Kitimat can accommodate industrial growth, air shed study says. But where’s Northern Gateway?

The long awaited Kitimat air shed study, released by the province Friday, July 17, 2014,  says “that with proper management, Kitimat’s ai rshed can safely accommodate new industrial growth” without major affects on either human health or the environment.
Link to news release : Study shows Kitimat airshed can handle new industrial development 

The Kitimat Airshed Assessment looked at the cumulative effects of industrial air emissions, primarily sulphur and nitrogen oxides, and their potential impacts on both human health and the environment from

  • Rio Tinto Alcan’s existing aluminium smelter and its planned modernization
  • David Blacks proposed “Kitimat Clean” oil refinery at Onion flats
  • Four proposed LNG facilities; Shell-led LNG Canada, Chevron lead Kitimat LNG, the floating Douglas Channel LNG at the old log dump and a second floating LNG project called Triton.
  • BC Hydro gas turbine powered electrical generation facilities in Kitimat and near Terrace
  • Predicted increased to marine shipping in Douglas Channel.

The study was divided into two zones.

Health results were first examined for Kitimat townsite, the Kitimat Industrial Service Centre and Kitamaat Village.

The wider study included Gitga’at Old Town, Hartley Bay (Kulkayu), Kitimat-Stikine, Kitselas, Kitsumkaylum, Kshish, and Terrace.

Enbridge missing

There was one big factor missing from the study, it does not include the Enbridge Northern Gateway project, although the consultants who did the study do cite a couple of the air quality studies that Enbridge filed with the Northern Gateway Joint Review Panel. That despite the fact the Joint Review Panel under Condition 82 required that Enbridge file with the NEB for approval, at least four months prior to commencing construction, “an Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal.”

The JRP report acknowledged that emissions from the Enbridge terminal would be minimal but would contribute to the cumulative effect of pollutant emissions from other industries and required Enbridge to consult with the District of Kitimat, the environment ministries and other industries in planning for emissions.

The map from the airshed study also shows that the  possible marine terminal for David Black’s proposed Kitimat Clean refinery project is at or close to where the proposed Enbridge Northern Gateway terminal would be.

airshedcover

Health and environment

The study looked at proposed emission levels and the effect of emissions elsewhere in the world and then compared those studies with the Kitimat Valley. It found that the risk of sulphur dioxide was “directly related to proximity to industrial area”–largely the Kitimat Service Centre area–and that there would be a minor increase in respiratory incidents of 0.5 per cent to 2 per cent, with a slight increase of nitrogen dioxide but those were within existing guidelines.

As for environmental impact, the study says nitrogen dioxide impacts will be low. There wil be “some increased risk of soil impacts” from sulphur dioxide. The study says there will be “no negative impacts to vegetation across all scenarios” but did find “potential for acidification” of seven small lakes.  Lakelese Lake is not one of those affected.

The study also doesn’t include particulate matter and although it does consider climate change, did not take into consideration possible increase of green house gases in the Kitimat Valley.

The consultants, Esssa Technologies of Vancouver, based its findings on an earlier study by Rio Tinto Alcan on emissions from the Kitimat Modernization Project and worked on those findings by adding new industries and a greater area to the models they used.

The province and industry says they will continue to monitor air, water, soil and vegetation “to ensure these values are protected.”

The higher levels of sulphur dioxide emissions from the Rio Tinto Alcan Kitimat Mondernization Project will be allowed to continue under the current permit. Environment Minister Mary Polack told reporters that will only change if the current court challenge to the sulphur dioxide levels are successful.

 

Map of Kitiamt
A map by Essa Technologies and Environment BC of the Kitimat valley airshed study shows locations for existing and proposed industrial or infrastructure development. It does not include the proposed Enbridge Northern Gateway project.
What Northern Gateway Joint Review said about emissions in the air shed
Among the 209 conditions imposed on the Enbridge Northern Gateway project is No. 82, an Air Quality Emissions Management and Soil Monitoring Plan.

Northern Gateway must file with the NEB for approval, at least 4 months prior to commencing construction, an Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal…

This plan must include:
a) a description of the baseline, pre-construction conditions, informed by relevant modelling results and recent, existing monitor data;
b) locations of both air and soil monitoring sites on a map or diagram, including the rationale for the locations selected and the timing for installation;
c) methods and schedule of ambient monitoring for contaminants of potential concern in air (e.g., NO2, SO2, and H2S) and in soils (e.g., pH; major plant nutrients K, P, N, and S; and trace metals), and emissions source tracking;
d) data recording, assessment, and reporting details;
e) a description of the public communication and complaint response process;
f) additional measures that will be implemented as a result of monitoring data or ongoing concern;
g) the criteria or thresholds that will require implementing additional measures;
h) a description of the plan updating process;
i) a summary of Northern Gateway’s consultation with Environmental Canada and the British Columbia Ministry of Environment regarding the Air Quality Emissions Management and Soil Monitoring Plan. This summary must include any issues or concerns raised regarding the plan and how Northern Gateway has addressed or responded to them; and
j) a summary of discussions with the District of Kitimat and local or regional industrial emitters regarding collaborating on the plan’s design and implementation.

One of the things that the Joint Review Panel noted in requiring Enbridge Northern Gateway to have an updated plan and to collaborate with Kitimat and other industries is that levels of acceptable sulphur doixide in the atmosphere are changing and much of Northern Gateway’s modelling was based on standards that were becoming obsolete.

In the Joint Review Panel report, section 8.7, the JRP said:

Northern Gateway assessed changes in the atmospheric environment, including a modelled assessment of criteria air contaminant, hazardous air pollutant, and greenhouse gas emissions. Criteria air contaminants assessed by modelling included sulphur dioxides, nitrogen oxides, carbon monoxide, hydrogen sulphide, and particulate matter. Hazardous air pollutants were also modelled and included total volatile organic compounds (VOCs), benzene, toluene, ethylbenzene, and xylene (combined, BTEX), as well as hydrogen fluoride.

The provincial air shed report considered only two contaminants, sulphur dioxide and nitrogen dioxide.

Northern Gateway said there would be minimal atmospheric emissions from the construction and operation of the pipeline. The focus was on the Kitimat marine terminal.

The modelled assessment for the Kitimat Terminal included emissions associated with terminal operations, with the largest sources being vehicle traffic and
hydrocarbon storage tanks Northern Gateway used the conservative assumption of continuous ship berthing…emission rate) in order to capture the worst case scenario of concurrent adverse meteorology and maximum potential emissions. From the model results, Northern Gateway predicted that sulphur dioxide associated with operating the Kitimat Terminal would exceed the provincial air quality objectives (Level A) for all time periods. This after mitigation.

Environment Canada said that Northern Gateway took appropriate measures in designing and siting its proposed facilities to minimize adverse effects on air quality. It acknowledged Northern Gateway’s commitments to adopt best practices and to use economically-feasible best-available technologies in designing the Kitimat Terminal to minimize effects on air quality.

Northern Gateway ackknowledged that “due to the project interacting with nearby topographical features, where the largest sulphur dioxide emissions are from the
marine vessels, the highest concentrations were predicted to occur infrequently and immediately adjacent to the terminal fence line.

Northern Gateway, Transport Canada, the Heiltsuk First Nation and other stakeholders did acknowledge that eventually the vessels coming to Kitimat “would be subject to the reduced sulphur fuel requirements associated with the joint United States-Canada North American Emission Control Area.

