LNG Partners LLC, of Houston, one of the backers of Douglas Channel Energy, the BC LNG Douglas Channel Project, a partnership between LNG firms and the Haisla Nation, has signed a preliminary deal with Golar LNG for two tankers.
On October 10, Golar entered into a 90 day Vessel Charter Option Agreement with LNG Partners LLC (Houston, TX) for the provision of two newbuild LNG carriers under long term contract to deliver LNG production from the Douglas Channel LNG Project in British Columbia (BC), Canada.
The Douglas Channel Project, in which LNG Partners is an equity owner, is a proposed liquefaction facility on the west bank of the Douglas Channel, within the district of Kitimat, BC. In addition to prospectively providing two vessels, the agreement confers certain preferential rights for Golar to participate in the project with LNG Partners LLC by way of infrastructure investment or LNG offtake.
In the same report, Golar LNG reported operating income of $70.2 million for the third quarter of 2012, an increase of 21 per cent from the second quarter.
Golar, which has its headquarters in Hamilton, Bermuda, says that since 2001, it has grown from a fleet of six LNG Carriers focused on LNG transportation, to a fleet of 13 vessels (with 13 newbuilds due from quarter three 2013), dedicated to both LNG transportation and midstream floating solutions.
The latter means that Golar is working on what the industry calls Floating Storage & Regasification Units (FSRU). LNG is transferred to the FSRU either for storage or where the low-temperature liquified natural gas is heated back to a gaseous state.
The FSRU storage tanks are generally made from aluminium.
Golar’s report also reflects the weakness in the LNG markets, a factor that is slowing development of the Kitimat LNG projects.
Golar says “a bearish cargo market [for shipping] prevailed in the third quarter with falling prices and weak demand in the Far East. Chartering activity remained thin and lacked direction and consequently, short-term charter rates experienced a correction from rates seen earlier in the year.”
It goes on to say:
Looking to the fourth quarter, weak Far East demand may result in additional vessels being released into the market, however, with limited available modern undedicated vessels a resumption in interest from buyers could very easily pull rates upward again.
As for the world LNG market, Golar says “downward pressure on pricing was experienced primarily due to high inventory levels that persisted East of Suez.”
It also says that more LNG projects are coming onstream which could provide potential competition for Kitimat:
New LNG supply will soon be coming to the market with the commissioning of Angola LNG in the Atlantic Basin. Despite delays at the West African project during the third quarter, exports are expected to start early in the New Year. This represents a set-back of about ten months from the original target date for the country’s first LNG project.
In the Far East, ConocoPhillips and Origin Energy announced the sanctioning of a second train at its Australia Pacific LNG project. The project is planning to bring the first train on late in 2015 with the second train following in 2016. Both trains will be sized at 4.5 million tonnes. Additionally, during the quarter Chevron made positive statements about proceeding with a fourth train at its Gorgon LNG project in Barrow Island, Western Australia. There are currently three trains at Gorgon under construction totalling 15.6 million tonnes.
In addition to Angola, given imminent start-up of the project, supply projects under construction in both the Atlantic and Pacific Basin have reached close to 100 million tonnes, with construction officially beginning at Cheniere’s Sabine Pass LNG export facility.
It was the decision by Cheniere to sell LNG to the Far East markets based on North American prices rather than the higher Japanese price that led to a further delay by Apache earlier this year to give the final go-ahead for the Kitimat LNG project.
A follow up study by the Department of Fisheries and Oceans on the discovery of prehistoric slope failure tsunamis in Douglas Channel concludes that the events would have had minimal impact on Kitimat but would have destroyed Hartley Bay.
The DFO follow up study was aimed at better understanding the dynamics of tsunamis during the two slope failure events on the southern end of Hawkesbury Island during the mid-Holecene period, between 5,000 and10,000 years ago.
The wave dynamic model study does not address the discovery by the Geological Survey of Canada of a possible fault line along Hawkesbury Island which could have been the cause of the slope failures.
The study estimates that the wave amplitude of the first tsunami reaching the proposed Enbridge Northern Gateway terminal site near Kitimat would have been about .09 to .12 metres. Since the actual wave height hitting land from a tsunami is one half of the amplitude, the height of tsunami waves reaching Kitimat at the time would have been about 60 centimetres or 23 inches. At Hartley Bay, on the other hand, the maximum estimated wave amplitude from the second tsunami would have been 15 metres, meaning a wave height of 7.5 metres or about 25 feet.
The main reason for the difference is that both the submarine slope failures occurred south of the dogleg in Douglas Channel at Gertrude Point. That meant the configuration of the channel from Gertrude Point up to Kitimat would lessen the amplitude whereas because Hartley Bay was so close, it would be hit by a higher amplitude. The report says that because of their relatively short wavelengths, the tsunami waves undergo multiple reflections that the “high degree of scattering from the complex shoreline and bottom topography in Douglas Channel” would “combined with the flux of tsunami energy through adjoining waterways and channels” have caused a rapid decrease in the energy of the waves with distance south and north of the slide area.
The study also points out a crucial difference between the ancient slides and the two that occurred near Kitimat in 1974 and 1975, while the land near the head of the Kitimat arm were largely composed of material laid down by the glaciers, the large slope failures on Hawkesbury Island were blocks of an extremely hard igneous rock called diorite. Each of the prehistoric slides would have consisted of about 65 million cubic metres of rock.
The DFO report says
Coastal British Columbia is an area of steep slopes, extreme seasonal variations in soil moisture, large tidal ranges, and the highest seismicity in Canada. Hazards of this form have been well documented for the coastal region of British Columbia, and other fjord regions of the world’s oceans, including Alaska and Norway. These factors increase the potential for both submarine and subaerial slope failures in the region. Such events generally take place in relatively shallow and confined inner coastal waterways, and can present hazards in terms of tsunami wave generation.
The two prehistoric submarine slides are located about 10 kilometres apart on the
slope of southern Douglas Channel, near the southern end of Hawkesbury Island
The report says:
The failures are defined by scallop-shaped hollows located along the edge of the fiord wall and appear to be associated with detached blocks that extend out several hundred metres into the channel. The two block slides identified in Douglas Channel are characteristic of rigid-body submarine landslides, which differ considerably from the well-documented viscous submarine landslides with a lower specific gravity (density relative to water) of about 1.5 that occurred to the north of Douglas Channel along the inner slope of Kitimat Arm in 1974 and 1975.
