map, while Kitamaat Village is not.

(National Geographic)
(National Geographic)

The map identifies Haisla traditional territory as “Xenaksilakala/Xa”islakala” and also includes the Kitlope Heritage Conservancy Protected area.

The article in the September issue is called The Pacific Coast, but unfortunately there is not much of a tie-in with the map, since it concentrates on California and Alaska with only a passing mention of British Columbia.

On the obverse side of the map is the poster that is promoted on the magazine cover, a beautiful painting of “The Changing Pacific Coast” which covers kelp and every creature from phytoplankton and zooplankton all the way to humpback whales and sea gulls (but for some reason no bald eagles). It is likely that poster will be on display in classrooms up and down the coast before school opens next week.

Dilbit dangerous to young fish, laboratory study shows

Diluted bitumen, also known as dilbit, a mixture of oil sands bitumen and natural gas dilutants can seriously harm fish populations, according to research study at Queen’s University and the Royal Military College of Canada published this week.

At toxic concentrations, effects of dilbit on exposed fish included deformities and clear signs of genetic and physiological stress at hatch, plus abnormal or uninflated swim bladders, an internal gas-filled organ that allows fish to control their buoyancy. Exposure to dilbit reduces their rate of survival by impairing their ability to feed and to avoid predators.

Post-doctoral fellow Barry Madison works with the fish in Valerie Langlois' lab. (Queen's University)
Post-doctoral fellow Barry Madison works with the fish in Valerie Langlois’ lab. (Queen’s University)

Among the other findings from the study were

    • Embryo toxicity of dilbit was comparable to that of conventional oils.
    • Developmental malformations increased with increasing dilbit concentrations.
    • Chemical dispersion broadened the genotoxic effects of dilbit

“This new study provides a clearer perspective on the potential risks to Canada’s aquatic resources of dilbit spills, and a technical basis for decisions on dilbit transportation within Canada,” says Peter Hodson Environment Studies, Biology at Queens. “It reduces some of the uncertainty and unknowns about the hazards of dilbit.”

This study characterized the toxicity and physiological effects of unweathered diluted bitumen (Access Western Blend dilbit; AWB) to a fish used for laboratory studies. Embryos of Japanese medaka (Oryzias latipes) were exposed for 17 days to dilutions of dilbit physically-dispersed by water and chemically-dispersed by dispersants

AWB dilbit exposure was not lethal to medaka, but resulted in a high prevalence of blue sac disease (BSD), impaired development, and abnormal or un-inflated swim bladders. Blue sac is a disease of young trout and other salmonid species; usually caused by unsuitable hatchery water. It turns the yolk sac bluish and is thought to be caused by a lack of oxygen.

The research was funded by Fisheries and Oceans Canada’s National Contaminants Advisory Group and the next stage will determine whether fish species native to Canada will be affected by dilbit exposure. The work also includes the development of genetic markers of exposure to dilbit and toxicity that could be used to assess whether wild fish that survive a spill are still affected.

The research team includes Dr. Valérie Langlois (Environmental Studies, Royal Military College of Canada) and Dr. Barry Madison (Royal Military College of Canada).

Dr. Hodson is also a member of a Queen’s research team tasked to determine whether dilbit spilled into rivers would contaminate bed sediments, specifically areas where fish such as salmon, trout, chars, whitefish and graylings spawn, to the extent that the survival of their embryos would be affected.

The research was published in ScienceDirect and is one of the first studies of dilbit on young fish.

The finding could be significant because both the proposed Northern Gateway pipeline and the proposed Kinder Morgan expansion will cross areas near spawning streams.

Kitimat Council endorses David Black’s Kitimat Clean refinery proposal

David Black
Publisher David Black chats with members of the environmental group Douglas Channel Watch, prior to Kitimat Council, May 5, 2014. (Robin Rowland/Northwest Coast Energy News)

District of Kitimat Council Monday endorsed, in a six to one vote, publisher David Black’s proposal for a refinery at Onion Flats north of Kitimat.

