economy | Northwest Coast Energy News

Enbridge claims support from 60 % of First Nations on pipeline route; company also sticks to repudiated Gitxsan deal.

Enbridge Northern Gateway says that 60 per cent of the aboriginal communities on the route of the $5.5 billion Northern Gateway oil pipeline have agreed to accept an equity stake in the project.

In releases to the media today, June 5, 2012, Enbridge says that half of the communities that signed up for a piece of the 10 per cent equity stake on offer are in British Columbia and the other half in Alberta.

There was immediate controversy because Enbridge is refusing to release the names of the communities that have signed up for the deal for “privacy reasons.”

The controversy was heightened late Tuesday when Enbridge spokesman Paul Stanway told The Terrace Standard the company’s deal with the Gitxsan First Nation still stands, despite the fact both a majority of the heriditary leadership of the Gitxsan and the elected council have rejected the agreement signed by one chief Elmer Derrick.

A blockade of the Gitxsan treaty office is continuing despite a court injunction ordering an end to the blockade.

“We feel we certainly have an agreement,” said Enbridge official Paul Stanway told the Standard in describing discussions it has subsequently had with Gitxsan officials. Stanway said the deal followed a protocol arrangement signed with Gitxsan chiefs several years ago.

“We are confident we were negotiating with the right people,” he said of discussions with treaty society chief land claims negotiator Elmer Derrick and other society officials.

In addition, Art Sterritt, executive director of the Coastal First Nations issued a news release that called Enbridge’s claims about aboriginal equity partners a “complete sham”.

“We’ve checked with all First Nations on the pipeline route west of Prince George and only two First Nations have signed equity agreements,” Sterritt says in the release. “Enbridge expanded its pipeline corridor by 80 kilometres to increase its numbers. Many of those communities that have signed on are located outside of the areas that will be impacted by a spill.”

Sterritt also challenged Enbridge’s contentions on the Gitxsan deal, saying that the Gitxsan people have made it clear they don’t support the project. “They have strongly rejected the agreement.”

Sterritt concluded. “We intend to stop this project.”

Sterrit says his coastal alliance is “absolutely mystified” about the inclusion of the Metis — who don’t have aboriginal rights and title within the corridor — in Enbridge’s 60 per cent. (Representatives of the Metis have taken part in the Joint Review hearings from the opening days of hearings in Kitimat last January).

Enbridge has announced before that First Nations support the pipeline project but, with the exception of Derrick, has never publicly discussed which nations support the project.

The near simultaneous announcement by Enbridge of First Nation’s support for the pipeline and the statement that the company is sticking with its agreement with Elmer Derrick could raise more controversy by causing more splits within First Nations if a few individuals sign and then the agreement is repudiated by other leaders, as happened with the Gitxsan Nation.

The pipeline which would run more than 1770 kilometres from the Alberta bitumen sands to Kitimat, carrying 525,000 barrels of diluted bitumen in the first train and as much as 825,000 barrels in the second train. If everything is approved, Enbridge hopes to ship the bitumen by 2017.

“It’s a good place for us to start in demonstrating that there is aboriginal support for Northern Gateway,” Stanway said. “It’s not 100 per cent, but neither is it the wall of opposition that our opponents sometimes claim.”

The 10 per cent equity ownership for the First Nations who signed the deal will give them about $280 million over 30 years. They would see cash flow starting in the first year of the pipeline’s operation.

There are 45 First Nations along the pipeline, but Stanway wouldn’t give a final figure on how many signed on.

“Some of those are willing to partner with us. That’s not to say they still don’t have some concerns. They want to make sure that we build and operate the pipeline as safety as possible.”

Wilf Adam of the Lake Babine First Nation in Burns Lake, B.C., the Canadian Press (as reported on the Global BC site) he refused to sign the equity agreement because Enbridge was unwilling to release more details in the contract.

“I’d been asking for the financial figures and I’d been asking about the employment. They said there would be a lot of employment.”