The report’s modelling is “considered minimum values” because the do not include debris that would have spread into the fiord after initial slide. That debris is now buried by a thick layer of post-slide sediment.
The reconstruction model shows that the head of the more northern slide began at a depth of around 60 to 100 metre, while that of the more southern slide began at a depth of 75 to 120 metres.
The slides would have moved down slope at about 25 metres per second, coming to rest after about 30 seconds, 250 to 350 metres from the slope at a depth of 400 metres.
The northern slide, called by the scientists Slide A:
would have generated extremely large waves in the immediate vicinity of the failure
region within a minute of the submarine landslide. Waves in the numerical simulations reach amplitudes of 30 to 40 metres at the coast near the slide area
Submarine landslides cause delays between the arrival of the first waves and the arrival of subsequent higher waves, increasing in distance from the slide, because of “reflections and non-linear interaction” along the shoreline. For Slide A, the maximum wave amplitudes at Hartley Bay would have been six metres (meaning three metre waves) “Large amplitude waves with typical periods of around 50 seconds would continue for several tens of minutes.”
The leading tsunami waves generated by Slide A reach Kitimat Arm in roughly 20 min and have small amplitudes of only a few centimetres. Although later waves have higher amplitudes, the maximum wave amplitudes (which occur 50-55 minnutes after the failure event) are still only around 0.09 to 0.12 metres.
The southern slide on Hawkesbury, called Slide B by the scientists, would have moved 400 metres before stopping. It stared at a greater depth than Slide A, with not as much vertical displacement than Slide A. That means Slide B was slower than Slide A.
Slide B:
would have generated large waves in the vicinity of the failure region. Simulated waves reach the coast adjacent to the slide region within a minute of the failure event, with wave amplitudes of up to 10 metres. The waves also hit the opposite site of the channel within a minute of the failure event and then take an additional minute to reach Hartley Bay where waves reach amplitudes of 15 metres/ Powerful oscillations in the bay last for tens of minutes.
Waves with high amplitudes (more than 2 metres) also occur in the southern part of Douglas Channel, and in certain locations of Verney Passage.
According to the models, the leading tsunami waves would have reached the Kitimat Arm 22 minutes after the start of the slide. The maximum waves would have had amplitudes of 0.08 metres to 0.3 metres (6 inches), reach the Kitimat Arm 45 to 60 minutes after the start of the failure event.
The the tsunami waves generated by Slide B that impact Kitimat Arm, although still of low amplitude, were somewhat higher than those generated by Slide A, despite the fact that Slide B was located further to the south and generated less energetic waves in the source region than Slide A.
This seeming paradox is explained by the slower motion of Slide B, which causes it to generate more wave energy in the low frequency band…Due to their reduced scattering and reflection, the relatively long and lower frequency waves generated by Slide B propagate more readily through the complex fjord system than the relatively short and higher frequency waves generated by Slide A.
Specifically addressing the proposed site of the Enbridge bitumen terminal, as well as potential tanker traffic in Douglas Channel, the detailed explanation of the modelling accompanying the DFO report says:
If similar submarine slides were to occur again somewhere in the same general area, they could present a significant risk to navigation and to nearby shore installations and coastal communities….
As with the tsunami generation regions, the highest waves and strongest currents in any particular region of the coastal waterway would occur near the shoreline. Based on the numerical findings, tsunamis generated by submarine landslides of the form identified for the southern end of Douglas Channel would have heights and currents that could have major impacts on the coastline and vessel traffic at the time of the event throughout much of Douglas Channel, but a minor impact on water levels, currents and hence vessel traffic in Kitimat Arm. Hartley Bay, at the southern end of Douglas Channel, would be impacted by high waves and strong currents, whereas Kitimat, at the northern end of Kitimat Arm, would experience negligible wave effects. Additional modelling would be required to assess the characteristics of possible tsunamis originating beyond the area of the two identified slope failures.
At the estimated propagation speeds of about 65 metres per second, the detailed model says it takes roughly 10 to 15 minutes for the simulated waves to propagate approximately 40 to 45 kilometres to the intersection of Douglas Channel and Kitimat Arm, where peak wave amplitudes would be diminished to less than one metre. It takes another 15 minutes for the waves to reach sites near the proposed Enbridge facilities in Kitimat Arm where wave amplitudes would be reduced to a few tens of centimetres and associated currents to speeds less than a few tens of centimetres per second.
Kitimat’s “Hospital Beach” on March 17, 2012, with the construction at the Rio Tinto Alcan plant in the background, before the area was closed to the public. (Robin Rowland)
The hottest issue in Kitimat this summer is water, not oil. For us, this summer can be summed up by saying: “Water, water everywhere, but you can’t get there from here.”
Even with David Black’s proposal for an oil refinery on a hill 25 kilometres north of Kitimat, residents here know that the Enbridge Northern Gateway debate has gone on for years and will go on for many years to come.
As environmentalists worldwide celebrate the beauty of Douglas Channel, and decry the dangers that tanker traffic could pose to the channel, many people in Kitimat are cut off from the waterfront.
At the District of Kitimat Council meeting on August 7, Coun. Mario Feldhoff introduced a motion calling for a study in an effort to find ways to launch kayaks into the ocean. Yes that’s right, according to members of council, you can’t even drop a kayak into the waters of Douglas Channel unless you pay the kind marina a launch fee usually charged for larger fishing boats. Kitimat is down to only one expensive boat launch.
In 2010, there were three marinas in Kitimat: one privately operated at a place called Moon Bay, a large marina owned by the Kitimat Stikine Regional District at MK Bay and a small marina at Minette Bay, also the site of a log export operation. There was also a boat launch on land known as “Alcan beach” or “Hospital Beach” on property owned by Rio Tinto Alcan (RTA) near the aluminum smelter. Hospital Beach is the only beach in Kitimat (named because it is on the site of the town’s original hospital in the 1950s). Moon Bay was located on land owned by RTA, and in April 2010, it ordered the marina shut down.
Some people who moored their boats at Moon Bay moved to MK Bay (if there was room). Others hauled their boats out of the water and parked them in their driveways. In the ensuing two years, there have been increasing stories about mismanagement at MK Bay and complaints about moorageand launching fees that are much higher than elsewhere in the province.