Based on this, marine fuel sulphur requirements permitted in Canadian coastal waters (200-nautical-mile limit) would be 1.0 per cent in 2012, reducing further to 0.1 per cent by 2015. Northern Gateway predicted that sulphur dioxide emissions from marine vessels should be approximately 96 per cent lower than modelled once these new international fuel standards take effect. Northern Gateway also predicted exceedances of provincial air quality objectives in the area for carbon monoxide, particulate matter, hydrogen sulphide, and total reduced sulphur.

Northern Gateway said there “no exceedances of hazardous air pollutant guidelines were predicted as a result of the project itself” but there could be a cumulative effect with other industries in the Kitimat waterfront.

The Joint Review Panel ruled:

By the Kitimat Terminal’s proposed in-service date, there will have been significant changes to the number and magnitude of existing air emission sources since
the provincial emission inventory of 2000 was compiled, and since Northern Gateway completed its modelling assessment.

Regarding the sulphur emissions attributable to the terminal, marine vessel berthing would account for 97 per cent. Given that Northern Gateway used conservative assumptions regarding berthing in the modelling and that regulations coming into force regarding the sulphur content of marine fuels would further decrease predicted missions, the Panel finds that the modelling results presented in the application and subsequent filings are not predictive of the realistic potential effects on local air quality.

Based on the filed information about sulphur dioxide emissions, the Panel is satisfied that new modelling based on the updated information would indicate that sulphur dioxide associated with the Kitimat Terminal’s operations would not exceed provincial air quality objectives.

The Panel requires that further modelling, reflecting the current level of activity, equipment, and marine sources, must inform Northern Gateway’s design of the Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal.

Updated modelling would be used to inform the monitoring program’s design, as well as to help ensure that the monitors are placed effectively to monitor both human and environmental health.

Cumulative effects on the atmospheric environment

Northern Gateway said that, during the Kitimat Terminal’s operations, tank maintenance and marine berthing would add a potential measureable contribution to regional cumulative environmental effects from air emissions. Northern Gateway incorporated the existing industrial sources in the Kitimat area in its modelling assessment, using the British Columbia Ministry of Environment’s emissions inventory. At the time the modelling was run, the available emission estimates from 2000 were used to characterize the existing sources in the airshed.

The Joint Review panel noted that over the time of the hearings”it heard of many changes to the industrial make-up of the Kitimat area since the 2000 emissions inventory was developed.”

Combining these with the predicted project emissions, the model results indicated predicted exceedances of regulatory thresholds for sulphur dioxide, carbon monoxide, particulate matter, hydrogen sulphide, and total reduced sulfur, though not at every averaging period.

Northern Gateway said that, due to the existing large emission sources and the region’s complex meteorology and topography, the exceedances are primarily attributable to the other industrial activities around Kitimat and not from the project itself.

Because there would be adverse project effects remaining after mitigation that could combine with the effects of other past, present, and future projects, and because cumulative effects are of primary concern, the Panel’s significance recommendation is given below in its analysis of cumulative effects.

The Panel finds that the emissions associated with the Kitimat Terminal’s operation would be minimal compared to the existing sources presented.

Although the modelled cumulative emissions exceeded many regulatory thresholds, the exceedances were predicted based on an out-of-date emissions inventory, and were predicted to occur prior to adding emissions from the project. Based on the information about sulphur dioxide emissions on the record, in addition to the modelling included in the application, the Panel is satisfied that new modelling based on updated information would indicate that sulphur dioxide associated with the Kitimat Terminal’s operations would not contribute to an increased exceedance of provincial air quality objectives, either through limited emissions or berthing management to limit emissions in particularly adverse conditions.

Related

Kitimat air shed study raises more questions than it actually answers

The Supreme Court decision on Tsilhqot’in Rights and Title is a shot across the bow of the Alberta bound National Energy Board

The response to the Joint Review Panel decision on the Northern Gateway, beginning in December and continuing until this Canada Day,  both in the public and in the media  is sharply divided by the Rocky Mountains.

A lof of  Albertans,   most of  the energy companies and many in the media, especially the Toronto-based business press,  keep telling Canadians that the NEB is an independent, quasi-judicial body, that carefully weighs the scientific and other evidence before coming to a conclusion.

Prime Minister Stephen Harper stands up in Question Period and from his prepared script also claims the  JRP and NEB are independent bodies.

Most of  those writing about the  attitude of the National Energy Board have never attended a single  hearing,  As for the Joint Review,.  those from the major media who  did attend  were only there for  the opening and closing sessions.

Members of the Joint Review panel make notes at Kitamaat Village (Robin Rowland)
Members of the Northern Gateway Joint Review Panel, left to right, Kenneth Bateman, chair Sheila Leggett and Hans Matthews make notes at the June 25, 2012 hearings at the Haisla Recreation Centre, Kitamaat Village. A map of Douglas Channel can be seen behind the panel. (Robin Rowland/Northwest Coast Energy News)

 

In British Columbia, those attended the Northern Gateway Joint Review sessions saw a strange and arcane bureaucratic system with rules of evidence and procedure often tilted toward a proponent in the energy sector.

Those rules of evidence were created for the cosy club atmosphere of the NEB in Calgary where mostly there are friendly hearings attended only by the proponents and energy sector lawyers. Those same rules were infuriating to those in northwest British Columbia trying and failing to persuade the JRP to take seriously many of  the concerns of the region. The rules of evidence and procedure were baffling to lawyers practicing in BC; even the highly experienced lawyers from the BC Department of Justice were chewed out by the JRP in Prince George for not following proper procedures.

Most egregious was the JRP’s refusal to consider the late evidence on the growing number of humpback whales in Douglas Channel.

Humpback whale in Douglas Channel
The tail fins of a humpback whale are seen in Douglas Channel near Bish Cove, as a fishing boat speeds toward Kitimat harbour in a rain storm on Aug. 21, 2013. (Robin Rowland/Northwest Coast Energy News)

The JRP seemed to believe that time stopped at the evidentiary deadline, and although it acknowledged that Northern Gateway was a 50 year project,  the panel didn’t need to know anything new.

A careful reading of the two volumes of the Joint Review Panel report and decision clearly shows that JRP finding was not, as one columnist called it, a triumph of science over emotion, but a proceeding that was biased from the outset to find in favour of Enbridge. It is clear that even though the Joint Review Panel did impose 209 conditions on Northern Gateway, reading those almost 500 pages one sees time and time again that Northern Gateway’s evidence and assurances were accepted at face value, while the panel treated the evidence and testimony from opponents with a much higher level of skepticism.

Moving to Calgary

One of my sources once told me that the “NEB is nothing more than an extension of the Petroleum Club.” In the 1991 budget, then Prime Minister Brian Mulroney moved the NEB headquarters from Ottawa to Calgary as a political gift to Alberta.

At that time the move was also seen as practical, Alberta was still complaining no one in Ottawa was listening to it. So if the Conservative government moved the NEB to Calgary, it would be there listening to the oil patch.  NEB offices were scattered across the country, consolidating them in Calgary seemed, at the time, to be a way of saving taxpayers’ money and enhancing internal communications.

Seen now, about 25 years later, it’s clear the NEB move from its Ottawa headquarters and regional offices to Calgary was a disaster waiting to happen. Over the past quarter century, despite its claims of independence, the NEB and its staff have become so embedded in the oil patch energy culture of Calgary that (probably subconsciously) the NEB  has shown that it is largely incapable of really taking seriously the culture of British Columbia on issues such as the Northern Gateway and Kinder Morgan projects. The NEB Calgary culture is also colliding,with the concerns and culture of other parts of the country as diluted bitumen pipelines head eastward.