Adam told CP it appeared to him that there would be few jobs available for his people. Hesaid there was a flurry of emails and phone calls from Enbridge officials after the company moved the deadline for signing the equity agreement up to May 31.
Related links

Reuters: Enbridge Northern Gateway wins some native support

Globe and Mail: Some first nations want equity in Northern Gateway, but opposition remains

Common Sense Canadian Tough Questions for Enbridge on its Alleged Support from First Nations

CBC Majority of aboriginal communities sign on to Northern Gateway

TransCanada to build Shell’s “Coastal Gaslink” natural gas pipeline to Kitimat

Shell Canada and its Asian partners have chosen TransCanada Corporation to design, build, own and operate the proposed natural gas pipline to Kitimat, now called the Coastal GasLink project.

The estimated $4-billion pipeline will transport natural gas from the Montney gas-producing region near Dawson Creek, in northeastern British Columbia to the proposed natural gas export facility at Kitimat, BC.

The LNG Canada project is a joint venture led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited.

A news release from TransCanada says “Shell and TransCanada are working toward the execution of definitive agreements on the Coastal GasLink project.”

In the release, Russ Girling, TransCanada president and CEO says:

Our team has the expertise to design, build and safely operate pipeline systems. We look forward to having open and meaningful discussions with Aboriginal communities and key stakeholder groups, including local residents, elected officials and the Government of British Columbia, where we will listen to feedback, build on the positive and seek to address any potential concerns. Coastal GasLink will add value to British Columbians, particularly Aboriginals and communities along the conceptual route, by creating real jobs, making direct investments in communities during construction and providing economic value for years to come.

TransCanada says the company has approximately 24,000 kilometres of pipelines in operation in western Canada including 240 kilometres of pipelines in service in northeast BC. Another 125 kilometres of proposed additions either already having received regulatory approval or currently undergoing regulatory review. These pipelines form an integral and growing part of TransCanada’s NOVA Gas Transmission Ltd. (NGTL) System, which brings natural gas from Alberta to British Columbia to a hub near Vanderhoof.

Girling said in the release:

TransCanada is a leading energy infrastructure company in North America, with a 60-year history of safe, efficient and reliable operation of our assets and a respect for the communities and environments where we operate. We appreciate the confidence that Shell and its partners have placed in us to build, own and operate this natural gas pipeline in British Columbia. We will work collaboratively with them, Aboriginals and other stakeholders as we launch into the initial phases of consultation and regulatory review.

Project parameters

In it’s release TransCanada describes the potential Coastal GasLink pipeline project this way:

Receipt point: Near Dawson Creek, BC
Delivery point: Proposed LNG Canada facility near Kitimat, BC
Product: Natural gas from BC’s abundant Montney, Horn River and Cordova basins and elsewhere from the Western Canada Sedimentary Basin
Length of route: Approximately 700 kilometres of large diameter pipe
Initial pipeline capacity: In excess of 1.7 billion cubic feet of gas per day
Anticipated jobs: Estimated 2000-2500 direct construction jobs over a 2- during construction 3 year construction period
Estimated cost: Detailed cost information will be developed following completion of project scoping and planning. The current estimate is approximately $4 billion
Regulatory process: Applications for required regulatory approvals are expected to be made through applicable BC provincial and Canadian federal processes
Estimated in-service date: Toward the end of the decade, subject to regulatory and corporate approvals

Pipeline route

TransCanada says: “The final pipeline route will take into consideration Aboriginal and stakeholder input, the environment, archaeological and cultural values, land use compatibility, safety, constructability and economics.:

The Pacific Trails Pipeline would go cross country to Kitimat. (PTP)

At this point there are two possible routes for the pipeline west of Vanderhoof. One route would be to follow the existing Pacific Northern Gas route that roughly parallels Highway 16. The second possibility is a cross-country route, which may lead to controversy. The Pacific Trails Pipeline, which would feed the KM LNG partners (Apache, Encana and EOG) goes across the mountains from Smithers. While the PTP project has the approval of most First Nations in the regions, Apache and PTP are still in negotiations with some Wet’suwet’en houses over portions where the pipeline would cross the traditional territory of the houses. The much more controversial Enbridge Northern Gateway pipeline follows a similar cross-country route and faces much stiffer opposition than the Pacific Trails Pipeline, due to the content of that pipeline, mainly diluted bitumen and because, critics say, Pacific Trails managed to secure the most geologically stable cross country route earlier in this decade when the pipeline was originally planned to import, not export, natural gas.