This spring, citing construction at the smelter, RTA closed public access to Hospital Beach for picnics, kids’ play and just looking at the water. That meant the boat launch was also off-limits. RTA spokesperson Nyce said:
The Rio Tinto Alcan site is now a full fledged construction zone with constant vehicular and heavy duty construction traffic. To that end, and as Rio Tinto Alcan representatives have always said, during construction we will take necessary steps to eliminate potential hazards to the general public on our road including access to Hospital Beach. Therefore, Hospital Beach will be closed to the public until construction is complete or until we believe it is more safe for public access.
Before access was closed, if a Kitimat resident was driving to Hospital Beach, they pass what was once a rough logging road that snaked its way along the shores of Douglas Channel toward Bish Cove. Now Bish Cove is the site of the Kitimat LNG project terminal. As part of the construction process, KM LNG upgraded the road. However, as the pace of construction increases KM LNG is now limiting access to the road and its views of the channel.
Why is there no access to the waterfront, or for that matter to the magnificent Kitimat River estuary?
It goes back to 1950 when the province of B.C., in a loosely worded agreement with what was then Alcan and in an equally non-specific Industrial Development Act, handed over the land where Kitimat is now to the company.
That included almost all the waterfront and the estuary. On the estuary, there is one small area of land that is a reserve for the Haisla Nation and one small area not in RTA domain owned by the District of Kitimat — but there is no right of way through a potential private development. Over the years, and especially since Rio Tinto took over Alcan, there have been more and more restrictions placed on access to Kitimat’s waterfront.
The fact that you can’t get to the waterfront and the estuary are a problem not only for community recreation; the inability for a resident or visitor to launch a kayak or small boat into the channel, much less larger fishing or recreational vessels, has put the brake on expansion of Kitimat’s already lucrative fishing, guiding and boating services.
There is already a lot of skepticism in Kitimat — due to the boom and bust of the industrial cycle — about all those promises of jobs and prosperity from industrial development. Restricted access to the ocean means that despite the growing number of jobs in Kitimat, corporate policy makes it hard to enjoy the benefits of living on the Douglas Channel.
It is the kind of externality that is always ignored by economists and is totally irrelevant to those business writers who claim to be experts in Kitimat but who have never been within 1,000 kilometres of the town.
You look out your window at the mountains and ocean of Douglas Channel and ask why can’t the residents and tourists go to the beach? That could be a key issue in the Enbridge Northern Gateway debate.
The United States Department of Transportation Maritime Administration has issued a call for a study that is calling into question the future of double-hulled oil tankers.
Following the Exxon Valdez disaster, the passing of the Oil Pollution Act of 1990 (OPA 90) led to the requirement to replace single hull petroleum tankers with double hull tank vessels sailing in U.S. waters. This requirement was soon adopted by the International Maritime Organization (IMO) and became a worldwide regulation. This means that, today, tank vessels worldwide are carrying thousands of extra tons of steel in order to meet the double hull requirements.
Though these double hulls reduce the threat of oil pollution as a result of grounding, they significantly increase the amount of energy needed to propel a vessel and increase the amount of air pollution into the atmosphere. As a result, the maritime industry’s carbon footprint and criteria pollutant emissions are increased.
In addition to the need to burn more fuel, it is acknowledged that double hulls can cause several other problems which will be detailed in this study.
Here in Canada, Enbridge Northern Gateway and its supporters, in briefings on maritime and tanker safety on the west coast of British Columbia, have always said that the changes following the Exxon Valdez disaster in Prince William Sound and the subsequent US Oil Pollution Act as almost guaranteeing that such a disaster could not happen again.
Now it appears that some people in the U.S. Department of Transportation may be worried that increased use of double-hulled tankers will cost too much. There’s also the apparent question of balancing the carbon footprint of increased emissions from tankers with the danger from a hydrocarbon spill.
In July last year, the IMO adopted binding regulations to limit the expected gas emissions increase by reducing fuel consumption of ships by as much as 15 million tonnes in 2020, a 14 per cent reduction, and by 2050, by as much as 1,013 million tonnes. This will lead to savings in fuel costs for the shipping industry of up to US$200 billion a year, says the IMO.
Black says that the US agency seems “to suggest by abandoning the additional weight of double hulls the savings would increase and pollution be cut further, adding “On the other hand, since the introduction of double hulls, pollution from major oil spills has been reduced to practically zero.”
The National story says even the tanker industry itself is worried about the move, quoting the the international tanker owners’ organization.
“We have noted reports about Marad’s intended study on tanker double hulls but, except for what we gather from press articles, we have little knowledge on the reasoning behind this,” said Bill Box, Intertanko’s senior manager for external relations.
“From our members’ experience, double-hull designs have evolved into safe and reliable ships with an excellent safety and pollution prevention record. We might provide comments when such a study would be released by Marad.”
The requirements for the double-hull study, as posted by the US government are:
1. The Contractor shall conduct an assessment of the history in the evolvement of “The Double Hull Rules”.
2. The Contractor shall conduct the assessment of any rules that are being proposed in bodies such as the IMO, U.S. Congress and other such bodies’ worldwide as they relate to additional hulls for environmental reasons.
3. The Contractor shall assess all the relevant safety issues related to double hulls for each class of vessel. E.g. Double bottoms are difficult and expensive to maintain and can result in corrosion problems. Unchecked corrosion in older double hull vessels can lead to cargo leakage into a double bottom and the buildup of dangerous vapor which could cause an explosion under certain conditions. The Contractor will obtain data from appropriate organizations which details the issues in double bottoms on older vessels including cracking, leakage, and the potential for vapor buildup.
4. The contractor shall conduct a complete economic study of the consequences of Double Hulls. E.g. they significantly add to the construction cost of vessels. They result in the loss of cargo space which also adds to the carbon footprint since an additional vessel(s) is needed to carry the same cargo tonnage.
5. The contractor shall assess the complete consequences of the carbon footprint of designing, constructing, maintaining and operating vessels with double hulls. E.g. Apart from the extra propulsive forces and fuel needed, the carbon footprint of double hull maintenance is substantially increased.
6. The Contractor shall prepare a report on the results of the project. The report shall be grammatically correct and must be professionally written to a high level of competence in the English language. The report must clearly specify the safety, economic and environmental issues details above.