The motion, proposed by Councillor Mario Feldhoff was:

 

That the District of Kitimat write a letter to the Prime Minister, copying the Premier of BC, endorsing Mr. David Black’s Kitimat Clean refinery proposal and asking that it be supported  by senior levels of government, thereby reducing  environmental impacts and risks associated with the Northern Gateway, while significantly increasing economic value-added  and associated taxation benefits to the Pacif Northwest, BC and Canada.

The lone dissenting vote came from Councillor Rob Goffinet, who wanted a more generic motion, dropping direct references to David Black’s proposal and replacing it with the term “value added.”

Before the vote, Black made a presentation to Council outlining details of the proposal. Black will be hosting a public meeting on the proposal at Riverlodge at 7:30 p.m. Tuesday.

Ottawa’s Northern Gateway consultation with First Nations limited to three simple questions and 45 days: documents

The federal government’s main consultation with First Nations on the Northern Gateway Joint Review Panel report is limited to just three simple questions that had to be answered within 45 days, according to documents seen by Northwest Coast Energy News.

Joint Review Panel cover
Cover of Volume 1 of the Joint Review Panel ruling on Northern Gateway

That despite the fact that the first volume of the JRP report “Connections” is 76 pages and the second volume “Considerations” is 418 pages including the 209 recommendations and appendices and came after two years of hearings and tens of thousands of pages of evidence.

On Dec. 6 and again on Dec. 16, 2013, just prior to the release of the Joint Review Panel report, Brett Maracle, Crown Consultation Coordinator at the Canadian Environmental Assessment Agency for the Northern Gateway project wrote to the First Nations potentially affected by Northern Gateway, saying their response had to be filed within 45 days of the release of the JRP. Since the report was released on December 19, 2013, that made the initial deadline January 31, 2014.

The letter also told the First Nations that if they wanted their positions included in the “Crown Consultation Report” that would be part of the package on Northern Gateway presented to the federal cabinet, that position had to be limited to just two to three pages “given the number of groups involved” with a final deadline of April 16, 2014.

Maracle’s letters used the term Phase IV to define the post JRP consultations, implying there were three earlier stages of consultation, something many First Nations have disputed, especially since the Harper government had earlier maintained that the JRP itself was the constitutionally mandated consultation.

The cabinet has until June 19, 2014, 180 days after the release of the report to approve the issuing of the federal permits for the Northern Gateway project. Consultation with First Nations on projects such as the Northern Gateway is required by the Constitution and has been upheld by the Supreme Court of Canada.

The three questions outlined in the letter were:

  • Does the Report appropriately character the concerns you raised during the JRP process?
  • Do the recommendations and conditions in the Panel Report address some/all of your concerns?
  • Are there any “outstanding” concerns that are not addressed in the Panel Report? If so, do you have recommendations (i.e proposed accommodation measures) how to address them?

Consultation on implementation

The third question appears to confirm what most political observers have said, approval of the Northern Gateway by the Harper cabinet is a a forgone conclusion, since Maracle speaks of “accommodation measures.” When the JRP approved the Northern Gateway project, the panel said that Enbridge’s proposed “mitigation” measures in case of a spill were adequate, something environmental groups and First Nations are now disputing in court.

It appears from the correspondence seen by Northwest Coast Energy News, that the federal government will only consider further specific consultations with First Nations after the approval of the Northern Gateway and only then on the implementation and construction process, rather than consulting on the project as a whole.

The Haisla have filed a document in response to the JRP that notes that

The Haisla Nation needs to understand Canada’s views of the role that future federal decisions might play for the proposed project. In its December 12, 2013 to Mr. Maracle, the Haisla Nation asked the federal government to provide a comprehensive list of the regulatory permits which would be issued the the federal government decision-makers in Haisla Nation Territory in the event the proposed project is approved and describe the consultation process that would occur prior to decisions being on those regulatory permits, within 45 days of the issuance of the JRP Report.

Mr. Maracle’s January 29, 2014 [reply] suggests that the only future federal decisions on the proposed project which may entail consultation are specific watercourse crossing and fish habitat destruction permits issued by Fisheries and Oceans Canada.