TransCanada says the Coast Gaslink pipeline will also have an interconnection with the existing Nova Gas (NGTL System and the liquid NIT) trading hub operated by TransCanada. The company says:

A proposed contractual extension of TransCanada’s NGTL System using capacity on the Coastal GasLink pipeline, to a point near the community of Vanderhoof, BC, will allow NGTL to offer delivery service to its shippers interested in gas transmission service to interconnecting natural gas pipelines serving the West Coast. NGTL expects to elicit interest in and commitments for such service through an open season process in late 2012.

That means that the Asian customers will not be just dependent on natural gas from northeast British Columbia. Instead the “molecules” of natural gas from Alberta will join the stream heading to Kitimat. “Open season” in the energy industry is an auction where potential customers or transporters bid for use the pipeline.

In the release Girling says:

The potential Coastal GasLink pipeline project will allow British Columbians, and all Canadians, to benefit from the responsible development of valuable natural gas resources and will provide access to new markets for that gas. The project will also create substantial employment opportunities for local, skilled labourers and businesses as part of our construction team,” concluded Girling. “We know the value and benefits that strong relationships in British Columbia can bring to this project and we look forward to deepening those ties as our extensive pipeline network grows to meet market and customer needs.

TransCanada Corp. is no stranger to controversy, the company is the main proponent of the Keystone XL pipeline from Alberta to the US Gulf Coast. Portions of that pipeline were put on hold by President Barack Obama pending further review and Keystone has become a hot issue in the current American presidential election.

Apache expects first LNG cargo from Kitimat in 2016

Map of Apache Corp LNG projects in the Pacific Region — A map of Apache Corp's liquified natural gas projects, including Ktimat, as presented to the UBS conference on May 22, 2012 (Apache)

Apache said Tuesday, May 22, 2012, that it expects the first LNG cargo leave the Kitimat terminal for Asia sometime in 2016, with possible further expansion in the future.

Patrick Cassidy, director of Apache’s Investor relations division, was making a presentation to the UBS Global Oil and Gas Conference in Houston, Texas, on the company’s future plans.

One slide in the Power Point presentation summed up Apache’s Pacific strategy, both at Kitimat and its chief rival, the Wheatstone project in Western Australia.

Apache said the final investment decision for the first train or phase the Kitimat LNG is still expected later this year. Previous reports have indicated the decision will likely come in the fourth quarter as Apache and its partners line up customers in Asia.

Originally the KM LNG partners said the project would start up in 2015, but delays, including the unusually harsh winter in Kitimat, which slowed construction at the Bish Cove site, and the search for customers for the natural gas, has pushed the date back to 2016.

Apache Corp. owns 40 per cent the KM LNG partnership, Canada’sEncana Corp. and EOG Resources each own 30 per cent each.

Two other projects are planned for Kitimat, the smaller BC LNG co-owned by Houston-based investors and the Haisla Nation and a larger project announced last week by Royal Dutch Shell.

LINK: Apache presentation to UBS Conference

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

EDITORIAL

Who speaks for Kitimat?

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

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

You can’t negotiate from a position of weakness.

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

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

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

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

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

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

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

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

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

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

So what does this mean?

“Armed neutrality”

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

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

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

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

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

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

So what now?

Professional advice

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

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

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

All the way to the Supreme Court

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

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

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

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

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

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

Seeking Alliances

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Terrace Chamber of Commerce, for example, said:

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

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

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

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

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

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

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

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

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

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

Alberta Oil magazine describes Kitimat LNG projects as high stakes poker

It looks like the Chinese curse (and journalist’s blessing) “May you live in interesting times,” has come to Kitimat, especially when it comes to selling LNG to Asia.

In the past months the world liquified natural gas market has become more volatile with increased competition across the globe and, in some cases, political factors adding to the molecule mix.

In the past few days, Alberta Oil magazine has published a series of articles on the Kitimat LNG projects, describing the projects as a high stakes poker game.

The point is that the potential Asian buyers for BC (and US) liquified natural gas want a secure supply and they’re not sure what is going on on this side of the Pacific.

That’s apparently why the first project, KM LNG, has put off the final go ahead project from the first quarter of 2012, as originally expected, to the now likely the fourth quarter of 2012.