That embedding in Alberta isn’t going to change. It might have been a good idea to move the NEB headquarters back to Ottawa but it’s too late for that. The NEB this week is moving to new quarters in Calgary  at a cost to taxpayers of a staggering $21 million.

The Conservative omnibus bills that gutted environmental protection and speed up the review process has made things much worse–at least until this week.

Now the Supreme Court has sent a shot across the bow of the full steam ahead National Energy Board, compelling the board to put much more weight on the concerns of First Nations.

The decision upholding the Tsilhqot’in claim to its traditional territory means the NEB and any future joint review panel (whether involving multiple federal agencies or federal agencies and a province) are going to have to take the concerns of First Nations and indeed all Canadians a lot more seriously—and the future of the planet as well, as described in the first part of this analysis. Chief Justice Beverly McLaughlin wrote that on First Nations` traditional territory:

that it is collective title held not only for the present generation but for all succeeding generations. This means it cannot be alienated except to the Crown or encumbered in ways that would prevent future generations of the group from using and enjoying it.

“Future generations” is the key phrase.

Future generations could undermine that whole world view of the Joint Review Panel, since the panel so casually dismissed the fears of a major disaster on the coast, saying it was “unlikely” and could be “mitigated.”

The JRP basically had a so-what attitude to British Columbia, arguing that since parts of the British Columbia environment had already been degraded any future environmental problems would be minimal and could be “mitigated.”

Public interest

While in the introduction to its definition of the Public Interest, the JRP says

If approved and built, the Enbridge Northern Gateway Project could operate for 50 years or more. Sustainable development was an important factor in our environmental assessment and our consideration of the public interest. The project would have to meet today’s needs without compromising the ability of future generations.

Sounds like that might match the Chief Justice. But, as the old saying goes, the devil is in the details. And just a few paragraphs later, the JRP says:

Our assessment of the project’s effects on residents and communities Considering Northern Gateway’s project design, its commitments, and our conditions, we concluded that the project’s potential effects on people’s land, water, and resource use could be mitigated. We were not persuaded that construction and routine operations of the project would have a negative effect on the social fabric of communities in the project area. We also were not persuaded that the project would adversely affect the health and well being of people and communities along the route or in coastal areas. We found that the net overall economic effects of the project would be positive and would provide potential benefits and opportunities to those individuals and businesses that choose to participate in the project.

“Trust Enbridge”

The JRP’s attitude toward a major disaster was “trust Enbridge.”

We found that some level of risk is inherent in the Enbridge Northern Gateway project, and that no party could guarantee that a large spill would not occur. We found that a large spill, due to a malfunction or accident, from the pipeline facilities, terminal, or tankers, is not likely.

We found that Northern Gateway has taken steps to minimize the likelihood of a large spill through its precautionary design approach and its commitments to use innovative and redundant safety systems, such as its commitments to address human error, equipment failures, and its corporate safety culture. These commitments and all others made by the company

Oh well, the ecosystem will recover eventually—a conclusion that could be reached only by ignoring the evidence from Prince William Sound, site of the Exxon Valdez spill.

We found that, in the unlikely event of a large oil spill, there will be significant adverse environmental effects, and that functioning ecosystems recover through mitigation and natural processes.

We found that a large oil spill would not cause permanent, widespread damage to the environment. The extent of the significant adverse effects would depend on the circumstances associated with the spill. Scientific research from past spill events indicates that the environment recovers to a state that supports functioning ecosystems similar to those existing before the spill. We found that, in the unlikely event of a large oil spill, there would be significant adverse effects on lands, waters, or resources used by residents, communities, and Aboriginal groups.

We found that, in rare circumstances, a localized population or species could potentially be permanently affected by an oil spill. Scientific research from a past spill event indicates that this will not impact the recovery of functioning ecosystems.

In other words, some communities, probably aboriginal communities, would have be sacrificed in the public interest and the economics of Alberta while the economy of that part of British Columbia would be destroyed.

Will the JRP have to start over?

The environmental law community and First Nations leaders are already taking a look at another paragraph in the Supreme Court judgement. Paragraph 92 in lawyer speak.

Gerald Amos
At the celebration of the Supreme Court decision, on June 26, Gerald Amos welcomed the suggestion from lawyers that the ruling could force a re-examination of Northern Gateway. (Robin Rowland/Northwest Coast Energy News)

One of the many reports comes from West Coast Environmental Law which noted in an e-mail

[T]he Tsilhqot’in decision, Canada’s highest court brings home the implications of this for Enbridge and other project proponents:

Once title is established, it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward.

For example, if the Crown begins a project without consent prior to Aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing.

And what about the overhaul of environmental legislation in 2012 to smooth the way for pipeline and other industrial development?

The court notes: “Similarly, if legislation was validly enacted before title was established, such legislation may be rendered inapplicable going forward to the extent that it unjustifiably infringes Aboriginal title.”

Reset

In other words, the Supreme Court decision resets everything.

It could nullify the recent decision by the Prime Minister to permit the Northern Gateway to go ahead. Or it could mean, especially given the number of court challenges just to the JRP, that, in light of the Tsilhqot’in decision the panel will be ordered by a court to go back to the drawing board and reconsider its findings.

Then there are the pending challenges to the Harper decision allowing the Northern Gateway to go ahead. Sources told Northwest Coast Energy News that the first of a number of court challenges were to be filed last week. It is likely that after the holiday weekend, lawyers will be rewriting their filings and their briefs in light of the Tsilhqot’in decision and presenting the Federal Court with those challenges some time in July.

The justices of the Supreme Court did allow a public interest exemption on the use of First Nations land for a larger purpose, but there must now be genuine consultation and the public interest will likely have be proven beyond a reasonable doubt, it can’t just be the whim of a prime minister with a tame, unquestioning caucus who decides what is in the public interest.

Who consults whom?

In the decision, Chief Justice McLaughlin wrote:

Governments and individuals proposing to use or exploit land, whether before or after a declaration of Aboriginal title, can avoid a charge of infringement or failure to adequately consult by obtaining the consent of the interested Aboriginal group

and later

The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders. If the Aboriginal group does not consent to the use, the government’s only recourse is to establish that the proposed incursion on the land is justified under s. 35 of the Constitution Act, 1982.

Compare that again with what the JRP said. As with the environmental impact it begins by saying:

The Panel finds that the magnitude, extent, and potential impacts of this project required an extensive program of public consultation. The Panel considers thorough and effective consultation to be a process that is inclusive of, and responsive to, all potentially-affected groups and individuals.

Then the JRP says:

The Panel notes that, among potentially-affected parties, there were differing perspectives on what constitutes a thorough and effective process of consultation. There were also different views among some parties about how consultation should occur, and their roles and responsibilities during consultation.

And then:

The Panel believes that it is critical for all parties to recognize and understand their respective roles and responsibilities for achieving effective dialogue during consultation. The Panel noted the principles of thorough and effective consultation at the beginning of this chapter. The Panel finds that these principles require that a process must provide timely, appropriate, and effective opportunities for all potentially-affected parties to learn about a project, provide their comments and concerns, and to discuss how these can be addressed by the applicant.

So what does it mean?