Whole-of-government

One of the problems reaching back to long before the Joint Review Panel hearings began is that the Harper government policy was what they called a “whole-of-government” approach in its consultations with First Nations, saying: “The Crown is open to discussing how consultation with the framework provided will be carried out.”

In their repose, the Haisla say the federal government never defined how the “whole-of-government” approach to First Nations was going to work and noted:

What Canada should have realized is that it has a very real obligation to consult with the Haisla Nation at the deepest end of the consultation spectrum that cannot be pigeon-holed into a one size fits all approach.

Further, the term whole-of-government is misleading, as this approach actually prohibits the majority of government from engaging in consultation.

The Haisla then say: “Documents we have obtained under an Access to Information Request clearly indicate individual departments were asked not to communicate directly with the Haisla Nation.”

The response goes on to say:

Further questions at federal government witnesses during the JRP process confirmed that federal departments had not met with the Haisla Nation since the commencement of the JRP process. While these witnesses were reluctant to confirm that they had been prohibited from meeting with us, they repeatedly referred to the “whole-of-government” approach to consultation as their reason for not meeting.

Canada’s “whole-of-government” approach clearly limited engagement to a strict process with no opportunity for real engagement.

Earliest stages

The Haisla are telling the Harper government:

It is clear that the Haisla Nation that we are the very earliest stages of consultation with Canada about the proposed project….It is clear to the Haisla Nation that the 45-day period within which Canada has unilaterally determined face-to-face meetings with all the Aboriginal groups potentially affected by the proposed project will occur is not an adequate amount of time to complete a meaningful consultation process.

 

Related

Haisla ask cabinet to postpone Northern Gateway decision to allow for adequate consultation with First Nations

Haisla consultation reply outlines flaws in Northern Gateway Joint Review report

Haisla response lists evidence rejected by Northern Gateway Joint Review

Two JRP conditions are already outdated, Cullen says

Skeena Bulkley Valley MP Nathan Cullen says at least two of the Northern Gateway Joint Review Panel’s 209 conditions may already be outdated.

In a news release January 15, 2013, Cullen said, “The requirement of $950 million in spill insurance was recently called into question as reports surfaced of cleanup costs at the sites of Enbridge’s 2010 Michigan spill surpassing $1.035 billion.”

The $1.035 billion figure was contained in Enbridge’s American arm, Enbridge Energy Partners, latest filing for the third quarter over 2013 with the US Securities and Exchange Commission.
Cullen went to say that, “The JRP’s order for Enbridge to carry out new research on the behaviour of diluted in bitumen in a marine environment has been questioned following the publication of an Environment Canada study confirming that diluted bitumen will sink in saltwater in high waves and where sediment is present.”

Cullen is referring to a study by Environment Canada Emergencies Science and Technology,Fisheries and Oceans Canada Centre for Offshore Oil, Gas and Energy Research and Natural Resoures Canada on bitumen that was completed in November and released this week.

The study found

. Like conventional crude oil, both diluted bitumen products floated on saltwater (free of sediment), even after evaporation and exposure to light and mixing with water;
. When fine sediments were suspended in the saltwater, high-energy wave action mixed the sediments with the diluted bitumen, causing the mixture to sink or be dispersed as floating tarballs;
(The use of the term “tarball” in this report follows convention in the literature and refers to the consistency of floating, heavily-weathered oil. It does not describe the chemical composition of the product.)
. Under conditions simulating breaking waves, where chemical dispersants have proven effective with conventional crude oils, a commercial chemical dispersant (Corexit 9500) had quite limited effectiveness in dispersing dilbit;
. Application of fine sediments to floating diluted bitumen was not effective in helping to disperse the products;
. The two diluted bitumen products display some of the same behaviours as conventional petroleum products (i.e. fuel oils and conventional crude oils), but also significant differences, notably for the rate and extent of evaporation.