That has left a lot of uncertainty in town, despite assurances from two of the KM LNG partners, Apache Corporation and EOG Resources that they are optimistic that there will be a deal with Asian gas buyers, even if it means Asian equity in the KM LNG project.

That uncertainty in Kitimat has led to widespread rumours, none substantiated, that the three proposed projects, by KM LNG, by the Houston-Haisla BC LNG partnership and Shell, may be consolidated in one way or another.

At Kitimat council on Monday, April 2, Mayor Joanne Monaghan said “There has been a rumour around recently that Apache is stopping their working for a year and I talked to the CEO, Tim Wall, yesterday and he assured me that that was not true.”

Work is continuing on the KM LNG site at Bish Cove.

This morning, April 5, 2012, Alberta Oil reported that EOG Resources boss still bullish on Kitimat LNG, quoting a company called Bernstein Research that met with EOG’s top executive, CEO Mark Papa, who told Bernstein that EOG considers its 30 per cent holding in KM LNG as a “core holding.”

In a Thursday research note, Bernstein’s Bob Brackett says EOG is willing to sell some of its stake in the Kitimat project to a buyer (likely of the Asian persuasion) looking for equity in the upstream portion of project. “EOG expects to dilute a portion of its stake for that purpose,” Brackett writes.

A day earlier, Alberta Oil reported in Global LNG players jockey for space on a crowded field noting that Australia’s LNG megaprojects are facing competition from North America and cost inflation as the number of projects increase. At the same, US LNG projects are trapped in the current mire of US politics, with many politicians wary of the energy-starved US exporting natural gas.

In Apache Canada makes global push amid fierce competition, the article that uses the poker analogy, the magazine quotes Asish Mohanty, senior research analyst, global LNG, with Wood Mackenzie

Kitimat is due to start pumping out five million tonnes of LNG by 2015, widely viewed as a market “sweet spot” because it beats a number of major Australian projects – among them Shell’s massive Prelude endeavor – into production. “It’s a bit of a race,” Mohanty at Wood Mackenzie says. “The general impression in the industry is that before these Australasian projects start up it’s going to be a sellers’ market.”

Mohanty also looks at the problem of cost inflation and limited resources, a problem Kitimat already faces with not only the three proposed LNG projects but RTA’s Kitimat Modernization Project.

Companies that specialize in engineering, procurement and construction of liquefaction facilities number fewer than 10 internationally, Mohanty says. He expects many of them will be kept busy by construction of several LNG projects underway in northwest Australia, including ongoing work at the massive Gorgon plant at Barrow Island. The Chevron-led venture is due to begin pumping out 15 million tonnes of LNG annually by 2014-15. “All of these are massive projects,” the analyst says. “What that means is order books are pretty full. There is a scarcity of resources in places like Australia right now.”

The shortfall could potentially squeeze Canadian LNG forays. “The fact that most of the B.C. facilities are going to be ‘green-field’ will not make it easy for them to meet a timeline compared to a lot of others.”

Related CBC News Mackenzie Valley pipeline funding reduced

Conservatives to limit time for environmental reviews, including Northern Gateway

The Conservative government is taking aim at environmental reviews of major resource projects and will impose time limits on those reviews from 12 to 24 months.

In a briefing in the Ottawa budget lockup, Finance Minister Jim Flaherty said, “The new timelines will apply to the Northern Gateway Pipeline.”

Currently, major resource projects can take as long six years to approve. Under the new rules the whole process will take no more than 24 months. Rosemary Barton of CBC said on air that the Gateway project will be now limited to 18 months, but there were no details when the 18 month limit actually starts.

Skeena Bulkley Valley NDP MP Nathan Cullen called the new limits “a rubber stamp that is not good for business or the environment,” noting that one major oil spill would wipe out any savings for government and industry for decades.

Cullen said limiting the Northern Gateway Joint Review proceedings “changes the rules of the game and opens it up to court proceedings. I’ve never heard of a government changing everything half way through. They’re rigging the entire process and they’re not ashamed of it.”

The changes to environmental assessment are, at the moment, expected to be part of the budget omnibus bill. Cullen said the Opposition will try to “hive it off” in the committee stage into a stand alone bill. He was not optimistic and noted that using budget riders to get unpopular measures into law was a common Republican tactic in the United States.