The JRP starts off by giving Northern Gateway a slap on the wrist:

The applicant [Enbridge] must be genuinely responsive. Affected parties have an ongoing and mutual responsibility to respond to opportunities for consultation, to communicate concerns they may have, and to discuss how these can be addressed.

But then it goes on in the same paragraph:

Consultation requires trust, mutual respect, and relationship-building. All parties have an obligation to seek a level of cultural fluency, in order to better understand the values, customs, needs, and preferences of the other parties involved in the consultation process. All parties may be required to adjust their expectations in response to the information, concerns, and interests raised and considered through the process. The Panel observed that this approach did not always occur in this proceeding.

Get the phrase “all parties.” It is clear here that the JRP is taking on the First Nations and other opponents for not seeing Northern Gateway’s point of view, since it accepts, as seen below, Northern Gateway’s contention that it is doing a good job with consultation,

And the word “trust.”  Again the Alberta-bound JRP (the panel had no members from British Columbia, two from Alberta, one from Ontario)  are saying “trust Enbridge.”

Unfortunately after a decade of operating in the northwest,  and despite its spin, Enbridge has failed time and time again to establish trust with First Nations  and it has equally failed to establish trust with a significant number non-aboriginal residents of the northwest.

The companies developing LNG projects have, for the most part, established a level of trust.

The joke up here  is now so old it’s a cliche (but still unknown to the eastern media) where an LNG executive says, “We look at what Enbridge did and do the exact opposite.”

The Panel accepts Northern Gateway’s view that consultation is a process which should ensure that all parties are better informed through consultation, and that it involves being prepared to amend proposals in light of information received. In this regard, the Panel notes that Northern Gateway made numerous changes to the design and operation of the project in response to input provided by the public, landowners, governments, and stakeholders

In fact, Northern Gateway is still fumbling the ball.

It is true that Northern Gateway did change its plans and put another $500 million into the plans for the project–after a lot of public pressure  and growing controversy  during the JRP hearings over its plans.

Sheila Leggett
JRP Chair Sheila Legget during the final arguments in Terrace, June 17, 2013. (Robin Rowland/Northwest Coast Energy News)

Equally telling was Northern Gateway’s dismissal in its final arguments (arguments accepted by the JRP)  that there was no earthquake hazard in the region, despite two major earthquakes at Haida Gwaii and southern Alaska just months earlier,  both of which shook Kitimat.

In the final oral arguments, Northern Gateway’s lawyer Richard Neufeld summarily dismissed the fears of the Haida and Heiltskuk First Nations about destruction of the herring spawning beds because, he said,  first, the chances of a tanker disaster were unlikely and second, even if there was a tanker disaster it was even more unlikely that it would occur during the spawning season. (Not that the spawning  season matters, herring beds in San Francisco Bay are still damaged years after a spill there).

Now with the Tsilhqot’in decision, Enbridge can no longer summarily dismiss those fears. The companies who have proposed liquefied natural gas projects  are meeting with anyone, including avowed opponents, and opening dialogues, even if both sides continue to disagree. Despite its spin, accepted by the political pundits and eastern business media, those who live in the northwest know Northern Gateway’s consultations and engagement, so far,  have mostly been with friendly groups and friendly audiences.

The Supreme Court decision is going to change that attitude in the coming weeks. If Enbridge wants Northern Gateway to go ahead, the company is going to have to genuinely engage with First Nations. Given all the damage created by Enbridge over the past decade, that engagement is unlikely to change anything.

The Supreme Court decision is going to have one more consequence.

Eventually, in a few years,  the decision will negate that stupid attitude from the conservative media and some in the business community that the people of northwestern British Columbia are against all development.  That was never true but it’s a convenient excuse for those columnists and conservatives not to question their own assumptions.

If the reporters and columnists had bothered to come up here, if the press-release dispatching business leaders had  bothered to leave their executive suites, they’d know what northwestern BC wants is responsible and sustainable development, not quick in and out profits.

The Supreme Court decision means that any future industrial development in the northwest will be much different from anything seen in the past because First Nations must be involved from the beginning.

Given its sorry track record, it is unlikely that Enbridge will be part of that development. but others will  profit, yes profit, from that failure.

In the coming years it is also likely that there will be a new approach to development from the National Energy Board after they begin to see their narrow oil-patch friendly approach and rulings struck down by the courts quoting the Tsilhqot’in decision.

Kitimat votes: Ross calls Gateway plebsicite “late in the day” and “slap in the face”

Haisla Nation chief counsellor Ellis Ross has written a letter to Kitimat media sharply critizing the upcoming plebiscite on the Enbridge Northern Gateway project

Enbridge trying to buy Social Licence

This late in the day, a poll of its residents has no binding effect on the project. Next week, the District of Kitimat will seek the views of its residents on Enbridge’s Northern Gateway Pipeline Project. But to what end? If anything, it will lead to further uncertainty.

Deciding to hold a referendum at this late date is a slap in the face to all the work done by the Haisla Nation on this project. The Haisla Nation dedicated time and money toward testing Northern Gateway’s evidence and claims about safety and environmental protection, while the District stood by and did nothing.

The review process for this project has already left town, with the District taking no position on the project. Still undecided on what its views are on the project, the District now proposes to conduct a poll, instead of examining the facts in the JRP process. A poll to vote on a JRP report that we view as wrong to begin with including the flawed process itself!

Ellis Ross
Haisla Chief Counsellor Ellis Ross (Robin Rowland/Northwest Coast Energy News)
Based on our participation, the Haisla Nation has determined the risks associated with Northern Gateway’s transport of diluted bitumen and condensate clearly outweighs any potential benefits. This is an informed conclusion, made after reviewing Northern Gateway’s application and evidence, and participating extensively in the Joint Review Panel process.

The Haisla Nation is doing what it can to protect what is left of its Territory. The Joint Review Panel Report has failed to properly address the concerns associated with the project, which is why the Haisla Nation has asked the Federal Court of Appeal to review the JRP’s Report. And the Haisla Nation is not alone in its challenge of the Report. Two other First Nations – Gitga’at and Git’xaala – and two environmental organizations have also challenged the Report.

Enbridge Northern Gateway is desperate for public support. That is why it is conducting a media and canvassing blitz in the District to sway voters. Will the District of Kitimat be able to form a position based on the outcome of such a plebiscite, which would have been bought by oil money, instead of based on participating in a fact finding process like the JRP? What is a yes vote that has been bought by Enbridge’s vast advertising machine worth? Does a purchased social licence hold any value at all? If it does have a price tag, it doesn’t come close to the value that the Haisla people place on what is left of Haisla Territory; especially if you look at what has happened in the Gulf of Mexico, at Kalamazoo and the effects lasting even to today in Prince William Sound (Exxon Valdez).

The Haisla Nation will not be swayed by a yes vote in the District of Kitimat plebiscite. If anything, our membership is angry that it is even happening at all. This project is wrong for the Haisla Nation and it is wrong for the Territory that Haisla’s and non Haisla’s call home. We have a choice. We have more than enough projects to sustain the region and we are already seeing the results.

There is also some controversy in Kitimat whether or not members of the Haisla Nation should be able to vote in the April 12 plebiscite. District officials noted that its has jurisdiction only within District boundaries. That means that members of the Haisla Nation who live within the boundaries of the District can vote, while Haisla who live in Kitamaat Village, which is a federally designated Indian Reserve cannot.