Read the report:Properties, Composition and Marine Spill Behaviour, Fate and Transport of Two Diluted Bitumen Products from the Canadian Oil Sands (pdf)
The Joint Review Panel found that dilbit was “ no more likely to sink to the bottom than other
heavier oils”

The Panel acknowledges the variety of opinions from experts regarding the behavior and fate of oil spilled in aquatic environments. These experts generally agreed that the ultimate behavior and fate of the oil would depend on a number of factors, including the volume of oil spilled, the physical and chemical characteristics of the product, and the environmental conditions at the time.

The Panel finds that likely oil behaviour and potential response options can be predicted from knowledge of the type of oil spilled and its physical and chemical characteristics. Details of oil behaviour and response options cannot be specified until the actual circumstances of a spill are known.

The Panel is of the view that, if placed along a spectrum of: tendency to submerge; persistence; and recovery difficulty, dilbit would be on the higher end of the spectrum, similar to other heavy oil products.

The Panel accepts evidence from previous spills showing that, in response to circumstances at the time, the behaviour of heavier oils, including conventional oils and synthetic crudes, can be dynamic. Some oil floats, some sinks, and some is neutrally buoyant and subject to submergence and overwashing.

Although the project would transport different types of oil, the majority of the evidence presented during the hearing process focussed on whether dilbit is likely to sink when spilled in an aquatic environment. In light of this, the Panel has chosen to focus its views on dilbit. The Panel heard that the fate and behaviour of dilbit has not been studied as much as that of other oils.

Although there is some uncertainty regarding the behavior of dilbit spilled in water, the Panel finds that the weight of evidence indicates that dilbit is no more likely to sink to the bottom than other heavier oils with similar physical and chemical properties.

The Panel finds that dilbit is unlikely to sink due to natural weathering processes alone, within the time frame in which initial, on-water response may occur, or in the absence of sediment or other particulate matter interactions. The Panel finds that a dilbit spill is not likely to sink as a continuous layer that coats the seabed or riverbed.

“It hasn’t even been a month since the JRP released their 209 conditions, and it seems like we’re already seeing some of them become obsolete,” Cullen said.

“Throughout the review process, the JRP continually ignored the situation in Michigan as it unfolded before our eyes. They saw the spill caused by Enbridge’s negligence, which was worsened by Enbridge’s incompetence, and how it brought untold damage to the local ecosystem and cost over $1 billion US. But the 209 conditions didn’t reflect what we learned about Enbridge’s history or its culture, or what we’ve learned about diluted bitumen at all.”

The Joint Review process was set up to deliver a positive verdict, according to Cullen, regardless of what the real life case studies in Michigan had already shown. “To say that it won’t cost as much – if not more – to respond to a spill in a remote corner of northwestern BC during winter than it was in Michigan in the middle of July is ridiculous,” Cullen said.

“What’s even more astonishing is that we asked repeatedly for these studies on the behaviour of diluted bitumen in the marine environment to be part of the Joint Review Panel’s assessment. That the government waited until after the JRP had given its conditional yes to release these findings is not only appalling but also highly suspect.

Cullen says there are two key questions that the Harper government now must answer. “What kind of protection is the government providing when it lowballs on the insurance for oil spills? And what kind of oversight is it giving Canadians when the verdict is given before the evidence is released?”

 

EPA Orders Enbridge to Perform Additional Dredging to Remove Oil from Kalamazoo River

The United States Environmental Protection Agency has ordered Enbridge to dredge the Kalamazoo River to remove addition bitumen.

The EPA issued this news release

CHICAGO (March 14, 2013) – The U.S. Environmental Protection Agency today issued an administrative order that requires Enbridge to do additional dredging in Michigan’s Kalamazoo River to clean up oil from the company’s July 2010 pipeline spill. EPA’s order requires dredging in sections of the river above Ceresco Dam, upstream of Battle Creek, and in the Morrow Lake Delta.

EPA has repeatedly documented the presence of recoverable submerged oil in the sections of the river identified in the order and has determined that submerged oil in these areas can be recovered by dredging. The dredging activity required by EPA’s order will prevent submerged oil from migrating to downstream areas where it will be more difficult or impossible to recover.