“The cost of approving bad projects is going to cost us multiple times more,” Cullen said. “For example, we used to approve projects with hardly any review at all and we are still paying about 170 million dollars in Yukon for bad mines that were approved without anybody doing any science. The idea that you can short cut this things and it won’t cost in the end, is insanity.”

Cullen pointed to $80 million in cuts to the Department of Fisheries and Oceans, will cut the already under resourced DFO monitoring of the fisheries, at the time that the Harper government is accelerating the Northern Gateway project. While the Canadian Coast Guard will get $5.2 billion over 11 years, Cullen noted that this money will go for new ships and there are unlikely to be any increases in the operational budget.

There appear to be no changes in the budget to the habitat provisions of the Fisheries Act, unless it is buried in the fine print. In his interview with the CBC, Flaherty called some provisions of the Fisheries Act aimed at preserving habitat as “ridiculous,” repeating the story about a flooded farmer’s field in Saskatchewan.

Flaherty said “It’s anticipated there will be $500 billion investment in mining and oil, minerals in the next ten years. That’s an incredible opportunity. We can blow it, but that would be ridiculous. one study, one project, one review. ”

The Canadian Association of Petroleum Producers welcomed the government move to speed up environmental reviews saying:

[T]he plan to improve Canada’s regulatory process for natural resource projects will generate more jobs and a stronger Canadian economy while ensuring continued environmental performance, Canada’s upstream oil and natural gas producers said today.

“Broad-based regulatory reform is fundamental to attracting investment that creates Canadian jobs, prosperity and economic growth,” said Canadian Association of Petroleum Producers President Dave Collyer. “The government’s plan will improve the timeliness and efficiency of the decision-making process while the regulatory scrutiny that Canadians expect remains intact…”

The upstream petroleum industry is the largest single private sector investor in Canada – investing over $50 billion each year and employing more than 500,000 Canadians. Regulatory bottlenecks in the current system have often led to project delays or outright cancellations due to missed market opportunities, with a resultant reduction in economic benefits that would flow from these delayed or foregone investments.

“The changes broadly outlined in the federal budget will improve our business climate and competitiveness without compromising our commitment to responsible, sustainable development,” Collyer said.

The environmental movement was quick to disagree. The BC based Wilderness Committee said in a release

Corporations and polluters could reap the rewards of today’s federal Budget and the follow-up legislation, which will weaken the environmental assessment process.
The Budget includes major cuts to Fisheries and Oceans Canada, and eliminates the National Round Table on the Environment and the Economy.

The changes to the environmental assessment process explicitly aim to help speed up approval of tar sands pipelines like the Enbridge Northern Gateway Pipeline and Kinder Morgan’s Trans Mountain pipeline expansion. This will put the Canadian people at increased risk of oil spills, polluted rivers and fish kills, as well as lost wildlife.

“Energy giant Kinder Morgan had said they would formally submit their application to the National Energy Board to twin their tar sands pipeline by the end of this month, but now they’ve delayed,” said Ben West, the Wilderness Committee’s Healthy Communities Campaigner. “It seems to me that Kinder Morgan could be waiting to take advantage of a weakened review process,” said West.

The West Coast Environmental law group which has opposed the Northern Gateway pipeline said in an e-mail to the media

Today’s budget announcements make it clear that long-standing legal protections for the environment, including environmental reviews of major industrial projects like mines and oil pipelines will soon be rolled back or eliminated.

For decades, Canadians have depended on the federal government to safeguard our families and nature from pollution, toxic contamination and other environmental problems through a safety net of environmental laws. Today?s budget would cut up this environmental safety net to serve the interests of a few big companies.

Canadians want strong environmental laws to protect our communities, ecosystems, health, and economy. Recklessly rushing approvals for major industrial projects like pipelines is not the same as building a sustainable economy. A robust, sustainable economy depends on a healthy environment. The multi-billion dollar clean up costs from the Exxon Valdez and the Gulf oil spill remind us that it is citizens who pay the price when things go wrong.

John Bennett, Executive Director of the Sierra Club Canada said:

“Environmental assessments need to be thorough, consultative and science-based. Creating hard-time limits and rushing the process compromises all these things.”