World-leading marine spill preparedness and response systems for British Columbia
Protecting the province’s environment is a priority for its citizens and the B.C. government. While B.C. is not the government lead in terms of responding to a marine spill, advocating for world-class protection measures and procedures is a B.C. priority. Guided by an analysis of international marine response plans and procedures, the B.C. government is moving forward with 11 recommendations to the federal government aimed at improving Ottawa’s marine spill management. Chief among those recommendations are:
Encourage the federal government to strengthen requirements for certified marine spill response organizations.
Current response times and planning capacity are less stringent than other jurisdictions like Alaska and Norway. For example, for the types of tankers being proposed for Canada’s west coast, Alaska requires planning for 300,000 barrels. In Canada, response organizations are only required to maintain response plans for spills up to approximately 70,000 barrels (10,000 tonnes).
Further, Alaska allows responders 72 hours to reach the spill site, while Canada allows 72 hours plus travel time, which can sometimes add days to the response.
Encourage the federal government to enhance tanker requirements and available response capacity.
In shared bodies of water, the United States’ requirements exceed Canada’s. For example, the United States requires escort tugs for laden tankers and mandates industry pay for designated and strategically placed emergency response tugs. Canada does not have any similar requirements.
Ensure the Canadian Coast Guard adopts a unified command/incident command structure.
The Canadian Coast Guard has a unique response system which is only used in B.C. The United States, companies and governments worldwide use a unified command/incident command response structure for a range of emergency responses, including marine spills. By bringing the Coast Guard under this system, an effective, co-ordinated response is better ensured while reducing layers of approvals that can delay critical, prompt decision-making.
Current limits of liability rules strengthened to reduce government and public exposure to financial risk.
The federal government should review its rules and requirements to ensure industry-funded response funds are sustainable and adequate to fully cover a major response without requiring public money. Currently, the total amount of ship owner insurance and industry funding available for spill response is $1.3 billion. By comparison, the U.S. federal government maintains a spill fund that is forecast to grow to nearly $4 billion by 2016.
BACKGROUNDER 2
World-Leading on-land spill preparedness and response system for British Columbia
Land-based spill response is an area where the province has significant management responsibilities. The safe transportation and use of hazardous materials – including oil and natural gas – is critical to British Columbia’s economy and way of life. While land-based spills can be mitigated, they cannot be completely avoided; they are a consequence of a modern economy.
Major resource developments in the province’s northeast, coupled with proposals to open new, and expand existing, transportation corridors for petrochemicals, makes it timely for the province to consider its spill management capacity.
B.C. government’s proposed policy:
A provincial policy review has confirmed support for the “polluter pays” principle. In other words, those sectors (i.e. the oil and gas industry) that pose the risk must be responsible for all related mitigation and response costs.
Ministry of Environment staff are in the process of reviewing options to implement industry-funded and enhanced spill-management for land-based operations. It has three central elements:
An industry-funded terrestrial spill response organization.
An enhanced provincial Environment Emergency Program.
Natural resources damages assessment.
These changes would address some key issues facing B.C.’s land-based spill response practice, including new requirements for:
industry to have tested and government-approved geographic response plans; and
provincial response capacity that matches the known risk, including staff and resources to address spills.
The proposed policy would strengthen the province’s oversight role and facilitate the verification of industry capacity. Further, it would ensure that a stable source of funding is available to ensure the program continues to have a strong presence on-scene when a spill occurs. This role for government is critical to protecting the provincial economic, social and environmental interests that can be impacted when a spill takes place.
Next steps:
Immediately strike a terrestrial spill response working group.
Engagement with key industry associations and federal agencies.
Complete in-depth technical analysis of policy and options.
Public consultation on policy intentions paper.
Draft legislation based on the chosen policy direction.
Media Contact:
BACKGROUNDER 3
Consultation and partnerships with First Nations
In British Columbia, case law requires the B.C. government to consult with First Nations on any decision that may infringe on their treaty or Aboriginal rights. Where government makes a decision that will infringe on rights, there is a legal duty called “accommodation,” which can include mitigation measures, or even economic compensation. These legal requirements impact resource development and government decision-making.
Consultation is not only a legal obligation, it is part of good governance, and the B.C. government takes consultation and the courts’ direction on consultation very seriously.
B.C.’s approach is to work in partnership to give First Nations a meaningful role in land and resource management. B.C. is also the first province to share resource development revenue with First Nations, creating opportunities that flow benefits directly back into Aboriginal communities. B.C. has reached a suite of strategic agreements that create certainty for First Nations and industry by making it easier for business and First Nations to work together.
B.C. has achieved nine Reconciliation and Strategic Engagement Agreements with First Nations. These agreements provide First Nations with a defined role in the management of lands and resources and often include tools to allow for increased First Nation participation in local economies.
B.C. has 189 active forestry revenue-sharing agreements with First Nations. Since 2003, B.C. has provided approximately $323 million and access to 63.9 million cubic metres of timber to First Nations.
B.C. signed mine revenue-sharing agreements with Nak’azdli First Nation and McLeod Lake Indian Band for the Mount Milligan Mine and the Tk’emlúps and Skeetchestn Indian bands for the New Afton Mine. Further agreements are being negotiated.
Economic Benefit Agreements with five Treaty 8 First Nations have provided $52 million to date in First Nation benefits from gas and other development in northeast B.C.
The First Nations Clean Energy Business Fund provides capacity, equity and revenue-sharing funding for First Nation participation in this sector. Since 2010, the fund has provided nearly $2.5 million to 53 First Nations.
The B.C. government has collaborated with the Business Council of British Columbia to develop the best practices to increase general understanding of industry’s role. Increasingly, companies recognize that building relationships with First Nations makes good business sense, and are taking steps to form effective relationships that result in mutual benefits.
B.C. expects proponents to build strong, enduring relationships with First Nations potentially affected by development projects. Through those relationships, there should be discussion of possible impacts on Aboriginal interests, measures in place that would mitigate those impacts and a development of impact management and benefit agreements.
The Northern Gateway Pipeline is forecast to provide significant benefits to governments, communities and individuals through taxation and royalty revenues, employment and indirect and induced jobs.
According to a research report by Wright Mansell Research Ltd., the pipeline is likely to generate an incremental $81 billion in provincial and federal government taxation over a 30 year period between 2016 and 2046. Of the $81 billion, a full $36 billion is accrued by the federal government.
The remaining $45 billion in provincial revenues are split with $32 billion to Alberta, $6.7 billion to British Columbia and the remaining $6 billion split among the remaining provinces, with Saskatchewan appearing to benefit by nearly $4 billion. Thus, of the $81 billion in incremental taxation revenue, British Columbia stands to receive approximately only 8.2 per cent.