Enbridge has five days to respond to the order and 15 days to provide EPA with a work plan. Dredging is anticipated to begin this spring and is not expected to result in closures of the river. EPA’s order also requires Enbridge to maintain sediment traps throughout the river to capture oil outside the dredge areas.

On July 26, 2010, Enbridge reported that a 30-inch oil pipeline ruptured near Marshall, Michigan. Heavy rains caused the spilled oil to travel 35 miles downstream before it was contained.

 

PART ONE: What the State Department Keystone EIS says about Kitimat

The United States Department draft Environmental Impact Statement (EIS) not only had to evaluate the main subject, the controversial Keystone XL pipeline project, but possible alternatives as well.

So that’s why the EIS took a couple of looks at Kitimat, with two possibilities for replacing the Keystone XL with a Kitimat terminal.

• Rail to Vancouver or Kitimat, British Columbia and tanker to the Gulf Coast area refineries
• The proposed Nothern Gateway Pipeline project.

The study doesn’t just include various forms of diluted bitumen from the Alberta bitumen sands, but  petroleum products from the Western Canadian Sedimentary Basin (WCSB) and crude oil from the Bakken shale shipped to the refineries on the US Gulf Coast which would be served by the Keystone XL pipeline if it was not approved.

The EIS examined the Northern Gateway project and rejected the Enbridge pipeline as a possibility for Alberta bitumen and crude because of the continuing controversy.

However, a reading of the report shows that there could be pressure in the future for a bitumen or crude export terminal at Kitimat that would be served by the existing CN rail line (even though the State Department report prefers Prince Rupert as the best choice as an alternative to Keystone).

Enbridge is proposing to construct the Northern Gateway pipeline, which would transport up to 525,000 bpd of crude oil 1,177 km from Bruderheim, Alberta, to the Port of Kitimat, British Columbia. The port would be improved with two dedicated ship berths and 14 storage tanks for crude oil and condensate. Enbridge intends for the pipeline to be operational around 2017. A regulatory application was submitted in 2010, which is undergoing an independent review process led by the Canadian National Energy Board and the Canadian Environmental Assessment Agency. The pipeline would traverse First Nation traditional lands and important salmon habitat. The project has been controversial and has encountered opposition from some
First Nation bands and other organizations. Opposition to the project remains strong as evidenced by media reports of the January 2013 public hearings in Vancouver on the permit application. It remains uncertain at this time if the project would receive permits and be constructed, and therefore the option of moving additional crude to Kitimat was eliminated from detailed analysis.

The report goes on to say that Enbridge is moving the target for the Northern Gateway due the controversy and the longer than expected Joint Review Panel hearings

Enbridge is now stating in investor presentations that the Northern Gateway pipeline
(525,000 bpd expandable to 800,000 bpd) may be operational by “2017+”

However the State Department report does seriously consider transportation of WCSB crude by rail to Vancouver, Kitimat and Prince Rupert. The report takes an in-depth look at the railway to Prince Rupert option.

One reason is that even if it is transported by rail, the market in Asia is still more attractive to the energy industry than using Kitimat or Prince Rupert as a possible terminal for export to the US Gulf.

The transportation costs of shipping to Asia via the Canadian or U.S. West Coasts
would be significantly cheaper than trying to export it via the U.S. Gulf Coast.

The total per barrel cost of export to Asia via pipeline to the Canadian West Coast and onward on a tanker is less than just the estimated pipeline tariff to the U.S. Gulf Coast for the proposed Project, and is less than half the cost of the Gulf Coast route to Asia. If pipelines to the Canadian West coast are not expanded or approved, even incurring the additional cost of rail transport to the West Coast ports (Vancouver, Kitimat, or Prince Rupert), estimated at $6 per barrel, results in a total transport cost to Asia that is still 40 percent cheaper than going via the Gulf Coast Absent a complete block on crude oil exports from the Canadian West Coast, there would be little economic incentive to use the proposed project as a pass through. The high costs of onward transport to other potential destinations tend to mitigate against WCSB heavy/oil sands crudes being exported in volume from the Gulf Coast.