Earlier in the week, Ross was equally blunt in a Facebook posting aimed at the Haisla Nation where he said:

The Kitimat Council’s ‘vote’ is an insult to Haisla given the amount of time, effort and money we’ve spent since 09 and they come in at the last minute to cheer lead for Enbridge but he vote wont mean anything regardless of the outcome.

District of Kitimat can’t make this project happen even if its a yes vote. We will make our position known to both this vote and our reaffirmation of this project and its impacts to our rights and title.
Haisla members: remember what we’ve been saying about this in our membership meetings since 09.

On Monday, in an Op Ed in the Vancouver Sun, Clarence Innis, acting chief of the Gitxaala Nation, wrote, in part:

We, the Gitxaala Nation, are vehemently opposed to Enbridge’s proposed Northern Gateway pipeline project because of the disastrous effects the shipment of heavy oil through our territory would have on our traditional way of life, economy, spirituality, and governance system….
What’s especially concerning is that our people have not been properly consulted about the impacts of the Northern Gateway Project, despite openly participating and co‑operating with the federal joint review panel process. We went out of our way to participate in Canada’s regulatory system, yet our rights have been completely ignored.

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

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

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

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

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

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

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

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

The three questions outlined in the letter were:

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

Consultation on implementation

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

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

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

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

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

Whole-of-government

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

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

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

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

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

The response goes on to say:

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

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

Earliest stages

The Haisla are telling the Harper government:

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

 

Related

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

Haisla consultation reply outlines flaws in Northern Gateway Joint Review report

Haisla response lists evidence rejected by Northern Gateway Joint Review

Bitumen excluded from data for federal tanker study, documents reveal

Tanker risk map
Transport Canada tanker report map shows current risk for spills in BC (Transport Canada)

 

Genivar report
Cover of Genivar tanker report (Transport Canada)

 

The possible effects of a bitumen spill on Pacific waters were not considered in the oil response preparedness report released last week by the Harper government, the background data study reveals.

The consulting firm that did the study for Transport Canada, Genivar Inc, had no reliable data on the effect of a bitumen tanker disaster—because, so far, there has been no major ocean disaster involving diluted bitumen.

Instead, Genivar, based its findings on potential hazards and response on existing data on crude oil spills.

The Genivar study, however, does warn, that if the Enbridge Northern Gateway project does go ahead,  the spill risk from diluted bitumen carrying tankers in Douglas Channel and along the north Pacific coast will jump from “low” or “medium” to “very high.” If the twinning of the Kinder Morgan pipeline goes ahead, then the risk in Vancouver also jumps to “very high.”

The question of how bitumen might behave in the cold and choppy waters of the North Pacific was hotly debated during the Northern Gateway Joint Review hearings earlier this year. Enbridge Northern Gateway based its position on laboratory studies, studies that were challenged by environmental and First Nations intervenors, pointing both to the unknowns of the ocean environment and the continuing problems Enbridge has in cleaning up the spill in the Kalamazoo River in Michigan.

Genivar tried to base its report to Transport Canada on existing data on oil spills and related hazards. What it found instead is that that there are often gaping holes in the reporting and monitoring of oil spills world wide, especially small and medium sized spills.

Lack of data also meant that Genivar had little to go on when it calculated the effect on an oil spill on key areas of interest to northwest British Columbia, the recreational fishery and tourism.
Genivar, however, did uncover disturbing data about the long term effects of oil spills, studies that show even minute amounts of remaining oil can still disrupt the marine environment 40 years after an event.

The Genivar report, Risk Assessment for Marine Spills in Canadian Waters Phase 1: Oil Spills South of 60th Parallel, was completed in November, then passed on to the “expert panel” that released their own report: A Review of Canada’s Ship-source Oil Spill Preparedness and Response Regime — Setting the Course for the Future. That second report was based not only on the data provided by Genivar but on the expertise of three panel members, their visits to some locations and input from government, industry, First Nations and municipalities.

Transport Minister Lisa Raitt and Natural Resources Minister Joe Oliver unveiled the second report at a glitzy media event  in Vancouver on Tuesday, December 10. At that time the expert panel report was released to the media along with an abstract of the data.

The actual data report was not posted; it had to be requested through the Transport Canada website, which is how Northwest Coast Energy News obtained the background study.

High risk for Kitimat

Transport Canada tanker report
Expert panel tanker risk assessment report cover (Transport Canada)

The expert panel found “a very high risk” of oil spills in two areas of the Pacific Coast, in the north around the ports of Kitimat and Prince Rupert and in the heavy ocean traffic area of southern British Columbia, especially Port Metro Vancouver and into Washington State.

The expert panel made 45 recommendations that covered a wide range of issues including eliminating the present $161-million liability limit for each spill and replacing it with unlimited liability for polluters, annual spill training involving the Canadian Coast Guard, Environment Canada, provincial and local authorities and the private sector, increased and improved annual spill training exercises, basing risk assessment on local geography and conditions and faster emergency responses to spills.

The expert panel calls for greatly increased research on the ocean environment at a time that Harper government has been gutting environmental research across Canada, while spinning that its policies are “science based.”

The science and technology around both the movement of oil and spill response has advanced significantly over the past several decades. We feel that while some aspects of the Regime have kept pace with these developments, in some areas, Canada has fallen behind world-leading countries like Norway and France. This can be attributed to a general lack of investment in research and development as well as the lack of coordination between industry and government over research priorities.

The Government of Canada should work closely with industry to establish a national research and development program for oil spill preparedness and response. The program should be co-funded by industry and the Government, and the research priorities should be set through a collaborative process that involves academia, where possible. Like the Regime itself, we view this program as a partnership between industry and government.

We envision that this program would also seek to leverage the work being done internationally on oil spill preparedness and response. The program should seek to establish partnerships with other world-leading countries in order to stay current on international advances and new technologies.

The expert panel, however, does not say how the federal government is expected to pay for meeting BC Premier Christy Clark’s condition for a “world class” spill prevention and response system at a time that Finance Minister Jim Flaherty is determined to balance the budget and the Harper government is continuing to cut back government services.

Bitumen excluded

On bitumen, the Genivar data study says:

Modified bitumen products represent the majority of the “crude carried as cargo” in
Pacific sub-sector 5. They are not modelled as a separate category in this spill behaviour analysis but are represented as “persistent crude”.

Changes in spill behaviour depend to some extent on the environmental conditions at the time of the spill, as described in greater detail below. However, over the range of wind and sea conditions typically experienced in the Canadian marine environment, changes in oil properties are not overly sensitive to variations in climatic values, so a single set of wind and sea conditions will be used in the analysis.

The idea that “changes in oil properties” not being sensitive to variations in climate was also frequently challenged before the Joint Review Panel.

On the increase in traffic volume if the Northern Gateway project goes ahead, the Genivar report says.

Enbridge Inc. has proposed to construct a marine terminal at Kitimat, B.C. and a dual pipeline from the terminal to oil sands production in northern Alberta. The terminal would handle up to 193,000 barrels/day of imported diluents (i.e., low-gravity condensate) that would be piped to Alberta and used to dilute bitumen to enhance its flow properties. The diluted bitumen would then be piped to Kitimat at rates up to 525,000 barrels/day that would be shipped by tanker to export to markets in Asia and California.

At full capacity, the import of diluent and export of diluted bitumen would total up to 35 Mt/year. This amount is comparable to the currently-shipped volume in the Pacific sector related to volumes being exported from Vancouver and related to volumes being exported from the Alaskan to Washington State trade.