The $36 billion to the federal government is anticipated to be distributed across the country on a per capita basis as these revenues would be considered to be general and not dedicated revenues. There is no guarantee these revenues would be distributed in this manner.
In addition, with the creation of a new market for Alberta oil in Asia, prices are forecast to rise such that over the same 2016-46 period, there would be a price lift of $107 billion, split $103 billion to Alberta and $4 billion to Saskatchewan, which has begun to exploit its heavy oil and bitumen resources. This lift arises from an all increased value of all oil products that are being exported out of Canada with the elimination of the discount paid for Canadian oil.
Given the risk to British Columbia from land-based and coastal bitumen spills, British Columbia does not believe an equitable distribution exists for fiscal benefits. This imbalance must be addressed prior to British Columbia considering provincial support.
Enbridge Northern Gateway has filed thousands of pages of “reply evidence” to the Northern Gateway Joint Review panel, responding to questions from the panel, from government participants like DFO, and intervenors.
In the introduction to the summary of the evidence the JRP asks
Should the fact that Northern Gateway does not respond to all points in a particular intervenor’s evidence or to all intervenor evidence be taken as acceptance by
Northern Gateway of any of the positions of intervenors?
To which Enbridge replies:
No. Northern Gateway does not accept any of the intervenor positions that are contrary tothe Application or additional material filed by Northern Gateway. Some of those positions will be dealt with by Northern Gateway in cross examination and argument rather than reply evidence, and others will simply be left to the JRP to determine on the basis of the filed evidence alone.
Recovery of Biophysical and Human Environment from Oil Spills
Corrosion, Inspection and Maintenance of Oil Tankers
Design and Construction of Oil Tankers
Pilotage
In response to numerous questions about the Marshall, Michigan, oil spill, Enbridge repeats what it said in an e-mail to “community leaders” earlier this week and in this morning’s news release, saying: “Enbridge has made a number of improvements since the Marshall incident.”
As part of the filing Enbridge has also filed an update on its aboriginal engagement program.
There are also detailed and updated reports on the company’s plans for the Kitimat valley region.
The Northern Gateway Joint Review Panel will bypass Kitimat for the final questioning hearings on the controversial pipeline.
In a ruling issued late on July 4, 2012, the JRP said the questioning hearings will begin on September 4, 2012 in Edmonton followed by hearings in Prince George and Prince Rupert.
The JRP says a more detailed schedule will be issued closer to the start of the final hearings.
It adds, that details on the location for the final hearings for final argument will be announced at a later date.
In its ruling the JRP said:
As noted previously, these locations are centrally located, have adequate facilities and reasonable transportation access. The Panel is of the view that these locations are appropriate as they are relatively close to the proposed Project and are readily accessible by all parties who are actively participating in the Northern Gateway hearing process and their witnesses. Further, these locations will allow for appropriate hearing facilities that are safe, of an adequate size and can logistically and technologically accommodate a hearing with many participants.
The Joint Review panel acknowledged that some “witnesses would be financially and logistically
unable to attend three different hearing locations for questioning in Alberta and British
Columbia.”
The JRP says it will “to the best of its ability and to the extent reasonable, accommodate
interested parties’ participation at the final hearings through remote participation.
Standard procedures for the final hearings.”
(i) Parties and members of the public may listen to all of the final hearings live,
through the webcast (available from the Panel’s website).
(ii) Parties may register their appearance on the first day of the final hearings
remotely by telephone, or other technology to the extent feasible such as
videoconference or webex. Details regarding potential audio-visual options will
be provided in advance of the final hearings.
(iii)Parties may ask questions of other party’s witnesses by telephone, or other
technology such as vidoconference or webex to the extent possible. Parties will be
asked to confirm their method of participation, in advance of the final hearings for
questioning.
(iv) Parties’ witnesses may be presented for questioning by technology such as
videoconference or webex that is capable of capturing audio and visual images of
the witnesses simultaneously.
The JRP says its staff is working to address issues that may arise from remote questioning and video conferences.
Some key questions such as the effects of the pipeline and tanker traffic on marine mammals will be handled by “concurrent panels,” that is groups of expert witnesses sitting together. That is a standard National Energy Board procedure and was used during the NEB hearings on the Kitimat LNG project in June, 2011.
A separate ruling from the Joint Review Panel requires all parties to provide a list of witnesses for questioning hears on or before Friday, July 13, 2012.
This list must include all experts that have submitted reports on the party’s behalf, as well as those individuals that are able to answer questions on the specific evidence filed. Where relevant, it would be helpful if parties would organize their list of witnesses into “witness panels” by topic.
The Haisla Nation today filed an extensive document with the Joint Review Panel outlining the nation’s concerns about the Northern Gateway project and, should Stephen Harper attempt to impose the pipeline, terminal and tankers on northwestern British Columbia, the Haisla have set down a detailed series of conditions that they say must be met in both the construction and operation of the project.
It is now clear that the real leadership on the issue of the Northern Gateway for the entire Kitimat region is found at the Haisla Administration building in Kitamaat Village, not at the District of Kitimat council chambers in town on Kingfisher Avenue.
The Haisla have lived in this region for thousands of years and the documents show the First Nation is taking that responsibility seriously, for the filing covers all the bases, planning, construction, operation and even the eventual decommissioning of the pipeline and terminal.
The District of Kitimat, on the other hand, has done absolutely nothing, preferring to wait until the increasingly discredited Northern Gateway Joint Review Panel issues a report that will likely be quickly shelved by Prime Minister Stephen Harper.
While the District council has clung to its policy of neutrality, the Haisla have been proactive in looking to the future and practical in considering all the problems the region will face should the Northern Gateway go ahead.
This site has said in the past, that it matters little whether one supports or opposes the project, the District must begin now to plan for the inevitable problems that will arise once the Northern Gateway goes ahead.
A few weeks ago, on May 20, we pointed out that Bill C-38 had undermined the fence sitting by the District Council and called for the Council to take a position of “armed neutrality” and start working toward the day when the pipeline is probably forced upon the Kitimat region.
That was Strike One.
Now the Haisla have set out a document that not only outlines the deficiencies in the Enbridge plans but also sets outs stringent conditions for the project, should it go ahead.
That is Strike Two.