The changes will result in weaker environmental assessments and projects being approved without a full understanding of the social, economic and environmental impacts they will have.

“We have environmental assessment laws to prevent repeating the mistakes of the past. It is far better to identify problems and then improve a design than to breathe polluted air or clean up dead fish,” said Mr. Bennett.

Minister issues non-denial denial on taking habitat protection out of the Fisheries Act

On Friday, March 16, Fisheries Minister Keith Ashfield released a brief statement denying that the government had made a decision to take habitat protection for fish out of the Fisheries Act (Earlier in the week reports had leaked saying that government intended to take protections for fish habitat out of the act, as way of clearing the way for industry.)

Ashfield’s statement, which came at 4:40 p.m. Eastern Time appeared to be the classic buried government news release issued late on a Friday. The release actually did not deny facts of the leak, making it also a classic non-denial denial.

Ottawa (Ontario) – The Minister of Fisheries and Oceans today issued the following statement:

“The government is reviewing fish and fish habitat protection policies to ensure they do not go beyond their intended conservation goals. Recent speculation about the current review is inaccurate. No decision has been made.

“The government has been clear that the existing policies do not reflect the priorities of Canadians.

“We want to focus our activities on protecting natural waterways that are home to the fish Canadians value most instead of on flooded fields and ditches.”

It is clear that Conservative policy, such as proposed changes to the Environmental Assessment Act and budget cuts at Environment Canada, is to eliminate as many environmental protections as possible, and so the sentence that policies “do not go beyond their intended conservation goals” must be interpreted in light of the environmental record of the Conservative government.

On March 13, media including The Globe and Mail Ottawa wants to bow out of regulating fish habitat, documents show and The Vancouver Sun, Canada poised to ‘gut’ fish protection laws, biologist claims reported that the Conservatives want to get government out of the job of regulating fish habitat, so projects such as the Enbridge Northern Gateway pipeline can be fast tracked.

Otto Langer, an aquatic ecologist who worked for the federal government for 32 years, obtained the documents and made them available to the media.

He said the documents show that the government intends to remove the requirement in the Canada Fisheries Act to protect fish habitats for any fish that is not of “economic, cultural or ecological value.”

Langer told The Globe and Mail: “Probably the main reason why the oil industry, especially in the Prairie provinces, wants it out of the act is its use triggers [a review under] the Canadian Environmental Assessment Act. If you are going to do harm to habitat, you have to do an environmental review and that takes time and money.”

Speaking to The Vancouver Sun Langer asked how the government could define
“what is a fish of economic, cultural or ecological value?”

Documents obtained by PostMedia news, as reported in The Vancouver Sun story, say that energy and other industries consider the Fisheries Act a irritant that holds up projects. One of the documents say:

“Some of the largest and most complex natural resource and industrial development projects across the country are affected by Fisheries Act requirements, which are consistently identified as one of the top federal regulatory irritants by stakeholders across the country,”

In his bi-weekly conference call with northwestern reporters, earlier Friday, before Ashfield issued his statement, Skeena Bulkley Valley NDP MP Nathan Cullen said he has heard the “the government is planning to take the word ‘habitat’ of Section 35 of the Fisheries Act and then ram that potential change into a budget bill.

“This is what the fisheries act is for, to protect habitat,” Cullen said. “Protecting habitat is one of the most crucial factors in protecting fish stocks. If you can’t protect habitat, then how do you protect fish?

If they do this,” Cullen said, “They’ll rip the very heart out of the Fisheries Act. The heart and soul of the act is that if you want to protect fish, you must consider habitat. You don’t have to be a genius or a fish biologist to know that if the fish don’t have anywhere to spawn, you’ll kill the fishery.”

Cullen said if the government does go ahead with the changes, “it will further compound all the problems and stresses we’ve been putting on the fishery. Essentially the government is saying that wild fish populations will not matter, that oil and gas is going to trump them every single time.

He went to say, “They did this with the Navigable Waters Act a few years ago They killed off a one hundred year old act that was designed to protect waterways in Canada. You know who it upset, and this is something the government is going to have to be paying attention to is the BC Wildlife Federation, the anglers and hunters associations, any of those groups that likes the go out into nature and actually see some nature. All of those groups got upset last time and now its going to be that times ten.“

Ashfield’s statement about flooding referred to a couple of incidents where the Department of Fisheries and Oceans would not allow draining of flooded areas. He told the House of Commons “Last year in Saskatchewan, a long-running country jamboree was nearly cancelled after newly flooded fields were deemed fish habitat by fisheries officials. In Richelieu, the application of rules blocked a farmer from draining his flooded field.”

In response, The Globe and Mail quoted Adam Matichuk, fisheries project co-ordinator for the Saskatchewan Wildlife Federation, said that, during high-water events, many fish species move into flooded areas to feed and reproduce.

“The Craven area is basically a flood plain,” he said. “It doesn’t flood every year, but, when it does, fish take advantage of it. There were hundreds of thousands of young fish, mostly pike and walleye, in there when they turned on those pumps,” he said.

Kitimat Modernization will create competitive contractors for future energy projects: RTA CEO

Jacynthe Côté, CEO Rio Tinto Alcan — Jacynthe Côté,the CEO of Rio Tinto Alcan, briefs reporters on the progress of the Kitimat Modernization Project,March 8, 2011(Robin Rowland/Northwest Coast Energy News)

The Kitimat Modernization Project, the $3.3 billion upgrade of the Kitimat aluminum smelter will create capable and competitive contractors that can go on to work at the future energy developments in the region, Rio Tinto Alcan CEO Jacynthe Côté said Thursday, March 8.

Côté was in Kitimat to tour the region, a trip that was postponed in December, at the time of the “Notice to Proceed” on the modernization project, when her aircraft was diverted to Prince Rupert by a snow and sleet storm the day of the announcement.

During a dinner on Wednesday night, Côté met with leading contractors, the leaders of the Haisla First Nation, Mayor Joanne Monaghan and members of the District of Kitimat Council.

The prospect of future energy projects, three liquified natural gas terminals to be built by the KM LNG partners, by the BC LNG partnership and by Shell was one factor in Rio Tinto Alcan giving the go ahead for the modernization project, she told local reporters.

“We have seen the critical mass in other parts of the world, “she said. “One of the reason to do full speed in December was to aim that we will be ramping down as the others are ramping up. Of course, I cannot say for the other projects that will be their decision.” Given the current schedules, she said, “we should be out of the way when others pick up.” (Another key reason for the go ahead, according to RTA primary metal vice president Jean Simon, speaking at the launch last December was the growing market for aluminum in Asia)

Côté added that the contractors now have “great abilities that could be redeployed.”

Michel Lamarre, Director of KMP said that despite some delays due to the harsh winter, RTA is still aiming for first concrete at the new potlines on June 1. First new metal is scheduled for the second quarter of 2014. Peak employment, about 2,500 people, is expected to be in the first quarter of 2013.

“We have the ambition to make the project a real showcase, for us, for British Columbia, for Canada,” Côté said. “So we’re pretty proud that 62 per cent of the work done so far has been done by the community in the area., 95 per cent of them in British Columbia, which is absolutely spectacular for a project of that complexity and magnitude.

“It requires a lot of skills, a lot of organization.”

Côté said she stressed RTA’s safety priorities when she met with the local contractors (a point the company made both at the Notice to Proceed gathering in December and at a local meeting for contractors last month). The contractors are very enthusiastic, Côté said. “I’ve seen in other regions as contractor and employees moved to that level of safety performance, it becomes a competitive edge, there’s going to be other projects coming in the region, there’s a lot of discussion around LNG, and it will be an advantage for contractors who have demonstrated superior performance and safety. We’re here to support that. I think they’re going to be more compelling and competitive, I mean it’s good business.”

She says that RTA is spending $3.1 million each day on the modernization project.

Asked about both the prospective LNG projects and the fact that accommodation in Kitimat is now at a premium, she said that “crowding” was a significant part of her discussions with both the Haisla and the District of Kitimat.

Rio Tinto has worked on what she called “disproportionately big” projects at sites compared to local communities around the world. “So we adjust, my message was we adjust.[There are] Different formulas in different parts of the world, depending on the conditions. The model is to bring in as many people from the community as we can.”

Kitimat Council to consider new Enbridge forum after warning about avalanches on pipeline route

Angus McLeod and Margaret Stenson, members of the environmental group Douglas Channel Watch, wear "ocean blue" scarves at a meeting of the District of Kitimat Council, March 5, 2012. The "ocean blue" scarves represent the group's determination to protect the oceans. (Robin Rowland/Northwest Coast Energy News)

District of Kitimat Council will consider a motion at its next meeting on March 19 to hold a second community forum on the controversial Enbridge Northern Gateway pipeline.

The notice of motion was introduced by Councillor Mario Feldhoff after a request for a new forum by the environmental group Douglas Channel Watch.

Murray Minchin called for the forum after a presentation to council about the avalanche dangers at Nimbus Mountain, where Enbridge plans a tunnel through the mountain.

Minchin said Enbridge has not done a forest survey on Nimbus Mountain where the pipeline would emerge from the tunnel. However, a survey by Douglas Channel Watch members of tree growth on Nimbus Mountain, Hoult Creek on the pipeline route and Hunter Creek which are tributaries of the Kitimat River, shows strong evidence of previous avalanches which could cause serious damage to the twin bitumen and condensate pipelines.

Minchin says that documentation filed by Enbridge with the Joint Review Panel shows that while an Enbridge response crew could reach a breached pipeline in that area in four hours, it would also take four hours for as much as two million litres of diluted bitumen spilled in that area to reach the Kitimat River estuary.

The lower slopes in the area have a large population of young, small, closely packed trees and lumpy rock material on the forest floor that show that it is periodically “swept clean by avalanches,” Minchin told the council.

The young trees in the area are small because they are growing on rockfall, and there are no mature trees. There are large boulders on the lower slopes, another indication of avalanche or rock fall, Minchin said.

He showed images of middle aged hemlocks farther up the slope near the proposed tunnel exit that sometime in the past had their tops ripped off. Damage to the spreading branches of the trees on one side indicate that the trees were hit by an avalanche when they were young.

There is evidence of a major rockfall on the mountain about 50 metres above the proposed tunnel exit with rock fall material clearly visible on the forest floor. The curve of the hemlocks in the area indicate that there is still downhill movement on the slope, Minchin said.

That means, he said, that with the plans calling for the twin pipelines to be suspended 200 metres in the air over Hoult Creek, that could be hit by an avalanche.

He said the presence throughout the area of “avalanche alders” combined with the fact that there are no hemlocks, is an indication, Michin said, of regular avalanche activity.

Giant boulder brought to Houlte Creek by an avalanche — This photograph from Douglas Channel Watch shows a giant boulder and a fallen hemlock in area close to the proposed Enbridge Northern Gateway pipeline at Houlte Creek, BC. (Douglas Channel Watch)

He showed a photo of a large boulder, perhaps the size of a carport, 100 metres from the proposed tunnel exit that was brought to the area by an avalanche.

He said a study of the age of young balsam would tell an expert when the last massive avalanche occurred “but it won’t tell us when the next one will occur.” The steep slopes on Mount Houlte, leading to the pipeline route along Houtle creek mean that area which feeds the Kitimat River has seen many avalanches in the past.

The pipeline then goes into the Hunter Creek area, which Minchin says, Enbridge’s own experts have warned is also vulnerable to avalanches. At Hunter Creek, avalanche debris could temporarily dam the creek, and then, when the debris is released by spring melt or water pressure, that could a create a flash flood; a flash flood that could damage the pipelines.

He pointed to the fact the cleanup of the Kalamazoo River spill in Michigan had been shut down for the winter because the bitumen becomes too sticky to move. He then asked how much longer would it take to clean up a spill under the winter conditions of the Kitimat area. Noting that Enbridge has admitted the Kitimat river would be closed for fishing for “at least four years” he asked “How long will the cleanup take…eight twelve? And where would Kitimat get its water?”

Minchin concluded by saying if there is a pipeline breach at Hoult or Hunter Creeks, despite Enbridge’s plans, the Kitimat River downstream from those creeks would be polluted for years.

He then asked that council organize a new public forum, with three representatives, one from the Haisla First Nation, one from Enbridge and one from an environmental group, adding. “The mayor of Dawson Creek has been trotted out at every one of these forums and is irrelevant, which is why we ask that three people speak to the forum.”