It goes on to say that the current tanker traffic on the north Pacific coast “has negligible risk in the near shore and intermediate zones, but significant potential spill frequency in the deep-sea zone related to the Alaskan trade.” Similarly, according to Genivar the environmental risk in the region “currently ranges from ‘medium’ to “very low” from near shore to deep-sea zones, respectively…. mainly driven by a combination of physical and biological features.”

The increase in traffic from Northern Gateway would likely increase the environmental risks. The the near shore risk from would jump from “very low” to “very high.” For the largest spill category, deep-sea risk would likely increase from “low” to “medium.”

No data on recreational or traditional First Nations fishery

To study the effect on an oil spill on the fishery, Genivar used data from the Department of Fisheries and Oceans as the provinces to gauge “the port value of commercial fishing and the value of the fish, shellfish and aquaculture” in each zone it studied and then compared it to the the national averages for commercial fishery. Those figures included any commercial fishery by First Nations.

But Genivar noted, there is no reliable data on either the recreational fishery or the First Nations traditional, food, social and ceremonial fishery, saying:

It is important to highlight that this indicator does not consider recreational or traditional fishing. The importance of this industry is notable and an oil spill could damage the recreational fishing stock as well. However, the absence of comparable data and the fact that this study is restricted to federal and international data, and some provincial data from Quebec and Ontario for commercial fisheries, limits the ability to include recreational fishing… Nevertheless, as an absolute index, it will provide an overall vulnerability in the event of an oil spill.

The ongoing impact of cutbacks at Fisheries and Oceans has had a continuing impact on the northwest, especially in the controversial halibut recreational fishery, where DFO has admitted that it is basically guessing the size of each year’s recreational halibut catch.

Tourism

Genivar also notes that lack of reliable data on the effect on a oil spill on tourism. The consultants go so far as to say one of the indicators they will use to measure the effect of any oil spill on tourism would come from “data extracted from the 2011 National Household Survey at the census division level and the accommodation and food services data will be used.”

The “National Household Survey” is also known as the long form census and it is the National Household Survey that the Harper government made voluntary rather mandatory, decreasing the reliability of the data. Global News recently analyzed those who had contributed to the survey and found that it poor people, the very rich and people in low population areas were least likely to fill out the voluntary census—which means the data for northwest BC is likely highly unreliable from the 2011 survey even though “The census divisions in coastal regions will be selected for each of the sub-sectors. This method will express the economic vulnerability of each sub-sector to a potential collapse in tourism following a spill.”

Despite the importance of cruise ship traffic on the west coast, Genivar notes, “In Canada, data for passenger vessels were unavailable.”

It also notes that “this study does not specifically take into account national parks and other landmarks, since their influence on tourism is indirectly included in the tourism employment
intensity index” so that Genivar could create what it calls the Human-Use Resource Index (HRI), even though that index appears to be based on incomplete data.

Long term sustainability of shale energy in doubt, scientists tell geology conference

Shale oil and gas may not be the economic “panacea” that some believe, a panel of scientists told a geology conference today.  New studies point  to higher than expected field decline rates and increasing costs to extract the energy, meaning the long-term sustainability of shale gas production is questionable.

The findings confirm what sources in the energy industry have been telling Northwest Coast Energy News for the past few months, that the output from hydraulic fracturing decreases much more quickly than conventional extraction.

The panel of three scientists released their findings at the annual convention of the Geological Society of America this morning in Boulder, Colorado.

The studies concentrate on the United States where fracking for “tight oil” and natural gas is more advanced than in Canada.

The panel says that while the use of hydraulic fracturing and horizontal drilling for “tight oil” is an important contributor to Amercian energy supply, fracking will not result in long-term sustainable production or allow the U.S. to become a net oil exporter.

Charles A.S. Hall, professor emeritus at the College of Environmental Science and Forestry, State University of New York, Syracuse, presented two studies: one of the global patterns of fossil-fuel production in the past decade, and the other of oil production patterns from the Bakken Field (the giant expanse of oil-bearing shale rock underneath North Dakota and Montana that is being produced using hydraulic fracturing).

According to a news release from the GSA, both studies show that despite a tripling of prices and of expenditures for oil exploration and development, the production of nearly all countries has been stagnant at best and more commonly is declining — and that prices do not allow for any growth in most economies.

“The many trends of declining EROIs suggest that depletion and increased exploitation rates are trumping new technological developments,” Hall said.

The second studies are from J. David Hughes, president of Vancouver-based Global Sustainability Research Inc. Hughes studied the Bakken Field and the Eagle Ford Field of Texas, which together comprise more than half of U.S. tight oil production. The results show that drilling must continue at high levels, to overcome field decline rates of 40 percent per year.

Drilling rates of more than 3,000 wells annually in the Eagle Ford, and more than 1,800 wells annually in the Bakken, are sufficient to offset field decline and grow production — for now. If drilling at these high rates is maintained, production will continue to grow in both fields for a few more years until field decline balances new production. At that point drilling rates will have to increase as “sweet spots” (relatively small high-productivity portions of the total play area) are exhausted and drilling moves into lower-productivity regions, in order to further grow or even maintain production.

The onset of production decline will likely begin before the end of the decade, Hughes said.

“These sweet spots yield the high early production observed in these plays, but the steep decline rates inevitably take their toll. ”

Arthur E. Berman, a geological consultant for Labyrinth Consulting Services, Inc., of Sugar Land, Texas, deems the U.S. 10-year history of shale-gas extraction “a commercial failure. ” However, he says, this will not be the case forever. “Prices will increase to, at least, meet the marginal cost of production. More responsible companies will dominate and prosper as the U.S. gas market re-balances and weaker players disappear.”

Hughes sums up: “Tight oil is an important contributor to the U.S. energy supply, but its long-term sustainability is questionable. It should be not be viewed as a panacea for business as usual in future U.S. energy security planning.”

One of the Kitimat LNG projects plans to self-generate power for liquefaction plant

At least one of the two large liquified natural gas projects in Kitimat is, at least at this point, planning to self-generate the power required using a gas-fired, steam-driven electrical generation system.

A job ad posted this weekend by the headhunting firm Fircroft is seeking a Lead Project Engineer, Power Plant for “Our client, a major international owner/operating company, requires expertise for their LNG mega-project in Western Canada.”

The job, which requires 20 years and more experience, would be located in Calgary for eighteen months, then move to Kitimat for the remainder of a four year contract paying from $1650 to $1850 per day.

By Fircroft describing the job as a “mega-project” means that the client is either Shell’s LNG Canada project or the Chevron and Apache KM LNG project, since the much smaller BC LNG project could not be described as a “mega-project.”

As well as the standard qualifications for a senior engineer, the job posting lists:

• Power Plant design, operation and construction experience required.
• Boiler design, construction, operation, and commissioning experience required.
• Heat Recovery Steam Generation (HRSG) design, processes, construction, operation, and commissioning experience required.
• Integrates inherent safety in design and operability in concept selection and development for gas resource opportunities.

Providing the power for the Kitimat and other northwestern LNG projects is becoming controversial. The power is needed to cool the natural gas so it can be loaded onto tankers for shipment to customers.

The BC government recently announced a $650,000 study of the cumulative effect on air quality for the planned industrial expansion in the Kitimat area, including the Rio Tinto Alcan Kitimat modernization project, which would increase the amount of sulphur dioxide emissions, combined with as many as three LNG projects and the associated increase in tanker traffic, as well as the possible and even more controversial Enbridge Northern Gateway project.