How many times do we have to say that it is time for the District to act on the Northern Gateway?
The next meeting of the District of Kitimat Council is on Tuesday, July 3, after the holiday weekend. At the meeting, council should introduce and pass a motion endorsing and supporting in principle the conditions for the Northern Gateway project as outlined by the Haisla Nation. Based on support in principle, the District should then do something it has never done, conduct its own study to identify future problems that both the Northern Gateway project and the LNG projects will bring to the District.
On a practical level, the Haisla conditions protect everyone in the Kitimat region, not just the people in Kitamaat Village. The Haisla conditions protect everyone in the District (including supporters of the project) not just now but in the future. While the District does not have the constitutional foundation of aboriginal rights and title, endorsement of the Haisla conditions will strengthen the entire region’s position in facing Enbridge and a stubborn federal government.
By supporting and endorsing the conditions set out by the Haisla Nation and by conducting its own studies, the District of Kitimat can prepare the region for the future of energy development.
Douglas Channel at the site of the proposed Enbridge marine terminal, June 27, 2012. (Robin Rowland/Northwest Coast Energy News)
Enbridge is striking back against the First Nations and intervenors who oppose the Northern Gateway pipeline and marine terminal projects by filing questions that those groups must answer as part of the Joint Review Process.
On May 11, 2012, Enbridge filed questions with 24 organizations, and from the questions, it appears that Enbridge isn’t just building a strictly legal case in their favour but are preparing to try and discredit opponents.
Enbridge’s questions are part of the legal process. For months, First Nations and intervenors have been filing a whole series of questions asking for clarification of items in the Enbridge’s filings on the project with Joint Review Process and Enbridge has the legal right to ask the First Nations and intervenors to clarify their positions.
However, the difference is that Enbridge is a giant corporation which can afford to spend millions of dollars on both the approval process as well as the current nationwide advertising process, while some of the intervenors are made up of volunteers or retirees working on their own time. Sources among the intervenors have been saying for months that they believe that Enbridge is following a perceived policy of working to wear down the opponents so much they burn out and drop out of the process.
A large proportion of the questions Enbridge is demanding that First Nations and intervenors answer are overtly political, rather than technical responses to their filings.
In an apparent escalation of its campaign against its opponents, Enbridge is using the Joint Review process to ask intervenors about funding, naming such hot button organizations such as Tides Canada, which is under attack by the Harper government. Enbridge is also questioning the “academic credentials” of numerous intervenors and commenters, even though the Joint Review Panel has spent most of the past seven months asking people to comment based on “local knowledge,” leaving the technical questions to the documents filed with the JRP
Some key questions directed at both the Haisla and Wet’suwet’en First Nations seem to indicate that Enbridge is preparing to build both a legal and probably a public relations case questioning the general, but not unanimous support for liquified natural gas projects in northwestern BC, by saying “Why not Northern Gateway,” as seen in this question to the Haisla Nation.
Please advise as to whether similar measures would be requested by the Haisla First Nation to deal with construction-related impacts of the Northern Gateway Project.
Black Swan
A series of questions to the coalition known as the Coastal First Nations questions the often heard assertion that an oil spill on the BC coast is “inevitable,” and Enbridge appears to be prepared to argue that spills are not inevitable. Enbridge asks Coastal First Nations about a study that compared the bitumen that could be shipped along the coast with the proposed LNG projects.
Please provide all environmental and risk assessment studies, including studies of “Black Swan” events, conducted by the Coastal First Nations or any of its members in respect of the LNG projects referred to.
Enbridge is referring to Nassim Nicholas Taleb’s now widely known “theory of high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance and technology.”
It is Black Swan events that most of the people of the northwest coast fear when it comes to all the major energy projects, but if as Taleb says they are hard-to-predict and rare, how can the studies Enbridge is requesting actually predict those disasters?
Enbridge’s questions to the Haisla Nation runs for 28 pages and many of those questions are political, not technical, including asking for details of the Haisla support for the various Kitimat liquified natural gas projects and who may be funding the Haisla participation in the Joint Review Process. Many technical questions around the questions of “acceptable risk” and it appears, despite the fact Enbridge officials have listened to the Haisla official presentation at Kitamaat Village last January and the speeches of Haisla members this week at the pubic comment hearings, that Enbridge is preparing to use a paper-based or Alberta-based concept of acceptable risk as opposed to listening to the First Nation that will be most directly affected by any disaster in the Kitimat harbour or estuary.
A series of questions seems to negate Enbridge’s claim that it has the support of many First Nations along the pipeline route because Enbridge is asking for details of agreements that First Nations have reached with the Pacific Trails Pipeline. Enbridge has consistently refused to release a list of the First Nations it claims has agreements with the company, but in the questions filed with the JRP, Enbridge is asking for details of agreements First Nations in northern BC have reached with the Pacific Trails Pipeline.
Funding demands
For example, while Enbridge is refusing to name all the backers of the pipeline for reasons of corporate confidentiality, the company is asking who may be funding the Wet’suwet’en First Nation in its appearances before the Joint Review Panel, including the US-based foundations named by right-wing blogger Vivian Krause, (note Krause recently declared victory and suspended her blog) right-wing columnists and the Harper cabinet:
Please confirm that the Office of the Wet’suwet’en has received participant funding from the Canadian Environmental Assessment Agency to participate in the Joint Review Panel (“JRP”) proceeding.
Please advise as to the amount of participant funding received to date from the Canadian Environmental Assessment Agency.
Please advise whether or not the Office of the Wet’suwet’en has received funding within the
last 5 years from Tides Canada, the Gordon and Betty Moore Foundation, the William and Flora Hewlett Foundation, or any other similar foundations, to oppose the Northern Gateway Project or to oppose oil sands projects in general.
If so, please provide the amount of funding received from each foundation.
In the case of the Raincoast Conservation Foundation, Enbridge is asking for details, including a membership list.
Please provide a description of the Raincoast Conservation Foundation.
Does the Raincoast Conservation Foundation prepare Annual Reports? If so, please provide the most recently published Annual report available.
If the Raincoast Conservation Foundation is a collection of like-minded individuals, please list its members.
Did the Raincoast Conservation Foundation apply for and receive participant funding in this proceeding? If so, how much was received?