The EnSys 2011 study found that the rail systems of the United States and Canada were not at that time running at capacity, that there is significant scope to expand capacity on existing tracks through such measures as advanced signaling, and that adequate cross-border Canada/U.S. capacity exists to accommodate growth in rail traffic that would be associated with movements at the level of 100,000 bpd cross-border increase per year or appreciably higher. In addition, rail lines exist to ports on the British Columbia coasts (notably Prince Rupert, Kitimat, and Vancouver), which could be used for export of Western Canadian crudes.

And later in the report:

both of these proposed pipeline projects to Canada’s West Coast face significant
resistance and uncertainty, but there are strong cost advantages when compared with moving WCSB crude to the Gulf Coast even if rail were used to access the Canadian West Coast In fact, using rail and tanker to ship crude oil from the WCSB via the West Coast to China is comparable to the pipeline rate to reach the U.S. Gulf Coast. An increase in the transport costs to the Gulf Coast (utilizing alternative transport options such as rail) would have a tendency to increase the
economic incentive to utilize any West Coast export options, if they are available.

The report also notes the change in Canadian laws in the omnibus bills pushed through by Stephen Harper’s Conservative government:

Also not examined above, are more speculative political impacts that might occur as a result of a decision on the permit application for the proposed Project. In 2012, the Canadian government enacted new laws changing the way some major infrastructure projects, such as pipelines, are reviewed. Among the changes made were limits on the amount of time for such reviews. A declared intent was to promote alternative routes for the export of WCSB crude oils, especially
ones that would reduce reliance on the United States as, essentially, the sole market option.

In other words, even if Northern Gateway is stopped, there could be considerable pressure to export bitumen and crude oil from Alberta not only through Prince Rupert, the site preferred by the State Department EIS, but though Kitimat as well.

That might just open the door for David Black’s proposed $16 billion refinery at Onion Flats near Kitimat. As noted elsewhere on the site Black has possible investors for construction of a new oil refinery approximately 25 kilometers to the north of Kitimat BC on a 3,000 hectare site.

Black’s Kitimat Clean website says the refinery would process 550,000 barrels per day (87,445 cubic meters per day) of diluted bitumen from the oilsands region of Alberta delivered to the site by pipeline or by rail. The diluent will be extracted at the refinery and returned to Alberta if needed there. If not, it would be processed into gasoline. The bitumen will be converted into fuel products, primarily for export.

Black’s plans call for connecting the Northern Gateway bitumen Pipeline to the site. From the refinery six dedicated product pipelines will run to a marine terminal on the Douglas Channel. The Douglas Channel is a wide and deep fjord. VLCC (Very Large Crude Carrier) tankers will transport the refined fuels to markets around the Pacific Rim.

If the Northern Gateway is stopped, Black’s plans call for 12 additional 120 car trains running through every day. (Six in each direction)
Northwest Coast Energy News Special report links

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

State Department news release

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

 

PART TWO: What the State Dept. Keystone EIS says about Kinder Morgan and Vancouver harbour

The US State Department report on the controversial Keystone XL pipeline project also looks at the Kinder Morgan Transmountain pipeline (both the existing line and the proposed second line) and, in at least one part of the report, seems to speculate that, once expansion of the Panama Canal is completed in 2014, there could be larger tankers in Vancouver harbour, something that up until now, both Kinder Morgan and Port Metro Vancouver have denied. However, the State Department report does not say how the port of Vancouver could handle larger tankers.

The State Department EIS says if larger tankers were loaded at Vancouver, it could be economic for crude from the Kinder Morgan Transmountain pipeline to be moved to the US Gulf Coast.

Using heavy crude as a basis, a present day movement via Trans Mountain to Vancouver and thence on a Panamax tanker via the Panama Canal to Houston would have a total freight cost (pipeline tariff plus tanker freight and Panama toll) of around $8.50-9.50/barrel (bbl).

Recognizing that Kinder Morgan plans to enable future shipment in larger Suezmax tankers, and that the Panama Canal Authority is expanding the Canal to take tankers of that size, the rate using a Suezmax would be approximately $1/bbl lower. These rates compare to approximately $8/bbl to move heavy crude via pipeline from Hardisty to Houston. Thus, while in normal markets, a tanker movement from Western Canada would be somewhat more costly than via pipeline, in a scenario where ability to move WCSB crudes by pipeline to the U.S. Gulf Coast were constrained, refiners in the U.S. Gulf Coast could opt for tanker transport.

(The Panama Canal expansion program began in 2006 and is scheduled for completion in 2014)

Latest progress report (pdf)

According to the progress report the current Panama Canal has the capacity for ships that are 32.3 metres wide by 304.6 metres long, This will increase to 49 metres wide by 366 metres long.

Later in the report the State Department goes on to say that bitumen and crude could, as an alternative to Keystone, go to Vancouver:

Under this option, WCSB [Western Canada Sedminetary Basin] would be shipped by existing railways or new pipelines from the Hardisty region to Vancouver or Kitimat, British Columbia for shipment by marine transport through the expanded Panama Canal and delivery to Gulf Coast area refiners. This option considers moving up to 730,000 bpd of heavy crude to the Port of Vancouver and then to the marine docks at the Westridge marine terminal in Vancouver or the port in Kitimat. Under this option, crude oil could move either via rail or by a new pipeline from the Hardisty region.

Currently, Kinder Morgan is planning an expansion of the existing Trans Mountain pipeline originating at Edmonton, increasing its capacity from 300,000 bpd (current) to up to 890,000 bpd(planned for operations in 2017).

The Trans Mountain pipeline runs into Vancouver via the existing Burnaby terminal over to the Westridge dock for loading heavy crude onto vessels. The pipeline has sufficient commitment from shippers to proceed with engineering and permitting processes. Kinder Morgan indicates that the project would significantly increase tanker traffic from about 5 to 34 cargoes per month, or up to about 400 cargoes per year . The increased marine traffic is due to increased volume to be shipped, and lack of sufficient channel draft to load larger vessels.

Kinder Morgan on its website says

The proposed expansion at Westridge Terminal is based on the loading of Aframax tankers, the same tankers currently being loaded at Westridge. Larger tankers are not permitted in the Vancouver harbour, and are not under consideration for the expansion. Proposed changes at the dock include new loading facilities, fire protection, vapour recovery, secondary containment, and emergency response equipment.

To connect the Burnaby Terminal with the Westridge Terminal, the proposed expansion includes two new, four-kilometre pipelines each with a diameter of 762 millimeters (30 inches). These two new delivery lines would provide product deliveries to tankers at two new dock berths, and provide the scheduling flexibility required for a marine operation.

Port Metro Vancouver also says on its website:

The role of Port Metro Vancouver is to conduct a rigorous project review to ensure the safe movement of goods through the Port. Kinder Morgan has yet to submit a formal project proposal to Canada’s National Energy Board. If they do, and should approval be granted, the project would then undergo several other permitting processes, one of which is a Port Metro Vancouver Project Permit Review. Vancouver is a very low volume tanker port. Currently, there are about 100 crude oil and chemical tankers calling the port each year. If the Kinder Morgan project receives approval, that number could increase to approximately 400 tankers a year. Other well-run ports such as the Port of Rotterdam handles 8,206 tankers a year, while Singapore handle 22,280 tankers a year.

Will larger tankers be calling at Port Metro Vancouver as a result of the Kinder Morgan Proposal?

There are no plans to exceed the current maximum size of tankers calling at Port Metro Vancouver. Due to depth restrictions in the Burrard Inlet, the largest dimension of tanker that can be handled is the Aframax, a medium-sized tanker with a maximum capacity of 120,000 tonnes. Even then, these vessels can load to only around 80% of capacity due to draft restrictions.

 

The State Department EIS was cautious about the Kinder Morgan project and did not do the same deailed analysis as it did for Prince Rupert.

The substantial increase in tanker traffic from the proposed Kinder Morgan expansion has raised safety and environmental concerns. Moving additional volumes of crude oil from the proposed Project into the Vancouver market by either a new pipeline or rail would result in 400 or more additional vessels loading at Vancouver each year and would require considerably more storage to be built than the current Kinder Morgan operations. The expansion of storage capacity, potential rail off-loading facilities and logistics, and increased marine traffic may make this option logistically challenging in a relatively compressed and populated geographical area.

Moreover, even if a separate pipeline from Hardisty could be planned, mapped, engineered, designed, and permitted starting today, it would likely not be available as an option until well after the proposed [Keytsone] Project’s planned start date. As a result of the logistical challenges in increasing the amounts of heavy Canadian grades of crude oil coming into the Vancouver/Burnaby region over and above the volumes from the Kinder Morgan expansion, this option was deemed to be less viable than movements from Kitimat and Prince Rupert and was eliminated from detailed analysis.

It’s not clear from the Keystone EIS, if the State Department was simply speculating on larger tankers in Vancouver harbour or if it was made of aware of possible hopes for a deep water tanker port elsewhere in the Vancouver harbour area.

 

Port Metro Vancouver tanker diagram
Port Metro Vancouver diagram showing the tankers that are permitted and not allowed in Vancouver harbour. (Port Metro Vancouver)

 

The State Department EIS goes on to note:

While no new additional pipeline capacity has been added from Canada into the United States or to the Canadian West Coast since the Final EIS in 2011, a number of projects are proposed, including this proposed Project. The 300,000 bpd Kinder Morgan Trans Mountain pipeline that runs from Edmonton to the British Columbia coast at Vancouver, with a spur to Washington State refineries, has been over-subscribed for some time. A successful open season led the Kinder Morgan to announce and file for expansion to 750,000 bpd by potentially 2017. After a
second open season, Kinder Morgan has increased the expansion to 890,000 bpd. The bulk of the incremental crude moved on the line would potentially be destined for Asia. The review process for this project is continuing, but there is significant opposition based on concerns over environmental impacts associated with the oil sands and with additional tanker movements in the Port Vancouver harbor.

As noted above, both of these proposed pipeline projects to Canada’s West Coast face significant resistance and uncertainty, but there are strong cost advantages when compared with moving WCSB crude to the Gulf Coast even if rail were used to access the Canadian West Coast... In fact, using rail and tanker to ship crude oil from the WCSB via the West Coast to China is comparable to the pipeline rate to reach the U.S. Gulf Coast. An increase in the transport costs to the Gulf Coast (utilizing alternative transport options such as rail) would have a tendency to increase the economic incentive to utilize any West Coast export options, if they are available.

 

Northwest Coast Energy News Special report links

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

State Department news release

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The new tank terminal construction would consist of the following:

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

• A security fence to encompass the tank terminal;

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

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

Reactor substation); and

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

Related Link Prince Rupert Port Authority Performance Report

 

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

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

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

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

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

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

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

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

The State Department EIS says:

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

It goes on to note:

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

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

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

 

 

More Details:
Northwest Coast Energy News Special report links

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

State Department news release

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

 

Decision on Black’s Kitimat refinery in 60 days, Edmonton Journal reports

The Edmonton Journal is quoting David Black as saying in Fate of proposed Kitimat refinery to be determined within 60 days:

British Columbia newspaper magnate David Black says he’ll know in about 60 days whether his controversial idea for a new refinery on the West Coast will move forward or die a quiet death.

In a recent interview, Black said he has signed memorandums of agreement with parties interested in the idea of a $15-billion refinery at Kitimat, done some preliminary design work and talked to financial backers — though any deal has a long way to go.

“I’ve been pulling threads together — potential customers, financiers, government, First Nations — and they should all be saying ‘yes’ or ‘no’ within 60 days.”

If the parties say “yes,” there would be two years of regulatory approvals required before construction could begin, he said.