At the time of the BC announcement, the Globe and Mail reported:

If natural gas is used either for direct-drive or combined-cycle electricity generation to produce the energy required for the proposed Shell LNG facility at Kitimat, approximately 300 million cubic feet of natural gas would be burned. The proposed Chevron Apache LNG facility could burn approximately 140 million cubic feet of natural gas.

The other alternative for powering the LNG plants is to use hydro-electricity, and BC Hydro at the moment doesn’t have the capacity to supply the LNG projects with power. One possibility is the controversial Site C dam project in the Peace River basin, which is also under review by the BC government. 

Although the job is restricted to Canadian citizens or permanent residents, it is clear that the engineer will have to also answer to the project’s overseas partners since one requirement is to conduct:  “Overseas VIP workshops, including Value Engineering, Process Simplification, Process Optimization and Design to Capacity.”

Apache sells some of its gas and oil assets, confirms commitment to Kitimat project

Apache CorporationApache Corporation said Thursday it will  sell oil and gas producing properties in the Nevis, North Grant Lands and South Grant Lands areas of western Alberta, to Ember Resources Inc., a private Canadian company, for CAN$220 million, as part of the company’s “portfolio rebalancing,” Apache said in a news release.

At the same time, Apache CEO Rodney Eichler said,  “We also remain focused on advancing the Kitimat LNG project to monetize large unconventional resources in the Liard and Horn River basins in northern British Columbia.”

“Going forward, Apache is focused on growing our liquids production from a deep inventory of crude oil- and liquids-rich opportunities that generate attractive rates of return on our extensive remaining acreage in Canada’s Western Sedimentary Basin,”  Eichler said.

“This transaction is one element of a comprehensive review of Apache’s portfolio to determine which assets make the most sense for Apache to own given our growth and return objectives and which assets are better owned by others,” Eichler said. “The Nevis, North Grant Lands and South Grant Lands assets fit in the latter category.”

Apache is selling 621,000 gross acres (530,000 net acres) and more than 2,700 wells that had average net production during the second quarter of 2013 of 67 million cubic feet of gas and 237 barrels of liquid hydrocarbons per day from late Cretaceous sands and coal seams. Apache says “it  will retain 100 per cent working interest in horizons below the Cretaceous, such as potential Duvernay and Nisku, in Nevis and North Grant Lands.”

Apache previously announced plans to divest $4 billion in assets by  the end of 2013. The company intends to use proceeds from the asset divestitures to reduce debt and enhance financial flexibility and to repurchase Apache common shares under a 30-million-share repurchase program authorized by the Board of Directors earlier this year.

In July, Apache announced an agreement to sell its Gulf of Mexico Shelf operations and properties to Fieldwood Energy LLC(Fieldwood), an affiliate of Riverstone Holdings, for cash proceeds of $3.75 billion. In addition, Fieldwood will assume all asset retirement obligations for these properties, which, as of June 30, 2013, Apache estimated at a discounted value of approximately $1.5 billion.

 

From the Orange Coast: The pollsters lost big in the BC election–but not for the reason everyone is talking about

Updated with clarification

The pollsters were the biggest losers in the British Columbia provincial election on May 14—but not in the way everyone is talking about.

It’s clear to the Wednesday morning quarterbacks that the big issue in BC was the economy, and voters chose that economy over the environment.

That’s where the pollsters failed and have failed time and time again for the past decade. As long as the pollsters keep asking the stupid question “What’s more important the environment or the economy?” a majority of voters, especially in uncertain times, will choose the economy. Politicians will campaign, as Christy Clark did brilliantly, by promising that there are better economic days ahead, putting the environment far down the priority  list.

By the time Canadians and all human beings realize that a viable economy is based on a sustainable environment it may be too late to save either.

The Liberal majority under Christy Clark was a big surprise; the polling data indicated, at first, that there would be a big NDP majority and in the final days that the Adrian Dix and the NDP would sneak into the Legislature still in majority territory.

Instead, Christy Clark, who until (if) she finds a seat, will be running the province as premier from the legislature galleries.

The BC free-enterprise coalition is satisfied, for the moment. The usual cabal of University of Calgary economic pundits are cheering for their sponsors in the oil patch, with the National Post,  Globe and Mail  and Sunmedia acting as their echo chamber. (Why the eastern media insist on always having Calgary academics write about BC is rather mind boggling. If they want ultra conservative BC point of view, there’s always the Fraser Institute, but even the Fraser Institute is junior to Alberta it seems)

The trouble is that the eastern establishment mainstream media are as out of touch as the pollsters.  The Globe and Mail editorial, like most of the eastern media, once again sees British Columbia as nothing more than a junior partner in Confederation, existing to serve the interests of Alberta, with the concerns about our future secondary.

 It now falls to Ms. Clark, who was cagey about her position on the Trans Mountain project, to take an objective look at the proposal, let go of her populist, B.C.-first rhetoric, and ensure that her government is an open-minded partner with Alberta in its bid to get its oil to tidewaters for export. Any reviews of the pipeline project must be done quickly and with a deadline.

It’s just plain unmitigated arrogance, but rather typical,  to tell a premier who just won  a majority in the legislature and the popular vote to “let go of her populist BC-first rhetoric.”

 

Christy Clark
Christy Clark laughs at a joke at the Kitimat Valley Institute, April 4, 2013, where she announced her plan to eliminate the provincial debt in 15 years via taxes and other payments from LNG (Robin Rowland)

The liquifaction factor

There’s one big problem, a very big problem, with Clark’s promises. She opened her campaign in Kitimat by promising that the liquified natural gas developments will not only slay the deficit but pay down the BC provincial debt in 15 years.

I asked Clark in the media scrum after her announcement how she could make such a prediction when the LNG market is so volatile. She replied that her predictions were based on very conservative estimates. That was spin.

Clark based her election campaign on a promise that not only hopes to foretell the future for the next fifteen years but on liquifaction.

Now liquifaction has two meanings. First is the freezing of natural gas to LNG. Second is the problem that occurs during an earthquake when water saturated ground turns into a liquid, bringing about the collapse of countless buildings with the death and injury that follows.
Clark based her campaign on the hope that the LNG market will not liquify—as in the second meaning.

The LNG market looked so simple two years ago. Buy natural gas at low North American prices, pipeline it to the west coast, load it on tankers and sell it in Asia at the higher natural gas price there which is based on the price of oil. But, wait, the free market doesn’t work that way (sorry free enterprise coalition). Customers in Asia don’t want to pay the full oil-based price for natural gas if they can get it via the US Gulf ports at a cost plus North American price. If the export price of LNG falls, even if the BC projects proceed, the price will be a lot lower than Clark and the energy cheerleaders expect and there will be no new golden age for the BC economy.

Changes in the LNG market are happening at warp speed and it is hard to keep up (And many people in Kitimat are trying to keep up with the daily volatility since the future of the town may depend on LNG). Unfortunately, the dying mainstream media failed to explain, even in the simplest terms, that Christy Clark’s LNG promises might be as empty as a mothballed tanker. This is one case where concentrating on the horse race—and the grossly inaccurate polls—was a blunder, when there should have been reality checks on the LNG promise. The conservative cheerleaders in the media actually didn’t do their readers much good when they failed as  reporters to check out the real state of the energy industry or predicted economic catastrophe if there was an NDP victory.

The NDP failure

The NDP campaign under Adrian Dix was not up to its appointed task of explaining the need for both a viable economy and a sustainable environment.  Most pundits point to Dix’s  mid-campaign switch to opposing the Kinder Morgan pipeline expansion as the beginning of the NDP decline.

More telling, for me, was Dix’s failure to explain the proposed two-year moratorium on fracking. There are lots of moratoriums and holds on fracking in North America and around the world. The Canadian media, however, failed miserably (if it even bothered to check) that fracking moratoriums are becoming a standard, although controversial, practice worldwide. A moratorium on fracking today is prudent given the uncertainty over current practices.

Yes, fracking has been used for 50 years but on a much smaller scale. There are two new factors. First is the sheer volume of operations, with no idea what the massive increase in fracking will do to the environment, especially the ground water. Second is the stubborn refusal of companies to release proprietary information on the chemicals they use—the same “public be damned”  attitude toward environmental concerns that has got pipeline companies in trouble as well.

Christy Clark and the conservative commentators successfully painted the fracking moratorium as stopping all economic development in the province. Dix and the NDP completely failed to emphasize that their platform was that the party wanted industrial development in the province, but didn’t want to rush into development that will cost the province and its taxpayers down the road. (And taxpayers will eventually have to pay to clean up unfettered development long after the companies that profited have left town, something deficit and debt hawks always conveniently ignore.)

The Orange Coast

The Orange coast
BC election map shows the coastal areas where tankers and pipelines are the biggest issue went solidly for the NDP

As Tyler Noble (formerly with CFTK News and now with the District of Kitimat) pointed out in a Facebook post, the electoral map shows perhaps the real story of the election. The British Columbia coast is entirely NDP orange. The Interior of BC went Liberal. The fight over tankers and pipelines is not going to go away with the result of this election, it’s going to get louder and a lot nastier.

So the University of Calgary pundits, the conservative columnists and editorialists from Calgary to Toronto and the Globe and Mail editorial board will soon have to forget their cheers and go back to complaining about the BC peasants who have to be “educated” about how good pipelines are for the economy.

The polls

The pollsters are now trying to find out what went wrong, and beginning to ask how to find out who will actually turn up at the voting booth?

Even with the problems pollsters face with call display refusals, fewer landlines and the possible unreliability of internet panel polling, even with the flawed polling data some things are clear.

The turnout, as currently reported, was 52 per cent. The student vote (an actual vote) went heavily to the NDP and the Greens. Part of the student vote result is traditionally, younger people generally tend to vote “progressive” parties. Young people, increasingly disillusioned by partisan politics, are not turning out to actually vote. With high unemployment among millennials and teenagers, these potential voters want jobs, but they’re also worried about the future of the planet. They’re not turning out to vote because many say they have no one to vote for (despite the appeals of the NDP and the Greens.)

Many older people, both on the left and the right are trapped in an obsolete world view of progressive views versus big business or the dreaded socialism versus free enterprise. Older people, worried about their economic future do vote and are often more small c conservative.

Clark campaigned on that paradigm and she won.

Be careful for what you wish for.

The failure of the economy vs environment question

It may be that by the next federal election in 2015 and by the next BC election in 2017, there might be, it is hoped, a profound change in the political narrative. If the pollsters hadn’t asked that obsolete and stupid question about the environment verus the economy, business versus socialism, they might actually have had some good data in this election.

The times, as Bob Dylan sang, they are a changing. The paradigm is shifting. In just the past few months there are hints of the rise of a growing “green conservative” movement.

Preston Manning, the founder and first leader of the Reform Party is now promoting the “green conservative”

In the United States, green conservatives are adding to the ruptures in the Republican Party. There is even a branch of the Christian Coalition, that is splintering because it too supports the idea of green values because it sees green as supporting family values, helping the poor and the idea of stewardship.

We see lots of green conservatives here in northwest BC among the hunters, fishers and fishing guides and those who work in the industrial sector who like hunting, fishing, hiking and boating. Did they vote for the NDP or the Liberals?  Usually the sample size in northwest BC is too small, but drilling down might indicate that there were  enough green conservatives who voted for what should now be called the Orange Coast.

If Adrian Dix and the NDP had campaigned effectively with an eye on the green conservatives, there might actually be an NDP majority. If Christy Clark actually keeps her hints of a possible tilt toward green conservatism and moves away from the free enterprise at any cost faction of the Liberals (including that 801 coalition that died at 802), she might actually be in for a long run as BC premier.

If, on the other hand, as the Globe and Mail advocates this morning, if Clark does move,  bowing to Alberta’s demands, toward more unfettered development, as environmentalists fear and the aging free entrerprisers would love, the next provincial election will be one to watch, perhaps with the Greens filling a vacuum created by the Liberals and the NDP.

As for the pollsters, there have been two major failures in Canada, the BC and Alberta elections. The pollsters were wrong about the Israeli election as well, which means polling failure is not confined to Canadian politics. It’s time for the pollsters to stand down, go back to the beginning, and take a look at all their practices, including the basic questions they are asking and to wonder if the questions reflect an unconscious bias in favour of the party paying for the poll (good professional pollsters do usually try to avoid open bias question sequences).

If the polling companies don’t change, they too will soon follow the dying mainstream media into oblivion, so neither will be around to see a possible future where the concerns for the environment are a given and the debate is over the real solution to stave off catastrophe.

 

This post has been updated to clarify that those who I call Conservative cheerleaders failed to be clear about the energy industry, not the overall campaign.

 

 

 

 

 

 

Environment agency calls for comments on Prince Rupert LNG pipeline

The Canadian Environmental Assessment Agency is calling for comments on the proposed LNG project at Prince Rupert.

An agency news release says:

As part of the strengthened and modernized Canadian Environmental Assessment Act, 2012 (CEAA 2012) put in place to support the government’s Responsible Resource Development Initiative, the Canadian Environmental Assessment Agency must decide whether a federal environmental assessment is required for the proposed Pacific Northwest LNG Project in British Columbia. To assist it in making its decision, the Agency is seeking comments from the public on the project and its potential effects on the environment.

Progress Energy Canada Ltd. is proposing to construct and operate a liquefied natural gas (LNG) facility and marine terminal near Prince Rupert, within the District of Port Edward. The Pacific Northwest LNG facility would be located on Lelu Island. The proposed project would convert natural gas to LNG for export to Pacific Rim markets in Asia.

The agency says written comments must be submitted by March 11, 2013.

The CEAA says it will post its decision on the website if a federal environmental assessment is required.

It goes on to say:

If it is determined that a federal environmental assessment is required, the public will have three more opportunities to comment on this project, consistent with the transparency and public engagement elements of CEAA 2012.
Projects subject to CEAA 2012 are assessed using a science-based approach. If the project is permitted to proceed to the next phase, it will continue to be subject to Canada’s strong environmental laws, rigorous enforcement and follow-up, and increased fines.

nwpipemapBy “CEAA 2012,” the agency is referring to the omnibus bill, best known as C-38, which actually weakened the CEAA’s ability to review projects. “Science-based approach” has become a stock phrase used by the government of Stephen Harper on resource issues, while it weakened environmental review procedures, terminated the jobs of hundreds of scientists and restricted those who are left in the government from speaking to the media or commenting on issue.

In December,the CEAA called for similar input for the Coastal GasLink project to Kitimat, with a deadline of January 30. No decision has been announced for that project. which would be built by TransCanada for the Shell LNG Canada project.