While many of Enbridge’s question to the RainCoast Foundation are technical, the company which is currently conducting a multi-million dollar public relations campaign in favour of the pipeline, asks:
Please confirm that the “What’s at Stake? study” was prepared for use as a public relations tool, to advocate against approval of the Northern Gateway.
Enbridge also appears to be gearing up for personal attacks on two of the most vocal members of Kitimat’s Douglas Channel Watch, Murray Minchin and Cheryl Brown, who have been appearing regularly before District of Kitimat council to oppose the Northern Gateway pipeline.
Murray Minchin of Douglas Channel Watch addresses protesters at Kitimat City Centre Mall, Sunday, June 24, 2012, He talked about how he has learned as he goes along in examining Enbridge documents (Robin Rowland/Northwest Coast Energy News)
Credentials
On Murray Minchin, Enbridge asks:
Written Evidence Regarding Proposed Liquid Petroleum Pipelines from the proposed Nimbus Mountain West Portal to the Kitimat River Estuary submitted by Murray Minchin of Douglas Channel Watch…. Supplemental Written Evidence Photographic Evidence Regarding Proposed Liquid Petroleum Pipelines from Nimbus Mountain to the Kitimat River Estuary submitted by Murray Minchin of Douglas Channel Watch….
Mr. Minchin provides extensive opinion relative to geotechnical and other technical matters. Request: Please provide Mr. Minchin’s curriculum vitae which includes his education, training and employment history, to demonstrate his qualifications to provide geotechnical and other technical opinions that appear….
Minchin is one of Enbridge’s strongest opponents in Kitimat and in his various appearances (the latest at the anti-Enbridge demonstration in Kitimat on Sunday, June 24, 2012, Minchin has told the audiences that he is self-taught and has spent much of his spare time over the past few years studying the documents Enbridge has filed with the JRP.
As for Cheryl Brown, a vocal critic of the Enbridge Community Advisory Board process, Enbridge has filed a long series of questions about her involvement with the CAB, including asking how many meetings she has attended (see document below)
Two of Enbridge’s questions about Brown stand out
Has Ms. Brown offered a suggestion for a speaker that would have provided a differing viewpoint from those of Northern Gateway?
Many people in Kitimat, not just the outspoken members of Douglas Channel Watch, say they do not trust the Community Advisory Board process. When the CAB held a meeting recently to discuss marine safety, a meeting that was heavily advertised in Kitimat Terrace area, the CAB facilitators ( from a Vancouver -based company) attempted to bar the media, including this reporter, from this “public” meeting, until apparently overruled by Enbridge’s own pubic relations staff. On the other hand, everytime Douglas Channel Watch has appeared before the District of Kitimat Council to request a public forum on Gateway issues, DCW has always insisted that Enbridge be invited to any forum, along with DCW and independent third parties.
Ms. Brown states that Enbridge has not addressed the hard questions. Please confirm that Northern Gateway responded to questions put forth by the Douglas Channel Watch in Letters to the Editor in both the Kitimat Northern Sentinel and Terrace Standard in August of 2009.
Here Enbridge appears to be basing its case on one letter to the editor that appeared in local papers three years ago. During the public comment hearings that the JRP held at Kitamaat Village earlier this week, numerous people testified time and time again that Enbridge was failing to answer major questions about the pipeline and terminal, by saying that those questions would be answered later, once the project is approved.
Bird watching
In one series of questions, Enbridge is demanding a professional level database from the Kitimat Valley Naturalists, the local birdwatching group. Quoting a submission by the naturalists group, Enbridge asks
Paragraph 2.2, indicates that the Kitimat Valley Naturalists has birding records for the estuary for over 40 years and that Kitimat Valley Naturalists visits the estuary at least 100 times per year.
Paragraph 2.3 indicates the Kitimat Valley Naturalists have local expertise in birds of the Kitimat River estuary as well as other plants and animals that utilize those habitats.
Request: To contribute to baseline information for the Kitimat River estuary and facilitate a detailed and comprehensive environmental monitoring strategy, please provide the long term database of marine birds in and adjacent to the Kitimat River estuary, with a focus on data collected by the Kitimat Valley Naturalists in recent years, and where possible, the methodology or survey design, dates, weather and assumptions for the data collection.
Today the Kitimat Valley Naturalists, three local retirees, Walter Thorne, Dennis Horwood and April Macleod filed this response with the JRP:
Northern Gateway has specifically requested the long-term database of birds occurring over many years within the Kitimat River Estuary. The data we have collected includes monthly British Columbia Coastal Water Survey (BC CWS) and yearly Christmas Bird Counts (CBC). The data from
these bird counts are available on the web or in print form.
For access to BC CWS enter http://www.bsc-eoc.org
For access to CBC data, enter http://birds.audubon.org
Historical results for CBC counts have also been published by the journal American Birds. The earliest CBC count for Kitimat was 1974.
In regard to the long-term database, we have significant numbers of records for the foreshore of the Kitimat River Estuary. The number increases when the larger estuary perimeter is considered. These cover a 40-year period with the majority in the last 20 years. We would be willing to provide this information in a meaningful format.
The Kitimat Valley Naturalists, however, lack the expertise or financial ability to convert the data into a format that would address Northern Gateway’s interest in methodology, survey design, dates, weather, and assumptions for data collection.
Alternatively, we do have access to a consulting firm, which is willing to analyze our data and convert it to a useable and practical design. We assume, since this is a considerable undertaking in both time and cost, that Northern Gateway would be willing to cover the associated fees.
We look forward to hearing back from Northern Gateway and pursuing this with a budget proposal.
Northwest Coast Energy News consulted data management experts who estimated that complying with the Enbridge request would likely cost between $100,000 and $150,000.
First Nations
Some Wet’suwet’en houses have opposed the Pacific Trails Pipeline, and while negotiations with Apache Corporation are continuing, Enbridge is asking the First Nation for details of what is happening with that pipeline.
Is it the position of the Office of the Wet’suwet’en that each First Nation whose traditional territory is traversed by the proposed pipeline has a veto on whether it is approved or refused?
Please confirm that the Office of the Wet’suwet’en opposed approval of the Pacific Trails Pipeline (also known as the Kitimat Summit Lake Looping Project).
Does the Office of the Wet’suwet’en continue to oppose construction of the Pacific Trails Pipeline?
Have the First Nations who are proposing to participate as equity owners in the Pacific Trails Pipeline Project advised the Office of the Wet’suwet’en that they accept that the Office of the Wet’suwet’en has a right to veto approval and construction of that Project?
Please confirm that the First Nations holding an equity ownership position or entitlement in the Pacific Trails Pipeline Project (also known as the Kitimat-Summit Lake Looping Project) include:
• Haisla First Nation
•Kitselas First Nation
•Lax Kw’alaams Band
•Lheidli T’enneh Band
•McLeod Lake Indian Band
•Metlakatla First Nation
•Nadleh Whut’en First Nation
•Nak’azdli Band
•Nee Tahi Buhn Band
•Saik’uz First Nation
•Skin Tyee First Nation
•Stellat’en First Nation
•Ts’il Kaz Koh First Nation
•West Moberly First Nation
•Wet’suwet’en First Nation
The majority of questions filed with the Coast First Nations are technical challenges to studies filed by the coalition. Enbridge also filed questions with the Gitga’at, Gitxaala, Heiltsuk Nations and the Metis Nation of Alberta.
(Disclosure: The author, who is also a photographer, sometimes accompanies members of the Kitimat Valley Naturalists to photograph birds during the time they are doing the counts)
A Department of Fisheries and Oceans report filed Wednesday, June 6, 2012, with Joint Review Panel says the department has identified streams on the Northern Gateway Pipeline route that Enbridge identified as “low risk” but which DFO considers “high risk.” However, in the filing, DFO says it can’t release a comprehensive list of the high risk streams, preferring instead to give two examples on the Kitimat River watershed.
The DFO report comes at a time when the Conservative government is about to pass Bill C-38, which will severely cut back DFO’s monitoring of the majority of streams. It appears that the anonymous DFO officials who wrote the report acknowledge that they may soon have much less monitoring power because the report says:
Under the current regulatory regime, DFO will ensure that prior to any regulatory approvals, the appropriate mitigation measures to protect fish and fish habitat will be based on the final risk assessment rating that will be determined by DFO.
Note the phrase “under the current regulatory regime.”
The report also identifies possible threats to humpback whales from tanker traffic.
In the report, DFO notes that Northern Gateway’s “risk management framework” is based on DFO’s own Habitat Risk Management Framework, and DFO, notes “the approach appears to be suitable for most pipeline crossings.”
However, DFO further remarks that it has identified
some examples where crossings of important anadromous fish habitat have received a lower risk rating using Northern Gateway’s framework than DFO would have assigned. In addition, DFO has identified some instances where the proposed crossing method could be reconsidered to better reflect the risk rating.
In bureaucratic language, the Department says “DFO reviews impacts to fish and fish habitat and proposed mitigation measures through the lens of its legislative and policy framework” again a strong hint that the legislative and policy framework is about to change.
It goes on to say:
The appropriate approach to managing risks to fish and fish habitat is based on the risk categorization. For example, where high risks are anticipated DFO may prefer that the Proponent use a method that avoids or reduces the risk such as directional drilling beneath a watercourse to install the pipeline. If low risks are anticipated other methods such as open-cut trenching across the watercourse may be appropriate.
While DFO is “generally satisfied” with Northern Gateway’s proposed approach, it says “DFO has identified some crossings where we may categorize the risk higher than Northern Gateway’s assessment.”
DFO then gives Enbridge the benefit of the doubt because:
Northern Gateway continues to refine the pipeline route and we anticipate that assessment of risk will be an iterative process and, if the project is approved and moves to the regulatory permitting phase, DFO will continue to work with Northern Gateway to determine the appropriate method and mitigation for each watercourse crossing. In DFO’s view, Northern Gateway’s approach is flexible enough to be updated if new information becomes available.
DFO then says it
has not conducted a complete review of all proposed crossings, we are unable to submit a comprehensive list as requested; however, this work will continue and, should the project be approved, our review will continue into the regulatory permitting phase. While there may be differences in opinion regarding the risk categorization for some proposed watercourse crossings, DFO will continue to work with Northern Gateway to determine the appropriate risk rating and level of mitigation required.
Here is where DFO points to current, not future policy, when it says:
DFO is of the view that the risk posed by the project to fish and fish habitat can be managed through appropriate mitigation and compensation measures. Under the current regulatory regime, DFO will ensure that prior to any regulatory approvals, the appropriate mitigation measures to protect fish and fish habitat will be based on the final risk assessment rating that will be determined by DFO.
The report then gives two examples of high risk streams both in the Kitimat River watershed
Example 1) Tributary to the Kitimat River, KP 1158.4 (Rev R), Site 1269
Northern Gateway Rating: RMF: Low Risk
DFO Rating: RMF: Medium to High Risk
Rationale: This is a coastal coho salmon spawning stream that is quite short in length. It has several historic culverts in poor repair which are already impacting the reported run of approximately 100 spawning salmon. Works can be completed in the dry as this stream dries up during the summer. DFO is of the opinion that the risk rating is higher than that proposed by Northern Gateway due to the sensitivity of incubating eggs and juveniles of coho salmon to sediment and the importance of riparian vegetation for this type of habitat.
Example 2) Tributary to the Kitimat River, KP 1111.795 (Rev R), Site 1207
Northern Gateway Rating: RMF: Medium Low Risk
DFO Rating: RMF: Medium to High Risk
Rationale: In DFO’s view the risk rating for this watercourse is higher than that proposed by Northern Gateway because this stream is high value off-river rearing habitat for juvenile salmon such as coho salmon. This type of fish habitat is vulnerable to effects of sedimentation and loss of riparian vegetation.
Humpback Whales
The Joint Review Panel also asked DFO for a comment on the status of the humpback whale, especially in the shipping area in the Confined Channel Assessment Area Between Wright Sound and Caamaño Sound.
DFO responds
Four areas of critical habitat were proposed for humpback whales in coastal British Columbia in the Draft Recovery Strategy released in 2010, including the Confined Channel Assessment Area from Wright Sound to Caamaño Sound. However, humpback whales have recently been re-assessed by the Committee on the Status of Endangered Wildlife in Canada (COSEWIC) and were redesignated ‘Special Concern’ but remain ‘Threatened’ under the Species at Risk Act (SARA). A draft recovery strategy for the humpback whale has been prepared.
It is unclear if humpback whales are still protected as a Schedule 1 status species under the SARA and whether a recovery strategy has been finalized.
Golar LNG, which describes itself on its website as “one of the world’s largest independent owners and operators of LNG carriers” said in its interim results report to shareholders on November 28:
