So far, Enbridge’s public and community relations efforts on issues like Northern Gateway and Kalamazoo, have for, the most part, been a disaster. In BC, since the Joint Review hearings wrapped in June, Enbridge has been on a full out campaign to convince British Columbians to support Northern Gateway.
Now, at least to me and my geeky sense of humour, it appears, that Enbridge has another PR fiasco in the making.
A few minutes ago, as I was scanning my Tweetdeck feed, a Tweet from Enbridge popped up. Given that the default background for Tweetdeck is black, I thought, that Enbridge logo looks very dark.
Enbridge tweet Sept. 20, 2013
Now since I’ve been monitoring Enbridge tweets since I started this site, normally the company logo is white and stands out against the black of the Tweetdeck feed.
Is it a mistake I wondered?
Or is it a new logo and therefore has Enbridge, I wondered, “moved to the dark side?”
So I checked the company webpage. It’s a new logo and new web design. In the lead picture, the old logo is clearly visible under the new logo on top.
For the record here is the new logo and the old one.
So I can’t resist reporting, Enbridge has moved to the dark side. 🙂
Natural Resources Minister Joe Oliver (centre) meets District of Kitimat Councillors, left to right, Rob Goffinet, Mary Murphy, Mayor Joanne Monaghan and Corinne Scott. (District of Kitimat)
Natural Resources Minister Joe Oliver made a brief visit to the Kitimat area on Tuesday July 23, 2013, meeting Haisla Chief Counsellor Ellis Ross. In the original planning for the visit, Oliver was not scheduled to meet with District of Kitimat Council or other members of the community, snubbing Kitimat in only his second visit to the region since he was appointed minister after the 2011 federal election.
A half hour meeting with available members of the District of Kitimat Council was squeezed in only after intense lobbying from Mayor Joanne Monaghan.
The Natural Resources department public relations staff also chose to ignore (or exclude) local media, with the exception of the Northern Sentinel. Northwest Coast Energy News, Kitimat Daily, CFTK and CRFN were not informed and did not accompany Oliver on his hour long tour of Douglas Channel.
After the meeting, Natural Resources Canada issued a news release saying that he had concluded “a successful visit to Kitimat,” hosted by the Haisla:
Minister Oliver discussed opportunities to increase First Nations’ participation in resource development and received a tour of the Douglas Channel hosted by Chief Councilor Ellis Ross.
“I am privileged to have been invited by the Haisla Nation to gain their perspective, listen to their concerns and discuss our plans for Responsible Resource Development and our initiatives to strengthen environmental protection,” said Minister Oliver. “Resource development presents a tremendous opportunity for First Nations groups like the Haisla. Our government has also been clear that development will only proceed if it is safe for the environment…”
“Responsible resource development has the potential to create significant new opportunities for Aboriginal peoples across Canada,” said Minister Oliver. “The Government will make every effort to ensure that…
Aboriginal peoples in Canada have the opportunity to share the benefits of energy resource development in the years ahead, while ensuring that projects are developed in a manner that has the highest regard for safety and the environment.”
“The safe and responsible diversification of our energy markets is a priority for the Government of Canada,” said Minister Oliver. “Our energy industry must remain competitive to ensure communities across Canada continue to benefit from our natural resource wealth.”
The Northern Sentinel reported that Oliver mainly concentrated on liquified natural gas development and tried to avoid questions about the Enbridge Northern Gateway project. Oliver repeated the federal government’s position on safety outlining the programs announced last march to expand pipeline expansion and increase penalties for safety violations.
On LNG, Oliver told the Sentinel, “These are decisions made by the private sector, it’s not us telling us don’t do this project…they’re going to figure that out themselves,” he said.
On the Enbridge Northern Gateway Pipelines Project, Oliver told the Sentinel, “We have a very strong interest in seeing the markets diversify, and that includes moving oil to Asia,” he said. “However, we’re not going to stomp over the regulatory process. It’s subject to regulatory review, the joint review panel will be coming to its conclusion this December. We’re waiting for what they have to say…I know people have a view of what our opinion is but we don’t offer an opinion before we hear from the regulator.”
He added that once the review is done, “At that point we’ll know more because they will have a done a comprehensive, scientific audit.”
Councillor Mary Murphy told Northwest Coast Energy News that she was told by a Haisla friend early Tuesday morning that Oliver was coming to visit Kitamaat Village and immediately informed Mayor Joanne Monaghan.
Monaghan said, “I called his office in Ottawa and said I wanted a meeting as well seeing he was here. After an all day back and forth until three o’clock he said he would come at four for half an hour.”
Councillor Corinne Scott said. “As none of us were aware of the Minister being in Kitimat, we scrambled to have Mary, Rob, the Mayor and I available to meet with him, along with [DOK Chief Admnistrative Officer] Ron [Poole] and [Economic Development Officer] Rose Klukas.”
Councillors Mario Feldhoff, Phil Germuth and Edward Empinado were unable to attend because they working at the time and could not get away with such short notice. Sources tell Northwest Coast Energy News that even pro-development members of the local business community were not informed about Oliver’s visit.
Murphy described the meeting “as very beneficial to us.” A couple of other sources, familiar with accounts of the meeting, however, both told Northwest Coast Energy News there was barely enough time after formalities to ask questions of the minister before he dashed out the door for the airport.
Kinder Morgan has filed a last minute objection to the Northern Gateway Joint Review Panel’s preliminary conditions for the Enbridge project.
One of the objections from Kinder Morgan is the provision in the JRP’s proposed Gateway conditions for “purpose built tugs” to escort tankers (a measure that Enbridge has proposed for the Gateway project). Another provision Kinder Morgan objects to is “secondary containment facilities at marine terminals” likely to become an issue if the Vancouver terminal is expanded by Kinder Morgan.
Overall, Kinder Morgan warns that if the JRP imposes some of the proposed conditions on the Northern Gateway, it could adversely affect future pipeline projects in British Columbia.
As well, Kinder Morgan, it appears, is already concerned that if the proposed oversight of Northern Gateway goes ahead, the Kinder Morgan plan to twin the pipeline from Alberta to Vancouver and expand terminal operations in Vancouver could face ongoing scrutiny and possible delays.
The Kinder Morgan document, from the company’s Calgary lawyer, Shawn Denstedt, of Osler, Hoskins and Harcourt, filed May 31, appeared among all the final arguments filed on Friday by intervenors and governments to the Joint Review Panel on Northern Gateway.
Kinder Morgan’s letter to the JRP comes long after the final deadline for such comments.
Kinder Morgan is a registered intervenor in the Northern Gateway hearings, but has only filed four previous documents during the entire multi-year process. The company does not appear on the list of intervenors scheduled to appear for oral final arguments in Terrace beginning on June 17.
On April 12, 2013, the JRP issued a preliminary list of 199 conditions for the planning, construction and operation of the Northern Gateway project.
Now Kinder Morgan is worried. Denstedt’s letter notes:
we believe a number of the proposed conditions may have a material impact on pipeline and infrastructure development in Canada and consideration should be given to the conditions from this perspective.
Diplomatically, Denstedt goes on to tell the panel:
Our comments are intended to assist the JRP in understanding the potential outcomes of the proposed conditions if they become generally applicable to industry.
Commercial considerations
Under what Detstadt calls “Commercial considerations”, Kinder Morgan says “we observe that several of the proposed conditions are likely to affect the manner and risks involved in procuring pipeline facilities and services.
The list points to
Three layer composite coating or high performance composite coating is required for the entire pipeline although other pipeline coatings are commonly used in the pipeline industry depending upon ground conditions encountered
.
Complementary leak detection systems must be identified that can be practically deployed over extended distances of pipeline.
The construction of purpose-built tugs involves significant cost and lead time
A volume is prescribed for the secondary containment facilities at the marine terminal without reference to existing codes.
The letter goes on to say that if the conditions proposed by the JRP for the Northern Gateway come into effect, in Kinder Morgan’s opinion, it could adversely affect other pipeline projects in the future.
If broadly applied to industry, such conditions may limit the ability of pipeline companies to obtain competitive quotes because there are few sources of the required materials or services. The effect of conditions that require the use of a particular material or service may be to grant commercial benefits to certain suppliers through the regulatory process beyond the requirements of existing codes. Since several export pipelines are currently proposed, there will be a heightened demand for labour and materials in the coming years. The commercial effect of conditions that may exacerbate shortages of labour and materials should be a relevant consideration for the JRP.
Timing
One of Kinder Morgan’s objections is to the timing the JRP proposes for the Northern Gateway project if it applies to other pipelines.
Several of the proposed conditions contain NEB approval requirements and filings deadlines several years prior to operations. For example, plans related to the marine terminal and research programs must be filed for NEB approval three years prior to operations.
We are concerned that requiring reports to be filed for approval several years before operations can create significant schedule risks for infrastructure development projects. For example, a project with a two year construction schedule could take three years to complete with such conditions. Any changes to the construction schedule and anticipated date of operations would affect the filing deadline. Project proponents need sufficient schedule certainty in order to plan major expenditures on labour and materials.
To mitigate such risks, it is relevant for regulators to consider whether the filing deadlines and approval requirements prescribed in conditions could materially alter a project’s schedule. Filing deadlines should be set at a reasonable time before operations in order to minimize the risk that such deadlines materially affect the critical path for a project.
Many of the conditions require NEB approval, and in some cases the participation of other parties in the approval process, in order to be satisfied. Fulfillment of those conditions will require additional time, a Board process and potentially litigation. For example, certain reports must be filed with the NEB for approval prior to commencing construction activities. Other conditions require reports to be filed for approval by the NEB prior to construction with a summary of how concerns from other government agencies and Aboriginal groups were addressed.
So Kinder Morgan says:
In our view, conditions that require subsequent board approvals and that attract the potential for additional regulatory processes should be the exception and not a new standard or norm. There must be clear, well understood rationales given as to why additional approvals are in the public interest.
And so Kinder Morgan asks:
As an alternative, the NEB may utilize its existing powers and processes to ensure that when filings are made to satisfy imposed conditions an additional approval process is not required.
Overall the company sees the rules for Northern Gateway as a step back to the days before deregulation.
A number of the conditions may be interpreted as reflecting a return to a prescriptive approach to regulation. These conditions prescribe detailed audit requirements instead of setting a goal oriented approach to allow the proponent flexibility in mitigating any adverse effects. Such conditions tend to focus on operational aspects that are covered by existing codes and regulations rather than setting goals for the proponent to mitigate any significant adverse effects.
Denstedt, again diplomatically, concludes by saying:
Kinder Morgan wishes to thank the JRP for the opportunity to present these high level perspectives regarding its proposed conditions. Our comments are intended to ensure that the wider implications of the proposed conditions on the pipeline industry and infrastructure development are given appropriate consideration in the deliberations and final recommendations of the JRP.
The government of British Columbia has filed a harsh assessment of Enbridge Northern Gateway in its final arguments submitted May 31 to the Joint Review Panel—much harsher than the government press release giving notice of the rejection suggests.
“‘Trust me’ is not good enough in this case,” the filing by BC government lawyer Christopher Jones says of Enbridge’s plans to handle any possible disaster from either a pipeline rupture or a tanker spill.
Some of the arguments from the province’s lawyers echo points about the Kitimat Valley raised by Douglas Channel Watch and the Haisla Nation, at one point, pointing directly to evidence from Douglas Channel Watch’s Dave Shannon.
The news release repeats Premier Christy Clark’s five conditions for the Northern Gateway and other projects, putting a positive spin on the much harsher legal argument.
“British Columbia thoroughly reviewed all of the evidence and submissions made to the panel and asked substantive questions about the project including its route, spill response capacity and financial structure to handle any incidents,” said Environment Minister Terry Lake. “Our questions were not satisfactorily answered during these hearings.”
“We have carefully considered the evidence that has been presented to the Joint Review Panel,” said Lake. “The panel must determine if it is appropriate to grant a certificate for the project as currently proposed on the basis of a promise to do more study and planning after the certificate is granted. Our government does not believe that a certificate should be granted before these important questions are answered.”
The provincial government has established, and maintains, strict conditions in order for British Columbia to consider the construction and operation of heavy-oil pipelines in the province.
Successful completion of the environmental review process. In the case of Northern Gateway, that would mean a recommendation by the National Energy Board Joint Review Panel that the project proceed;
World-leading marine oil spill response, prevention and recovery systems for B.C.’s coastline and ocean to manage and mitigate the risks and costs of heavy-oil pipelines and shipments;
World-leading practices for land oil spill prevention, response and recovery systems to manage and mitigate the risks and costs of heavy-oil pipelines;
Legal requirements regarding Aboriginal and treaty rights are addressed, and First Nations are provided with the opportunities, information and resources necessary to participate in and benefit from a heavy-oil project; and
British Columbia receives a fair share of the fiscal and economic benefits of a proposed heavy-oil project that reflect the level, degree and nature of the risk borne by the province, the environment and taxpayers.
Final argument
In its filing the province tells the JRP:
While the Joint Review Panel (“JRP”) may of course consider other factors in its recommendation, the Province submits that the JRP must accord very significant weight, in the case of this project, to the fact that NG’s plans for terrestrial and marine spill response remain preliminary and that it cannot, today, provide assurance that it will be able to respond effectively to all spills. Given the absence of a credible assurance in this regard, the Province cannot support the approval of or a positive recommendation from the JRP regarding, this project as it was presented to the JRP.
In the alternative, should the JRP recommend approval of the pipeline, the JRP must impose clear, measurable and enforceable conditions that require NG to live up to the commitments it has made in this proceeding.
Hazards from Kitimat’s geoglacial clay
The provincial government identifies a major potential hazard in the Kitimat valley, glacio-marine clay deposits that “threaten the integrity of the pipeline.”
Overall the province appears to accept the arguments from Douglas Channel Watch and other environmental groups that geo hazards along the pipeline route present a significant risk, one perhaps underestimated by Enbridge Northern Gateway.
NG does not dispute that spills from the pipeline may occur. While the project will be new, and built using modern technology, the fact remains that pipeline spills do happen. Indeed, Enbridge had 11 releases greater than 1000 barrels between 2002 and 2012…
The Province has concerns about the assertions NG has made regarding the probability for full-bore releases resulting from geohazards. NG asserts that full-bore spills will be very rare. However, this assertion must be considered in light of the fact that NG’s analysis of the geohazards that the pipeline could face is at a preliminary stage….
The rugged topography of West Central British Columbia is prone to slope failures.
Terrain instability may pose significant challenges for linear development.
Despite these challenging admits that its assessment of existing and potential geohazards along the pipeline route is not complete and that further investigations and more detailed geohazard mapping are required. For instance, although NG acknowledges that the potential presence of glacio-marine clays in the lower Kitimat Valley can threaten the integrity of a pipeline; its report on glacio-marine clay fails to identify a significant area of potential instability that had been previously reported in the relevant literature…
Since all geotechnical hazards have not been identified with the investigations carried out to date, and since comprehensive investigations will not be completed until the detailed design phase, NG has but a rough idea of the mitigation measures that may be employed in order to mitigate the geotechnical hazards that may be encountered…
Spill response
The province’s arguments also indicates that Enbridge Northern Gateway has not done a good enough job regarding spill response, whether from a full bore rupture or a pin hole leak.
it must be remembered that full-bore spills are less frequent than smaller spills, which could still have a significant environmental effect. Indeed, since risk equals consequence times probability, smaller spills could pose a higher risk as they are more frequent. While NG has produced considerable evidence with respect to the likelihood and effects of full-bore spills… the evidence concerning the potential for other spills is limited. While the Province supports assessing the effects of any spill based on a full-bore release, as it would allow for an analysis of the worst-case scenario, focus on full-bore releases should not eliminate consideration of the potential impact of smaller events…
NG stated that [a] table [in the evidence], which includes probabilities for medium sized spills, would be “replaced by. a detailed characterization of each pipeline kilometre and region as part of the ongoing risk assessment work,” but the province says, a later table that “now replaces the concept of large and medium spills”. focussed only on full-bore releases, a relatively rare event.
Similarly, NG also calculated spill return periods for pinhole and greater-than-pinhole events. Taking the figures NG for “greater-than-pinhole” releases results in a spill return figure of 76.7 years. The Province also has concerns about the information that NG has provided in this regard. First, because it focussed on spill events, there is no information about spill size, which, we submit is a critical issue in considering the risk posed by these kinds of events. Second, NG does not include the potential for spills that could occur as a result of “operating and maintenance procedures” that deviate from the norm. Finally, NG assumes that all geotechnical threats would result in a full-bore rupture. This assumption appears to be incorrect…
Premier Christy Clark has, as part of her five conditions, said there must be a world class spill response system. Enbridge responded by saying there will be. The province then turns around and says Enbridge has failed to do prove it.
Because of the potential for spills, and their impact, NG has committed to develop a comprehensive spill response capability. Indeed, NG has stated that it intends to have a “world-class response capability” for the Project. Given the real potential for spills to occur, and the devastating effect of a spill should a significant one take place, the Province submits that NG must show that it would be able to effectively respond to a spill. As set out below, the Province submits that it has failed to do so.
High stream flow, heavy snow at Kitimat
Again, the province appears to accept arguments from Douglas Channel Watch that Enbridge has underestimated the challenges of handling a spill in a remote area. The province also accepts the argument that booms are ineffective in high stream flow in the Kitimat River.
Although it asserts that it will be able to effectively respond to any spill, NG admits that responding to a spill from the pipeline will be challenging. In particular, it admits that a spill into a watercourse at a difficult to access location would present the greatest difficulty for clean-up and remediation…
Many parts of the pipeline will be located in remote areas, located some distance from road networks and population centres. For example, many of the rivers… are identified as remote or having no access. Road access to the pipeline and places where a spill might travel down a watercourse is important to allow for effective spill response…
In some cases, the steepness of the terrain will make responding to spills very challenging. NG acknowledges that the Coast Mountains’ topography is extreme…
As the JRP noted during cross examination by the Province of NG with respect to the Clore River, it has had the opportunity to take a view of the entire route. It will therefore know the steep and rugged terrain through which the pipeline would pass.
The presence of woody debris could also pose a challenge to spill response, requiring a shift of response activities to upstream locations…
If a spill were to occur during a period of high flow conditions, a common occurrence in British Columbia rivers, then some aspects of the response may have to be curtailed, or at least delayed until the high flow event recedes. At certain water velocities, booms become ineffective, and are potentially unsafe to operate.
The presence of heavy snow could also impede access during response operations, requiring use of snowmobiles, snow cats, and helicopters. In the Upper Kitimat and Hoult Creek Valleys, snow accumulation can reach 8-9 metres. However, weather may limit the ability of helicopters to aid in spill response…
Many of these challenges are recognized by NG. In the Preliminary Kitimat River Drainage Area Emergency Preparedness Report (“Kitimat Report”), NG refers to the challenges of winter conditions, avalanches and debris slides, heavy snow, spring melt, Fall freeze-up, patchy ice, and fast-flowing watercourses.
Sinking dilbit
The province also accepts the argument that under some circumstances that diluted bitumen can sink, arguments raised by David Shannon of Douglas Channel Watch.
These challenges are compounded by the fact that in certain conditions diluted bitumen (“dilbit”) can sink in a watercourse. This occurred in the case of Enbridge’s spill in Michigan. This was, as a result, an issue of significant importance to the parties in this proceeding…
The evidence presented by NG in this regard is inconsistent. For example, some evidence it presented suggests that dilbit may sink when it enters water, after a process of weathering; other evidence it has submitted suggests that dilbit will only sink if it combines with sediment. In its response to [a submission by the Haisla Nation] NG states that “If diluted bitumen becomes heavily weathered some oil may sink in fresh water environments.” Similarly, in its response to Dave Shannon’s IR No. 1, NG states that
Diluted bitumen emulsions will remain buoyant in waters with densities greater than approximately 1.015 g/cc. If the water density drops below approximately 1.015 g/cc,in zones of fresh-water intrusion, weathered and emulsified diluted bitumen products may sink to the depth where the density increases to above 1.015 g/cc.
Similar also is NG’s response to Dr. Weir’s IR No. 2.6, where NG states:
The weathered diluted bitumen would have a density approaching 1.0 g/cc, which indicates that once the diluted bitumen weathers it may be susceptible to sinking in fresh water.
Finally, in the Kitimat Report NG states that:
Examples that may lead to oil not remaining on the water surface include:
• Oils with specific gravities equal to or greater than the receiving medium (fresh- or saltwater)
• Oils that have weathered and, in losing lighter-end fractions, have reached a specific gravity equal to or greater than the receiving water
• Oil that is near the same density as the receiving water and that is characterized as a 3-dimensional flow (non-laminar to turbulent flow such as found in streams, rivers, areas with fast tidal currents, breaking waves)
• Oil with sediment (mixed into oil or adhered to oil droplets)…
…submerged oil may eventually sink with increased weathering, if in receiving water with lower density, or if sufficient sediment is incorporated.
Northern Gateway contradictory
The province’s argument goes on to point more inconsistencies with Northern Gateway’s submission on dilbit in rivers, telling the JRP “In short, what dilbit will do when it enters water remains unclear.”
On the other hand, another NG witness stated that dilbit cannot sink, as this would be contrary to an “immutable fact of physics”. In cross examination, Dr. Horn, Mr. Belore and other witnesses maintained that dilbit will only sink in the presence of suspended solids, or after a long period of weathering.
However, NG’s evidence with respect to the type of sediment that could combine with dilbit to form material that may sink in water is unclear. Dr. Horn testified that “fine grain sediments…provide the greatest amount of surface area which is one of the reasons that oil sank in [Michigan]”. On the other hand, Mr. Belore appeared to suggest that, in the marine context at least, finer sediments reduce the potential for oil to sink as they are lighter. The evidence with respect to the material that may bind to dilbit and contribute to its sinking is unclear…
NG’s views with respect to the flow conditions under which dilbit may sink is also contradictory. On the one hand, it states that “Higher flow rates and increased turbulence typically will entrain more oil into the water column leading to the potential for oil to enter pore spaces in permeable sediments.” On the other, it states that “Oil sinking is unlikely to occur in areas with fast currents…”
Evidence provided by other parties suggests that dilbit may sink when weathered. In particular, Environment Canada’s evidence in this proceeding contrasts sharply with NG’s. For example, Environment Canada states that:
Northern Gateway’s response planning model does not account for sinking oil or for oil suspended particulate matter interactions…For oils with densities close to that of water, like both the diluted bitumen and synthetic crude products, even small amounts of sediment can cause sinking. Environment Canada is concerned that oil sinking and oil-sediment interactions have been
underestimated in the provided scenarios. In the cases of both the Enbridge-Kalamazoo and the Kinder Morgan-Burnaby spills, significant oil-sediment interactions occurred.
The changes to dilbit as it ages in the environment may affect cleanup. Although initially buoyant in water, with exposure to wind and sun, as well as by mixing with water and sediment in the water, the density of dilbit can increase to the point that the oil may sink. Recovery and mitigation options for sunken oils are limited.
Not only has Environment Canada expressed the view that even small amounts of sediment may cause oil to sink, its witness also stated under cross-examination that high velocity rivers may carry high suspended sediment concentrations, and that, at certain times of the year, sediment load could enter the marine environment. Although NG acknowledges that sediment loads and oil-sediment interactions are a critical factor in predicting the behaviour of spilled oil, it has not, in Environment Canada’s opinion, provided a complete baseline data set on sediment loads, despite requests that such data be provided.
While NG has submitted information respecting the laboratory testing of dilbit, an Environment Canada expert testified that tests conducted in a laboratory setting provide only limited information that cannot be relied upon in isolation to predict the fate and behaviour of hydrocarbons spilled into the environment. Instead, information gathered from real spill events must inform the analysis, and consideration must be given to the conditions, including water temperature, suspended sediment concentrations and wind speed, to be encountered in the “real world”.
Environment Canada has also made it very clear that the evidence provided to date by NG does not allow for a full understanding of the behaviour of spilled dilbit. In the opinion of Environment Canada witnesses, the evidence has not provided sufficientclarity with respect to the weathering, evaporation or sedimentation processes dilbit may be subjected to in the environment. Given the unique nature of this product, further research is warranted before one can ascertain whether dilbit will sink or remain on the water surface. Those concerns were echoed by an expert retained by the Gitxaala Nation.
In addition, the evidence of other parties raises the possibility of the need to respond to submerged oil. NUKA research, on behalf of the Haisla Nation, opined that “submission documents overall still grossly underestimate the potential for sunken or submerged oil, particularly for pipeline spills to rivers.” EnviroEmerg Consulting, for the Living Oceans Society summarizes well the uncertainty that remains with respect to the behaviour of oil:
There are no definitive statements in the [Environmental Impact Statement] EIS to explain if bitumen diluted with condensate will emulsify, sink or do both if spilled. The supporting technical data analysis in the EIS is based on laboratory tests. There are no in-situ field tests, empirical studies, nor real incidents to validate these findings. This raises significant uncertainty that current spill response technologies and equipment designed for conventional oil can track and recover the diluted bitumen in temperate marine waters. In essence, the assumption that the diluted bitumen can be recovered on-water has yet to be tested.
In short, what dilbit will do when it enters water remains unclear. NG recognizes this lack of clarity itself. As was stated by one of its witnesses, “it’s extremely difficult to predict the behaviour of this product”.
NG admits that additional research needs to be done with respect to understanding how dilbit behaviour.
The provincial argument concludes:
The Province has serious concerns about the lack of clarity and certainty about what dilbit will do if it were to enter the water, the preliminary and indeed contradictory nature of the evidence with respect to NG’s remediation strategies and actions to address sunken oil, and the fact that its proposed tactics have not been evaluated for use in British Columbia. These factors, taken together, suggest that, at least as of today, NG is not yet prepared to deal with sunken oil in the event there were a spill of dilbit into a British Columbia watercourse. By itself this is a cause for serious concern in relation to the fundamental question in this proceeding, namely whether the JRP should recommend approval of this project. But at the very least, this means that a strong condition must be imposed requiring further research on the behaviour of dilbit.
Spill response only preliminary “All roads are driveable”
The provincial argument says, in italics, that the Northern Gateway’s spill response plans are “only preliminary” and adds Northern Gateway’s plan to provide detail operational plans six months before the beginning of the pipeline operations is not good enough. “It is not possible for NG to assert, nor for the JRP to conclude, that NG will be able to access all those places where a spill may travel, and to respond effectively.”
Despite the challenges to responding to a spill from the pipeline, including the challenge of responding to submerged and sunken oil, NG’s plans for responding to a spill have not yet been developed. NG has committed only to providing its detailed oil spill response plans to the National Energy Board 6 months in advance of operations. In the context of this project, the Province remains very concerned that NG has not yet demonstrated its ability to respond effectively to spills from the pipeline.
When specifically asked “In the absence of that planning…to address the challenges that we’ve been discussing, how is it we are to be confident that Northern Gateway will, in fact, be able to effectively respond to a spill?” NG replied that “There is a lot of work that needs to be done.”
Of particular concern, despite its admission that a spill into a watercourse in a remote location would pose a significant challenge, NG has not yet determined those locations it could access to respond to a spill, including the control points utilized for capturing and recovering oil passing that location. Such access will only be determined, if possible, during detailed planning. At this time, NG also does not know what portion of water bodies would be boat-accessible in the event of a spill. The 2010 Michigan spill, which was the subject of much questioning during the hearing, occurred in a populated area, where there were many potential access locations. This will of course not be the case if a spill were to occur in a remote river in British Columbia.
While NG has prepared a document showing some possible control points that might be used for spill response in the event of a spill in some rivers, NG concedes that its work in this regard is preliminary, and only pertains to some of the control points that would ultimately have to be established. NG helpfully provided additional information to that which was originally filed with respect to the travel distance between pump stations or the terminal and certain potential control points. However, travel times to the control points that have been identified do not take into account mobilization time, and assumes all roads are drivable.
Given the incompleteness of NG’s evidence in this regard, the Province submits that NG cannot currently assert that there would in fact be viable control points where a spill could travel to. In addition, even if accessibility to control points had been fully validated, in order for NG to assert that it could respond effectively to a spill, it would also have to know the means by which personnel and equipment would gain access to respond to oil that had come ashore or sunken to the sediment. Given the preliminary nature of the evidence presented by NG, this is of course not known.
The Province is very concerned that, in the event of a spill, some places where a spill could reach will be inaccessible, and therefore not amenable to spill recovery actions. While NG states that it will be able to access control points at any location along the pipeline, it has simply not provided the evidence in this proceeding to substantiate this assertion. The Province submits that, as of today, it is not possible for NG to assert, nor for the JRP to conclude, that NG will be able to access all those places where a spill may travel, and to respond effectively.
In addition to access, there are a number of other challenges to operating in British
Columbia in respect of which NG has completed only very preliminary work.
• The pipeline could be covered by heavy snow at different times of the year; NG states that it will have to review alternative methods of access to deal with this, but has presented no specific evidence on how this challenge will be addressed.
• NG has not yet developed specific plans about how it would deal with oil recovered from a spill, and has not yet determined disposal locations.
• NG has not yet determined the location or the contents of the equipment caches to be used to respond to spills.
• It has not determined year-round access to the pipeline, which will be evaluated as part of detailed planning.
Kitimat River response
The province takes a harsh look at Northern Gateway’s plan for a response on the Upper Kitimat River and Hunter Creek.
Similarly, the Province is concerned about the ability of NG to respond to a spill in the Upper Kitimat Valley. When asked by the Douglas Channel Watch
“…in the context of the Upper Kitimat Valley, does this mean because of the steepness of the terrain and limited road access to the river, that containment at some locations at the source will be impossible, and the majority of your efforts will be at the first accessible locations downstream?”
NG was only able to reply that:
“again it depends on the specific conditions. But as Dr. Taylor indicated, in the development of the response plans we would need to look at various scenarios, various times of year, develop plans so that it would identify the appropriate response locations at those times.”
NG’s targeted spill response time of 6-12 hours needs to be set against the reality that, in the case of a watercourse spill, oil may travel many kilometres downstream while NG is still mobilizing. In this proceeding NG has provided considerable information with respect to how far and fast oil can travel in a watercourse. For example, with a spill into Hunter Creek, NG has stated:
Based on water velocities, a release at this location could reach the Kitimat River estuary 60 km downstream within four to ten hours, depending on river discharge.
Dr. Horn has indicated that these figures are very conservative, and that the actual times to reach Kitimat would be a longer period. However, no other definitive evidence on these times was presented by NG.
Enbridge doesn’t learn from its mistakes
The provincial argument then goes on to say, again in italics, Enbridge does not follow procedures or learn from mistakes and concludes “while NG asserts that its spill detection systems will be world-class, it has not yet chosen to adopt spill detection technologies that would achieve that objective.”
The provincial argument goes over Enbridge’s spill record in detail, including the Marshall, Michigan spill which was harshly criticized by the US National Transportation Safety Board.
Concerns about NG’s inability to respond to a spill are magnified by Enbridge’s conduct with respect to the spill which took place in Michigan. NG concedes that, in that case, there were procedures in place that were not followed. NG asserts that it now has in place a number of “golden rules”, including that whenever there is a doubt with respect to whether the spill detection system has detected a leak, the pipeline must be shut down. However, NG concedes that this rule was in place before the Michigan spill; it self-evidently was not followed. In fact, the rule under which Enbridge would shut down its pipeline system within 10 minutes of an abnormal occurrence which could be immediately analyzed was put into place following a spill in 1991. At that time, similar commitments were made indicating that procedures would change and that a spill of that nature wouldn’t take place again….
despite the fact that the relevant technologies had been in existence for some
10 years, and despite the existence of crack-related failures that led to the development of such technologies, Enbridge had failed to put in place a program that would have detected the Marshall spill
The province wraps up the response saying by telling the JRP:
In short, if NG is relying on its ability to respond effectively to a spill for a positive recommendation from the JRP, then it must show that it will in fact have that ability. The Province submits that NG has not shown that ability in this proceeding.
The Province submits that requiring NG to show now that it will in fact have the ability to respond effectively to a spill is particularly important because there will be no subsequent public process in which that ability can be probed and tested. NG has pointed out that its oil spill response plans will be provided to the NEB for review, and has committed to a third party audit of its plans. However, it also acknowledges that there will be no means by which those plans could be tested through a public process.
On the pipeline project, BC concludes
The Province submits that the evidence on the record does not support NG’s contention that it will have a world-class spill response capability in place. The challenges posed by the pipeline route, the nature of the product being shipped, the conceptual nature of its plans to date and Enbridge’s track record mean that the Province is not able to support the project’s approval at this time. The Province submits that its concerns in this regard should be seriously considered by the JRP as it considers the recommendation it will be making to the federal government.
A study by two scholars at Simon Fraser University says that the Enbridge Northern Gateway project is much more hazardous to Kitimat harbour, Douglas Channel and the BC Coast than Enbridge has told the Joint Review Panel.
The study by Dr. Thomas Gunton, director of the School of Resource and Environmental Management at SFU and Phd student Sean Broadbent, released Thursday May 2, 2013 says there are major methodological flaws in the way Enbridge has analyzed the risk of a potential oil spill from the bitumen and condensate tankers that would be loaded (bitumen) or unloaded (condensate) at the proposed terminal at Kitimat.
Enbridge Northern Gateway responded a few hours after the release of the SFU study with a statement of its own attacking the methedology used by the two SFU scholars and also calling into question their motivation since Gunton has worked for Coastal First Nations on their concerns about the tanker traffic.
Combination of events
One crucial factor stands out from the Gunton and Broadbent study (and one which should be confirmed by independent analysis). The two say that Enbridge, in its risk and safety studies for the Northern Gateway project and the associated tanker traffic, consistently failed to consider the possibility of a combination of circumstances that could lead to either a minor or a major incident.
Up until now, critics of the Northern Gateway project have often acknowledged that Enbridge’s risk analysis is robust but has consistently failed to take into consideration the possibilty of human error.
As most accidents and disasters happen not due to one technical event, or a single human error, the SFU finding that Enbridge hasn’t taken into consideration a series of cascading events is a signficant criticism.
Overall the SFU study says there could be a tanker spill every 10 years, not once in 250 years, as calculated by Enbridge.
It also says there could be 776 oil and condensate spills from pipelines over 50 years, not 25 spills over 50 years as projected by Enbridge. (And the life of the project is estimated at just 30 years, raising the question of why the 50 year figure was chosen)
Enbridge track record
The study also bases its analysis of the possibility of a spill not on Enbridge’s estimates before the Joint Review Panel but on the company’s actual track record of pipeline spllls and incidents and concludes that there could be between one and 16 spills (not necessarily major) each year along the Northern Gateway pipeline.
Findings for Kitimat
Among the key findings for Kitimat from the SFU study are:
Enbridge said the possibility of tanker spill was 11.3 to 47.5 per cent over the 30 year life of project. The SFU study says the possibility of a spill within the 30 years is 99.9 per cent.
The SFU study says it is likely there will be a small spill at the Kitimat Enbridge terminal every two years.
The SFU study estimates that there will be eight tanker transits each week on Douglas Channel if the Northern Gateway project goes ahead and more if it is expanded. (This, of course, does not include LNG tankers or regular traffic of bulk carriers and tankers for Rio Tinto Alcan)
The SFU study says that while Endridge did study maneuverability of tankers, it paid little attention to stopping distance required for AfraMax, SuezMax tankers and Very Large Crude Carriers.
The SFU study says Enbridge inflated effectiveness of the proposed tethered tugs and maintains the company did not study ports and operations that use tethered tugs now to see how effective tethering is.
The SFU says Enbridge’s risk analysis covered just 233 nautical miles of the British Columbia coast, where as it should have covered entire tanker route both to Asia and California, raising the possibility of a tanker disaster outside British Columbia that would be tied to the Kitimat operation.
Based on data on tanker traffic in Valdez, Alaska, from 1978 to 2008, the SFU study estimates probability of a 1,000 barrel spill in Douglas Channel at 98.1 per cent and a 10,000 barrel spill at 74.2 per cent over 30 year Gateway life. The Valdez figures account for introduction of double hulls after Exxon Valdez spill in 1989 and notes that spill frequency is much lower since the introduction of double hulled tankers.
According to a study by Worley Parsons for Enbridge in 2012, the Kitimat River is the most likely area affected by an unconstrained rupture due to geohazards in the region. According to the Worley Parsons study, geohazards represent the most significant threat to the Northern Gateway pipeline system.
Flawed studies
The SFU scholars list a series of what they say are major methological or analytic flaws in the information that Enbridge has presented to the Joint Review Panel, concluding that “Enbridge significantly understates the risk of of spills from the Northern Gatway.
Enbridge’s spill risk analysis contains 28 major deficiencies. As a result of these deficiencies, Enbridge underestimates the risk of the ENGP by a significant margin.
Some of the key deficiencies include:
Failure to present the probabilities of spills over the operating life of the ENGP
Failure to evaluate spill risks outside the narrowly defined BC study area
Reliance on LRFP data that significantly underreport tanker incidents by between 38 and 96%.
Failure to include the expansion capacity shipment volumes in the analysis
Failure to provide confidence ranges of the estimates
Failure to provide adequate sensitivity analysis
Failure to justify the impact of proposed mitigation measures on spill likelihood
Potential double counting of mitigation measures
Failure to provide an overall estimate of spill likelihood for the entire ENGP
Failure to disclose information and data supporting key assumptions that were used to reduce spill risk estimates
Failure to use other well accepted risk models such as the US OSRA model
SFU reports that Enbridge provides separate estimates of the likelihood of spills for each of the three major components of the project:
tanker operations,
terminal operations,
the oil and condensate pipelines.
The SFU scholars say Enbridge does not combine the separate estimates to provide an overall estimate of the probability of spills for the entire project and therefore does not provide sufficient information to determine the likelihood of adverse environmental effects……
It notes that “forecasting spill risk is challenging due to the many variables impacting risk and the uncertainties in forecasting future developments affecting risk. To improve the accuracy of risk assessment, international best practices have been developed.”
Part of the problem for Enbridge may be that when the company appeared before the Joint Review Panel it has repeatedly said that will complete studies long after approval (if the project is approved), leaving large gaps in any risk analysis.
The SFU study may have one example of this when it says Enbridge did not complete any sensitivity analysis for condensate spills at Kitimat Terminal or the condensate pipeline.
Our experts have identified a number of omissions, flawed assumptions and modeling errors in the study and have serious concerns with its conclusions:
The spill probability numbers are inflated: The author uses oil throughput volumes that are nearly 40 per cent higher than those applied for in this project which also inflates the number of tanker transits using these inflated volumes
The pipeline failure frequency methodology adopted by Mr. Gunton is flawed, and does not approximate what would be deemed a best practices approach to the scientific risk analysis of a modern pipeline system
Mr. Gunton based his failure frequency analysis on a small subset of historical failure incident data. Why would he limit the source of his data to two pipelines with incidents not reflective of the industry experience and not reflective of the new technology proposed for Northern Gateway?
The study results are not borne out by real world tanker spill statistics. Based on Mr. Gunton’s estimates we should expect 21 to 77 large tanker spills every year worldwide while in reality after 2000 it has been below 3 per year and in 2012 there were zero.
Most of Enbridge’s rebuttal is a personal attack on Gunton, noting
We are very concerned about the misleading report released by Mr. Gunton, who was a witness for the Coastal First Nations organization during the Northern Gateway Joint Review Panel process.
Mr. Gunton should have made his study available to the JRP process, the most thorough review of a pipeline that’s ever taken place in Canada. All of Northern Gateway’s conclusions have been subject to peer review, information requests and questioning by intervenors and the Joint Review Panel.
In response, Gunton told the Globe and Mail “the report took over a year to complete and it was not ready in time to be submitted as evidence before the federal Joint Review Panel which is now examining the proposed pipeline.”
Enbridge’s statement also ignores the fact under the arcane rules of evidence, any study such as the one from Simon Fraser had to be submitted to the JRP early in the process, while evidence was still being submitted.
The recent ruling by the JRP for closing arguments also precludes anyone using material that was not entered into evidence during the actual hearings.
That means that the SFU study will be ignored in the final round of the Joint Review Panel, which can only increase the disillusionment and distrust of the process that is already common throughout northwest British Columbia.
The Northern Gateway Joint Review Panel has confirmed that final, closing arguments for the controversial Enbridge pipeline project will take place in Terrace for approximately two weeks, beginning on Monday, June 17, 2013.
The Panel says the purpose of closing arugments is to provide Parties Northern Gateway, intervenors, and government participants the opportunity to:
tell the Panel their views and opinions about the Project including whether Parties believe it is in the public interest;
persuade the Panel to recommend approval or denial of the Project;
make their case about the relevance and weight of any evidence on the Panel’s public registry;
discuss the merits of conditions that the Panel might place on any Certificate that may be issued for the Project;
suggest additional conditions should the Project be approved
.
As is common with National Energy Board and Joint Reivew procedures, final arguments argument should be in writing, followed by oral responses. Only one arugment document is permitted.
The written final arguments must be based on JRP evidence that is on the public record. No one can introduce new evidence in either the written argument or in their oral response.
The “aids to cross-examination” used during the questioning phase of the final
hearings cannot be used unless they were admitted onto the record by the Panel as evidence.
However a witness’ answer to questions given when an aid was used is evidence and can be
relied upon.
The absolute deadline for filing the written arugment is noon Pacific Time (1:00 pm Mountain
Time) on 31 May 2013.
Participants can take part either in the hearing room or remotely via a conferencing system.
A party of the proceeding cannot make an oral argument unless they have filed a written arugment.
The purpose of the oral argument is to let one party respond orally to the written argument filed by others. A party may also respond to the Oral Argument of other Parties who have presented Oral Argument before them and whose arguments they disagree with.
Participants are expected to have read in advance all the written arguments they may wish to challenge and are restricted from repeating arguments made by others but are allowed to indicate they agree with the earlier argument.
Top Down Bottom Up
There are very specific rules for how the closing arguments will proceed, which the JRP calls “Top Down Bottom Up”
In order to allow all Parties to respond to all of the Oral Arguments of other Parties, they will be given two opportunities to provide Oral Argument in what is referred to as a “Top Down –Bottom Up” process….
During either the Top Down or Bottom Up portion, parties may simply state that they adopt the position of specific parties who have gone before them.
In the Top Down portion, Northern Gateway will first provide its Oral Argument in response to the Written Argument of other Parties. This will be followed by the Oral Argument of intervenors and government participants in the order set out in the Order of Appearances (alphabetically, A-Z). During the Top Down, Parties will respond to the Written Argument of Parties they are opposed to as well as the Oral Argument of those who have argued before them.
Intervenors and government participants will have up to one (1) hour each to provide their Oral Argument. Since Northern Gateway has the burden of proving its case and will be responding to all other Parties, it will have up to two (2) hours for its Oral Argument.
After the Top Down Oral Argument, Parties will have the opportunity to very briefly reply to any new matters that were raised in the Oral Argument of other Parties who presented after them. This will proceed in a Bottom Up format where the Panel will start at the bottom of the Order of Appearances and proceed up from there (alphabetically, Z-A), ending with Northern Gateway.
During the Bottom Up Oral Argument, Parties can only reply to new matters that arose in Oral Argument after they presented their Oral Argument. For this reason, the Bottom Up Oral Argument should be very brief. Parties who do not have any reply comments specifically related to arguments they have not had the opportunity to address should not provide Bottom Up Oral Argument.
The Panama registered bulk carrier Azuma Phoenix is seen tied up at Kitimat harbour on the afternoon of Jan 9, 2012. In March 2013. the federal government announced it was making the private port of Kitimat into a public port. (Robin Rowland)
When the story of the Stephen Harper government is told, historians will say that the week of March 17 to 23, 2013, is remembered, not for the release of a lacklustre federal budget, but for day after day of political blunders that undermined Harper’s goal of making a Canada what the Conservatives call a resource superpower.
It was a week where spin overcame substance and spun out of control.
The Conservative government’s aim was, apparently, to increase support for the Enbridge Northern Gateway pipeline project with a spin campaign aimed at moving the middle ground in British Columbia from anti-project to pro-project and at the same time launching a divide and conquer strategy aimed at BC and Alberta First Nations.
It all backfired. If on Monday, March 17, 2013, the troubled and controversial Enbridge Northern Gateway project was on the sick list, by Friday, March 23, the Enbridge pipeline and tanker scheme was added to the Do Not Resuscitate list, all thanks to political arrogance, blindfolded spin and bureaucratic incompetence. The standard boogeymen for conservative media in Canada (who always add the same sentence to their stories on the Northern Gateway) “First Nations and environmentalists who oppose the project” had nothing to do with it.
Stephen Harper has tight control of his party and the government, and in this case the billion bucks stop at the Prime Minister’s Office. He has only himself to blame.
All of this happened on the northern coast of British Columbia, far out of range of the radar of the national media and the Ottawa pundit class (most of whom, it must be admitted, were locked up in an old railway station in the nation’s capital, trying interpret Finance Minister Jim Flaherty’s spreadsheets).
The story begins early on that Monday morning, at my home base in Kitimat, BC, the proposed terminal for Northern Gateway, when a news release pops into my e-mail box, advising that Natural Resources Minister Joe Oliver would be in nearby Terrace early on Tuesday morning for an announcement and photo op.
I started making calls, trying to find out if anyone in Kitimat knew about Oliver’s visit to Terrace and if the minister planned to come to Kitimat.
Visitors to Kitimat
I made those calls because in the past two years, Kitimat has seen a parade of visitors checking out the town and the port’s industrial and transportation potential. The visitors range from members of the BC provincial Liberal cabinet to the staff of the Chinese consulate in Vancouver to top executives of some of the world’s major transnational corporations (and not just in the energy sector). Most of these visits, which usually include meetings with the District of Kitimat Council and District senior staff as well as separate meetings with the Council of the Haisla Nation, are usually considered confidential. There are no photo ops or news conferences. If the news of a visit is made public, (not all are), those visits are usually noted, after the fact, by Mayor Joanne Monaghan at the next public council meeting.
It was quickly clear from my calls that no one in an official capacity in Kitimat knew that, by the next morning, Oliver would be Terrace, 60 kilometres up Highway 37. No meetings in Kitimat, on or off the record, were scheduled with the Minister of Natural Resources who has been talking about Kitimat ever since he was appointed to the Harper cabinet.
I was skeptical about that afternoon’s announcement/photo op in Vancouver by Transport Minister Denis Lebel and Oliver about the “world class” tanker monitoring.
After all, there had been Canadian Coast Guard cutbacks on the northwest coast even before Stephen Harper got his majority government. The inadequacy of oil spill response on the British Columbia coast had been condemned both by former Auditor General Sheila Fraser and in the United States Senate. The government stubbornly closed and dismantled the Kitsilano Coast Guard station. It’s proposing that ocean traffic control for the Port of Vancouver be done remotely from Victoria, with fixed cameras dotted around the harbour. Leaving controllers in Vancouver would, of course, be the best solution, but they must be sacrificed (along with any ship that get’s into trouble in the future, on the altar of a balanced budget).
The part of the announcement that said there would be increased air surveillance is nothing more than a joke (or spin intended just for the Conservative base in Alberta, Saskatchewan and the Toronto suburbs,that is not anyone familiar with BC coastal waters). Currently the Transport Canada surveillance aircraft are used on the coasts to look for vessels that are illegally dumping bilge or oil off shore. As CBC’s Paul Hunter reported in 2010, Transport Canada aircraft were used after the Gulf of Mexico oil disaster to map where the oil was going after it erupted from the Deepwater Horizon.
Given the stormy weather on the west coast (when Coast Guard radio frequently warns of “hurricane force winds”) it is highly unlikely that the surveillance aircraft would even be flying in the conditions that could cause a major tanker disaster. Aerial surveillance, even in good weather, will never prevent a tanker disaster caused by human error.
I got my first chance to look at the Transport Canada website in late afternoon and that’s when a seemingly innocuous section made me sit up and say “what is going on?” (I actually said something much stronger).
Public port
Public port designations: More ports will be designated for traffic control measures, starting with Kitimat.
(Transport Canada actually spelled the name wrong—it has since been fixed—as you can see in this screen grab).
Kitimat has been one of the few private ports in Canada since the Alcan smelter was built and the town founded 60 years ago (the 60th anniversary of the incorporation of the District of Kitimat is March 31, 2013).
The reasons for the designation of Kitimat as a private port go back to a complicated deal between the province of British Columbia and Alcan in the late 1940s as the two were negotiating about electrical power, the aluminum smelter, the building of the town and the harbour.
For 60 years, Alcan, later Rio Tinto Alcan, built, paid for and operated the port as a private sector venture. For a time, additional docks were also operated by Eurocan and Methanex. After Eurocan closed its Kitimat operation that dock was purchased by the parent company Rio Tinto. The Methanex dock was purchased by Royal Dutch Shell last year for its proposed LNG operation.
The announcement that Kitimat was to become a public port was also something that the national media would not recognize as significant unless they are familiar with the history of the port. That history is known only to current and former residents of Kitimat and managers at Rio Tinto Alcan.
The port announcement came so much out of left field; so to speak, that I had doubts it was accurate. In other words, I couldn’t believe it. I went to Monday evening’s meeting of District of Kitimat Council and at the break between the open and in-camera sessions, I asked council members if they had heard about Kitimat being redesignated a public port. The members of the district council were as surprised as I had been.
Back from the council meeting, I checked the Transport Canada news release and backgrounders. I also checked the online version of Bill C-57, the enabling act for the changes announced earlier that day. There was no mention of Kitimat in Bill C-57.
Tuesday morning I drove to Terrace for Joe Oliver’s 9 am photo op and the announcement at Northwest Community College (NWCC) that the government had appointed Douglas Eyford as a special envoy to First Nations for energy projects, an attempt on the surface to try and get First Nations onside for the pipeline projects, an appointment seen by some First Nations leaders as an attempt by the Harper government to divide and conquer.
As an on site reporter, I got to ask Oliver two questions before the news conference went to the national media on the phones.
In answer to my first question, Oliver confirmed that the federal government had decided to make Kitimat a public port, saying in his first sentence: “What the purpose is to make sure that the absolute highest standards of marine safety apply in the port of Kitimat.” He then returned to message track saying, “we have as I announced yesterday and I had spoken about before at the port of Vancouver we have an extremely robust marine safety regime in place but we want to make sure that as resource development continues and as technology improves, we are at the world class level. As I also mentioned there has never been off the coast of British Columbia a major tanker spill and we want to keep that perfect record.”
For my second question, I asked Oliver if he planned to visit Kitimat.
He replied. “Not in this particular visit, I have to get back [to Ottawa] There’s a budget coming and I have to be in the House for that but I certainly expect to be going up there.”
The question may not have registered with the national media on the conference call. For the local reporters and leaders in the room at Waap Galts’ap, the long house at Terrace’s Northwest Community College, everyone knew that Kitimat had been snubbed.
Back in Kitimat, I sent an e-mail to Colleen Nyce, the local spokesperson for Rio Tinto Alcan noting that Joe Oliver had confirmed that the federal government intended to make the RTA-run port a public port. I asked if RTA had been consulted and if the company had any comment.
Nyce replied that she was not aware of the announcement and promised to “look into this on our end.” I am now told by sources that it is believed that my inquiry to Nyce was the first time Rio Tinto Alcan, one of Canada’s biggest resource companies, had heard that the federal government was taking over its port.
The next day, Kitimat Mayor Joanne Monaghan told local TV news on CFTK the Kitimat community was never consulted about the decision and she added that she still hadn’t been able to get anyone with the federal government to tell her more about the plan.
Who pays for the navigation aids?
Meanwhile, new questions were being raised in Kitimat about two other parts of the Monday announcement.
New and modified aids to navigation: The CCG will ensure that a system of aids to navigation comprised of buoys, lights and other devices to warn of obstructions and to mark the location of preferred shipping routes is installed and maintained. Modern navigation system: The CCG will develop options for enhancing Canada’s current navigation system (e.g. aids to navigation, hydrographic charts, etc) by fall 2013 for government consideration.
Since its first public meeting in Kitimat, in documents filed with the Northern Gateway Joint Review Panel, in public statements and advertising, Enbridge has been saying for at least the past four years that the company would pay for all the needed upgrades to aids to navigation on Douglas Channel, Wright Sound and other areas for its tanker traffic. It is estimated that those navigation upgrades would cost millions of dollars.
Now days before a federal budget that Jim Flaherty had already telegraphed as emphasizing restraint, it appeared that the Harper government, in its desperation to get approval for energy exports, was going to take over funding for the navigation upgrades from the private sector and hand the bill to the Canadian taxpayer.
RTA not consulted
On Thursday morning, I received an e-mail from Colleen Nyce with a Rio Tinto Alcan statement, noting:
This announcement was not discussed with Rio Tinto Alcan in advance. We are endeavoring to have meetings with the federal government to gain clarity on this announcement as it specifically relates to our operations in Kitimat.
On Friday morning, Mayor Monaghan told Andrew Kurjata on CBC’s Daybreak North that she had had at that time no response to phone calls and e-mails asking for clarification of the announcement. Monaghan also told CBC that Kitimat’s development officer Rose Klukas had tried to “get an audience with minister and had been unable to.” (One reason may be that Oliver’s staff was busy. They ordered NWCC staff to rearrange the usual layout of the chairs at Waap Galts’ap, the long house, to get a better background for the TV cameras for Oliver’s statement).
Natural Resources Minister Joe Oliver (front far right) answers questions after his news conference at the Northwest Community College Long House, March 19, 2013. (Robin Rowland)
Monaghan told Kurjata, “I feel like it’s a slap in the face because we’re always being told that we’re the instrument for the whole world right now because Kitimat is supposed to be the capital of the economy right now. So I thought we’d have a little more clout by now and they’d at least tell us they were going to do this. There was absolutely no consultation whatsoever.”
By Friday afternoon, five days after the announcement, Transport Canada officials finally returned the calls from Mayor Monaghan and Rose Klukas promising to consult Kitimat officials in the future.
Monaghan said that Transport Canada told her that it would take at least one year because the change from a private port to a public port requires a change in legislation.
Transport Canada is now promising “extensive public and stakeholder consultation will occur before the legislation is changed,” the mayor was told.
On this Mayor Monaghan commented, “It seems to me that now they want to do consultation….sort of like closing the barn door after all of the cows got out!”
Blunder No 1. Pulling the rug out from Northern Gateway
Joe Oliver and the Harper government sent a strong political signal to Kitimat on Tuesday; (to paraphrase an old movie) your little town doesn’t amount of a hill of beans in this crazy world.
There are a tiny handful of people in Kitimat openly in favour of the Northern Gateway project. A significant minority are on the fence and some perhaps leaning toward acceptance of the project. There is strong opposition and many with a wait and see attitude. (Those in favour will usually only speak on background, and then when you talk to them most of those “in favour” have lists of conditions. If BC Premier Christy Clark has five conditions, many of these people have a dozen or more).
Oliver was speaking in Terrace, 60 kilometres from Kitimat. It is about a 40 to 45 minute drive to Kitimat over a beautiful stretch of highway, with views of lakes, rivers and mountains.
Scenic Highway 37 is the route to the main location not only for the controversial Northern Gateway pipeline but three liquefied natural gas projects, not to mention David Black’s proposed refinery half way between Terrace and Kitimat.
Why wouldn’t Kitimat be a must stop on the schedule for the Minister of Natural Resources? In Terrace, Oliver declared that Kitimat was to become a public port, run by the federal government. Although technically that would be the responsibility of Denis Lebel, the Minister of Transport, one has to wonder why the Minister of Natural Resources would not want to see the port that is supposedly vital to Canada’s economy? You have to ask why he didn’t want to meet the representatives of the Haisla Nation, the staff and council of the District of Kitimat and local business leaders?
Oliver has been going across Canada, the United States and to foreign countries promoting pipelines and tanker traffic, pipelines that would terminate at Kitimat and tankers that would send either bitumen or liquefied natural gas to customers in Asia.
Yet the Minister of Natural Resources is too important, too busy to take a few hours out of his schedule, while he is in the region, to actually visit the town he has been talking about for years.
He told me that he had to be in Ottawa for the budget. Really? The budget is always the finance minister’s show and tell (with a little help from whomever the Prime Minister is at the time). On budget day, Oliver would have been nothing more than a background extra whenever the television cameras “dipped in” on the House of Commons, between stories from reporters and experts who had been in the budget lockup.
According to the time code on my video camera, Oliver’s news conference wrapped at 9:50 a.m., which certainly gave the minister and his staff plenty of time to drive to Kitimat, meet with the representatives of the District, the Haisla Nation and the Chamber of Commerce and still get to Vancouver for a late flight back to Ontario.
On Tuesday, Joe Oliver’s snub pulled the political rug out from under the Northern Gateway supporters and fence sitters in Kitimat. Oliver’s snub showed those few people in Kitimat that if they do go out on a limb to support the Northern Gateway project, the Conservatives would saw off that limb so it can be used as a good background prop for a photo op.
Prince Rupert, Terrace and Smithers councils have all voted against the Northern Gateway project. Kitimat Council, despite some clear divisions, has maintained a position of absolute neutrality. Kitimat Council will continue to be officially neutral until after the Joint Review report, but this week you could hear the air slowly leaking out of the neutrality balloon.
Oliver may still believe, as he has frequently said, that the only people who oppose Northern Gateway are dangerous radicals paid by foreign foundations.
What he did on Tuesday was to make the opposition to Northern Gateway in Kitimat into an even more solid majority across the political spectrum.
Blunder No 2. Rio Tinto Alcan
It doesn’t do much for the credibility of a minister of natural resources to thoroughly piss off, for no good reason, the world’s second largest mining and smelting conglomerate, Rio Tinto. But that’s just what Joe Oliver did this week.
I am not one to usually have much sympathy with rich, giant, transnational corporations.
But look at this way, over the past 60 years Alcan and now Rio Tinto Alcan have invested millions upon millions of dollars in building and maintaining the Kitimat smelter and the port of Kitimat. RTA is now completing the $3.3 billion Kitimat Modernization Project. Then without notice, or consultation, the Conservative government—the Conservative government—announces it is going to take over RTA’s port operations. What’s more, if what Transport Canada told Mayor Joanne Monaghan is correct, the federal government is going to start charging RTA fees to use the port it has built and operated for 60 years.
Too often RTA’s London headquarters acts like it is still the nineteenth century and the senior executives are like British colonialists dictating to the far reaches of the Empire on what do to do.
No matter what you think of RTA, it boggles the mind, whether you are right wing, left wing or mushy middle, that the federal government simply issues a press release–a press release– with not even a phone call, not even a visit (even to corporate headquarters) saying “Hey RTA, we’re taking over.”
There’s one thing that you can be sure of, Rio Tinto Alcan’s lobbyists are going to be earning their fees in the coming weeks.
(One more point, even if there wasn’t a single pipeline project planned for Kitimat you would think that the Minister of Natural Resources would want to see what is currently the largest and most expensive construction project in Canada, a project that comes under his area of political responsibility).
It took five days, from the time of the minister’s news conference on Monday until Friday afternoon, for officials in Transport Canada to return phone calls from Mayor Joanne Monaghan and Rose Klukas, to explain what was going to happen to the Port of Kitimat.
This week was yet another example of the decay of Canadian democracy under Stephen Harper. Executives from Tokyo to Houston to the City of London quickly return phone calls from the District of Kitimat, after all Kitimat is where the economic action is supposed to be. At the same time, the federal government doesn’t return those calls, it shows that something really is rotten in our state.
Blunder No 5. LNG
There are three liquefied natural gas projects slated for Kitimat harbour, the Chevron-Apache partnership in KM LNG, now under construction at Bish Cove; the Royal Dutch Shell project based on the old Methanex site and the barge based BC LNG partnership that will work out of North Cove.
None of these projects have had the final go ahead from the respective company board of directors. So has the federal government thrown the proverbial monkey wrench into these projects? Will making Kitimat a public port to promote Enbridge, help or hinder the LNG projects? Did the Ministry of Natural Resources even consider the LNG projects when they made the decision along with Transport Canada to take over the port?
And then there’s…..
Kitimat has a marina shortage, especially since RTA closed the Moon Bay Marina. The only one left, the MK Bay Marina, which is straining from overcapacity, is owned by the Kitimat-Stikine Regional District. That means there will be another level of government in any talks and decisions on the future of the Kitimat harbour. There are also the controversial raw log exports from nearby Minette Bay.
Although Transport Canada has promised “extensive public and stakeholder consultation,” one has to wonder how much input will be allowed for the residents of Kitimat and region, especially the guiding and tourism industries as well as recreational boaters. After all, the Harper government is determined to make Kitimat an export port for Alberta and the experience of the past couple of years has shown that people of northwest count for little in that process. Just look at the Northern Gateway Joint Review, which more and more people here say has no credibility.
Big blunder or more of the same?
I’ve listed five big blunders that are the result of the decision by the Harper government to turn Kitimat into a public port.
Are they really blunders or just more of the same policies we’ve seen from Stephen Harper since he became a majority prime minister?
This is a government that has muzzled scientific research and the exchange of scientific ideas. The minister who was in the northwest last week, who has demonized respect for the environment, is now squeezing the words “science” and “environment” anywhere into any message track or speech anyway he can.
That’s just the point. Joe Oliver’s fly-in, fly-out trip to Terrace was not supposed to have any substance. Changing the chairs at the Waap Galts’ap long house showed that it was more important to the Harper government to have some northwest coast wall art behind Joe Oliver for his photo op than it was to engage meaningfully with the northwest, including major corporations, First Nations and local civic and business leaders.
Joe Oliver’s visit to Terrace was an example of government by reality television. The decision to change the private port of Kitimat into a public port was another example of Harper’s government by decree without consulting a single stakeholder. The problem is, of course, that for decades to come, it will be everyone in northwest British Columbia who will be paying for those 30 second sound bites I recorded on Tuesday.
Epilogue: Alcan’s legacy for the socialist Prime Minister, Stephen Harper
If an NDP or Liberal government had done what Harper and Oliver did on Monday, every conservative MP, every conservative pundit, every conservative media outlet in Canada would be hoarse from screaming about the danger from the socialists to the Canadian economy.
That brings us to the legacy left by R. E. Powell who was president of Alcan in the 1940s and 50s as the company was building the Kitimat project.
As Global Mission, the company’s official history, relates, in 1951, Alcan signed an agreement with the British Columbia provincial government, that “called upon the company to risk a huge investment, without any government subsidy or financial backing and without any assured market for its product.”
According to the book, Powell sought to anticipate any future problems, given the tenor of the times, the possible or even likely nationalization of the smelter and the hydro-electric project.
So Powell insisted that the contract signed between Alcan and the province include preliminary clauses acknowledging that Alcan was paying for Kitimat without a single cent from the government:
Whereas the government is unwilling to provide and risk the very large amounts of money required to develop those water powers to produce power for which no market now exists or can be foreseen except through the construction of the facilities for the production of aluminum in the vicinity and….
Whereas the construction of the aluminum plant at or near the site of the said waterpower would accomplish without risk or to the GOVERNMENT the development power, the establishment of a permanent industry and the new of population and….
(Government in all caps in the original)
…the parties hereto agree as follows (the agreement, water licence and land permit)
Powell is quoted in the book as saying:
I asked the political leaders of BC if the government would develop the power and sell the energy to Alcan and they refused. We had to do it ourselves. Someday, perhaps, some politician will try to nationalize that power and grab it for the state. I will be dead and gone but some of you or your successors at Alcan may be here, and I hope the clauses in the agreement, approved by the solemn vote of the BC legislature, will give those future socialists good reason to pause and reflect.
In the late 1940s and early 1950s, the federal government had very little to do with the Kitimat project. With the declaration that Kitimat will be a public port, the federal government comes to the party 60 years late. But one has to wonder if the late Alcan president, R.E. Powell, ever considered that the “future socialists” he hoped would “pause and reflect” would be members of Canada’s Conservative party, Stephen Harper, Joe Oliver and Denis Lebel?
So that’s why the EIS took a couple of looks at Kitimat, with two possibilities for replacing the Keystone XL with a Kitimat terminal.
• Rail to Vancouver or Kitimat, British Columbia and tanker to the Gulf Coast area refineries
• The proposed Nothern Gateway Pipeline project.
The study doesn’t just include various forms of diluted bitumen from the Alberta bitumen sands, but petroleum products from the Western Canadian Sedimentary Basin (WCSB) and crude oil from the Bakken shale shipped to the refineries on the US Gulf Coast which would be served by the Keystone XL pipeline if it was not approved.
The EIS examined the Northern Gateway project and rejected the Enbridge pipeline as a possibility for Alberta bitumen and crude because of the continuing controversy.
However, a reading of the report shows that there could be pressure in the future for a bitumen or crude export terminal at Kitimat that would be served by the existing CN rail line (even though the State Department report prefers Prince Rupert as the best choice as an alternative to Keystone).
Enbridge is proposing to construct the Northern Gateway pipeline, which would transport up to 525,000 bpd of crude oil 1,177 km from Bruderheim, Alberta, to the Port of Kitimat, British Columbia. The port would be improved with two dedicated ship berths and 14 storage tanks for crude oil and condensate. Enbridge intends for the pipeline to be operational around 2017. A regulatory application was submitted in 2010, which is undergoing an independent review process led by the Canadian National Energy Board and the Canadian Environmental Assessment Agency. The pipeline would traverse First Nation traditional lands and important salmon habitat. The project has been controversial and has encountered opposition from some
First Nation bands and other organizations. Opposition to the project remains strong as evidenced by media reports of the January 2013 public hearings in Vancouver on the permit application. It remains uncertain at this time if the project would receive permits and be constructed, and therefore the option of moving additional crude to Kitimat was eliminated from detailed analysis.
The report goes on to say that Enbridge is moving the target for the Northern Gateway due the controversy and the longer than expected Joint Review Panel hearings
Enbridge is now stating in investor presentations that the Northern Gateway pipeline
(525,000 bpd expandable to 800,000 bpd) may be operational by “2017+”
However the State Department report does seriously consider transportation of WCSB crude by rail to Vancouver, Kitimat and Prince Rupert. The report takes an in-depth look at the railway to Prince Rupert option.
One reason is that even if it is transported by rail, the market in Asia is still more attractive to the energy industry than using Kitimat or Prince Rupert as a possible terminal for export to the US Gulf.
The transportation costs of shipping to Asia via the Canadian or U.S. West Coasts
would be significantly cheaper than trying to export it via the U.S. Gulf Coast.
The total per barrel cost of export to Asia via pipeline to the Canadian West Coast and onward on a tanker is less than just the estimated pipeline tariff to the U.S. Gulf Coast for the proposed Project, and is less than half the cost of the Gulf Coast route to Asia. If pipelines to the Canadian West coast are not expanded or approved, even incurring the additional cost of rail transport to the West Coast ports (Vancouver, Kitimat, or Prince Rupert), estimated at $6 per barrel, results in a total transport cost to Asia that is still 40 percent cheaper than going via the Gulf Coast Absent a complete block on crude oil exports from the Canadian West Coast, there would be little economic incentive to use the proposed project as a pass through. The high costs of onward transport to other potential destinations tend to mitigate against WCSB heavy/oil sands crudes being exported in volume from the Gulf Coast.
The EnSys 2011 study found that the rail systems of the United States and Canada were not at that time running at capacity, that there is significant scope to expand capacity on existing tracks through such measures as advanced signaling, and that adequate cross-border Canada/U.S. capacity exists to accommodate growth in rail traffic that would be associated with movements at the level of 100,000 bpd cross-border increase per year or appreciably higher. In addition, rail lines exist to ports on the British Columbia coasts (notably Prince Rupert, Kitimat, and Vancouver), which could be used for export of Western Canadian crudes.
And later in the report:
both of these proposed pipeline projects to Canada’s West Coast face significant
resistance and uncertainty, but there are strong cost advantages when compared with moving WCSB crude to the Gulf Coast even if rail were used to access the Canadian West Coast In fact, using rail and tanker to ship crude oil from the WCSB via the West Coast to China is comparable to the pipeline rate to reach the U.S. Gulf Coast. An increase in the transport costs to the Gulf Coast (utilizing alternative transport options such as rail) would have a tendency to increase the
economic incentive to utilize any West Coast export options, if they are available.
The report also notes the change in Canadian laws in the omnibus bills pushed through by Stephen Harper’s Conservative government:
Also not examined above, are more speculative political impacts that might occur as a result of a decision on the permit application for the proposed Project. In 2012, the Canadian government enacted new laws changing the way some major infrastructure projects, such as pipelines, are reviewed. Among the changes made were limits on the amount of time for such reviews. A declared intent was to promote alternative routes for the export of WCSB crude oils, especially
ones that would reduce reliance on the United States as, essentially, the sole market option.
In other words, even if Northern Gateway is stopped, there could be considerable pressure to export bitumen and crude oil from Alberta not only through Prince Rupert, the site preferred by the State Department EIS, but though Kitimat as well.
That might just open the door for David Black’s proposed $16 billion refinery at Onion Flats near Kitimat. As noted elsewhere on the site Black has possible investors for construction of a new oil refinery approximately 25 kilometers to the north of Kitimat BC on a 3,000 hectare site.
Black’s Kitimat Clean website says the refinery would process 550,000 barrels per day (87,445 cubic meters per day) of diluted bitumen from the oilsands region of Alberta delivered to the site by pipeline or by rail. The diluent will be extracted at the refinery and returned to Alberta if needed there. If not, it would be processed into gasoline. The bitumen will be converted into fuel products, primarily for export.
Black’s plans call for connecting the Northern Gateway bitumen Pipeline to the site. From the refinery six dedicated product pipelines will run to a marine terminal on the Douglas Channel. The Douglas Channel is a wide and deep fjord. VLCC (Very Large Crude Carrier) tankers will transport the refined fuels to markets around the Pacific Rim.
If the Northern Gateway is stopped, Black’s plans call for 12 additional 120 car trains running through every day. (Six in each direction) Northwest Coast Energy News Special report links
The US State Department report on the controversial Keystone XL pipeline project also looks at the Kinder Morgan Transmountain pipeline (both the existing line and the proposed second line) and, in at least one part of the report, seems to speculate that, once expansion of the Panama Canal is completed in 2014, there could be larger tankers in Vancouver harbour, something that up until now, both Kinder Morgan and Port Metro Vancouver have denied. However, the State Department report does not say how the port of Vancouver could handle larger tankers.
The State Department EIS says if larger tankers were loaded at Vancouver, it could be economic for crude from the Kinder Morgan Transmountain pipeline to be moved to the US Gulf Coast.
Using heavy crude as a basis, a present day movement via Trans Mountain to Vancouver and thence on a Panamax tanker via the Panama Canal to Houston would have a total freight cost (pipeline tariff plus tanker freight and Panama toll) of around $8.50-9.50/barrel (bbl).
Recognizing that Kinder Morgan plans to enable future shipment in larger Suezmax tankers, and that the Panama Canal Authority is expanding the Canal to take tankers of that size, the rate using a Suezmax would be approximately $1/bbl lower. These rates compare to approximately $8/bbl to move heavy crude via pipeline from Hardisty to Houston. Thus, while in normal markets, a tanker movement from Western Canada would be somewhat more costly than via pipeline, in a scenario where ability to move WCSB crudes by pipeline to the U.S. Gulf Coast were constrained, refiners in the U.S. Gulf Coast could opt for tanker transport.
According to the progress report the current Panama Canal has the capacity for ships that are 32.3 metres wide by 304.6 metres long, This will increase to 49 metres wide by 366 metres long.
Later in the report the State Department goes on to say that bitumen and crude could, as an alternative to Keystone, go to Vancouver:
Under this option, WCSB [Western Canada Sedminetary Basin] would be shipped by existing railways or new pipelines from the Hardisty region to Vancouver or Kitimat, British Columbia for shipment by marine transport through the expanded Panama Canal and delivery to Gulf Coast area refiners. This option considers moving up to 730,000 bpd of heavy crude to the Port of Vancouver and then to the marine docks at the Westridge marine terminal in Vancouver or the port in Kitimat. Under this option, crude oil could move either via rail or by a new pipeline from the Hardisty region.
Currently, Kinder Morgan is planning an expansion of the existing Trans Mountain pipeline originating at Edmonton, increasing its capacity from 300,000 bpd (current) to up to 890,000 bpd(planned for operations in 2017).
The Trans Mountain pipeline runs into Vancouver via the existing Burnaby terminal over to the Westridge dock for loading heavy crude onto vessels. The pipeline has sufficient commitment from shippers to proceed with engineering and permitting processes. Kinder Morgan indicates that the project would significantly increase tanker traffic from about 5 to 34 cargoes per month, or up to about 400 cargoes per year . The increased marine traffic is due to increased volume to be shipped, and lack of sufficient channel draft to load larger vessels.
The proposed expansion at Westridge Terminal is based on the loading of Aframax tankers, the same tankers currently being loaded at Westridge. Larger tankers are not permitted in the Vancouver harbour, and are not under consideration for the expansion. Proposed changes at the dock include new loading facilities, fire protection, vapour recovery, secondary containment, and emergency response equipment.
To connect the Burnaby Terminal with the Westridge Terminal, the proposed expansion includes two new, four-kilometre pipelines each with a diameter of 762 millimeters (30 inches). These two new delivery lines would provide product deliveries to tankers at two new dock berths, and provide the scheduling flexibility required for a marine operation.
The role of Port Metro Vancouver is to conduct a rigorous project review to ensure the safe movement of goods through the Port. Kinder Morgan has yet to submit a formal project proposal to Canada’s National Energy Board. If they do, and should approval be granted, the project would then undergo several other permitting processes, one of which is a Port Metro Vancouver Project Permit Review. Vancouver is a very low volume tanker port. Currently, there are about 100 crude oil and chemical tankers calling the port each year. If the Kinder Morgan project receives approval, that number could increase to approximately 400 tankers a year. Other well-run ports such as the Port of Rotterdam handles 8,206 tankers a year, while Singapore handle 22,280 tankers a year.
Will larger tankers be calling at Port Metro Vancouver as a result of the Kinder Morgan Proposal?
There are no plans to exceed the current maximum size of tankers calling at Port Metro Vancouver. Due to depth restrictions in the Burrard Inlet, the largest dimension of tanker that can be handled is the Aframax, a medium-sized tanker with a maximum capacity of 120,000 tonnes. Even then, these vessels can load to only around 80% of capacity due to draft restrictions.
The State Department EIS was cautious about the Kinder Morgan project and did not do the same deailed analysis as it did for Prince Rupert.
The substantial increase in tanker traffic from the proposed Kinder Morgan expansion has raised safety and environmental concerns. Moving additional volumes of crude oil from the proposed Project into the Vancouver market by either a new pipeline or rail would result in 400 or more additional vessels loading at Vancouver each year and would require considerably more storage to be built than the current Kinder Morgan operations. The expansion of storage capacity, potential rail off-loading facilities and logistics, and increased marine traffic may make this option logistically challenging in a relatively compressed and populated geographical area.
Moreover, even if a separate pipeline from Hardisty could be planned, mapped, engineered, designed, and permitted starting today, it would likely not be available as an option until well after the proposed [Keytsone] Project’s planned start date. As a result of the logistical challenges in increasing the amounts of heavy Canadian grades of crude oil coming into the Vancouver/Burnaby region over and above the volumes from the Kinder Morgan expansion, this option was deemed to be less viable than movements from Kitimat and Prince Rupert and was eliminated from detailed analysis.
It’s not clear from the Keystone EIS, if the State Department was simply speculating on larger tankers in Vancouver harbour or if it was made of aware of possible hopes for a deep water tanker port elsewhere in the Vancouver harbour area.
Port Metro Vancouver diagram showing the tankers that are permitted and not allowed in Vancouver harbour. (Port Metro Vancouver)
The State Department EIS goes on to note:
While no new additional pipeline capacity has been added from Canada into the United States or to the Canadian West Coast since the Final EIS in 2011, a number of projects are proposed, including this proposed Project. The 300,000 bpd Kinder Morgan Trans Mountain pipeline that runs from Edmonton to the British Columbia coast at Vancouver, with a spur to Washington State refineries, has been over-subscribed for some time. A successful open season led the Kinder Morgan to announce and file for expansion to 750,000 bpd by potentially 2017. After a
second open season, Kinder Morgan has increased the expansion to 890,000 bpd. The bulk of the incremental crude moved on the line would potentially be destined for Asia. The review process for this project is continuing, but there is significant opposition based on concerns over environmental impacts associated with the oil sands and with additional tanker movements in the Port Vancouver harbor.
As noted above, both of these proposed pipeline projects to Canada’s West Coast face significant resistance and uncertainty, but there are strong cost advantages when compared with moving WCSB crude to the Gulf Coast even if rail were used to access the Canadian West Coast... In fact, using rail and tanker to ship crude oil from the WCSB via the West Coast to China is comparable to the pipeline rate to reach the U.S. Gulf Coast. An increase in the transport costs to the Gulf Coast (utilizing alternative transport options such as rail) would have a tendency to increase the economic incentive to utilize any West Coast export options, if they are available.
There have always been commentators who believe that if the Northern Gateway Pipeline is rejected by the Joint Review Panel or stopped by other means, that the bitumen from Alberta should be carried by rail to Prince Rupert.
A pipeline to Prince Rupert has already been rejected by Enbridge as impractical given the mountainous terrain and the narrow footprint along the Skeena River from Terrace to Prince Rupert.
That means taking bitumen by rail to Prince Rupert has not been seriously studied—until now.
That’s because under its mandate the State Department had to consider alternatives to Keystone. The detailed look at carrying crude to the west coast is contained in the “No Action Alternatives” section of the Keystone report (that is telling President Barack Obama what might happen if he takes no action on Keystone)
The EIS took a brief look at the possibilities of rail to Kitmat, but concentrates mostly on Prince Rupert.
As for sending bitumen to the Gulf,via rail and tanker, the Keystone report concludes, as have most analysts that even if bitumen was shipped by rail to Prince Rupert, it would be cheaper to send it to markets in Asia than through the Panama Canal to the US Gulf Coast.
If pipelines to the Canadian West coast are not expanded or approved, even incurring the additional cost of rail transport to the West Coast ports (Vancouver, Kitimat, or Prince Rupert), estimated at $6 per barrel, results in a total transport cost to Asia that is still 40 percent cheaper than going via the Gulf Coast.
Absent a complete block on crude oil exports from the Canadian West Coast, there would belittle economic incentive to use the proposed project as a pass through. The high costs of onward transport to other potential destinations tend to mitigate against WCSB [Western Canada Sedimentary Basin] heavy/oil sands crudes being exported in volume from the Gulf Coast.
As an alternative to Keystone, the State Department examined a scenario where bitumen and possibly Bakken shale crude oil would be:
• Loaded onto rail in Lloydminster and transported to Prince Rupert, British Columbia;
• Transferred to a new/expanded marine terminal at Prince Rupert; and
• Shipped via Suezmax vessels to the Gulf Coast area (Houston/Port Arthur) through the Panama Canal.
If the tanker cars are hauling bitumen, they would be actually loading “railbit” which the report says is “similar to dilbit but with less diluent added” (Dilbit is the standard diluted bitumen in pipelines) There is also, according to the EIS, a possibility that the tank cars would carry raw bitumen without dilutent (although this requires insulated rail cars with steam coils)
New facilities in Prince Rupert would consist of a large rail terminal complex, most likely on themainland, where off-loaded crude oil would be stored until it could be loaded onto tankers, and an expanded port. The entire facility would cover 4,700 acres (1,900 hectares), including 3,500 acres (1,400 hectares) for storage and off-loading/on-loading facilities at the rail terminal and approximately 1,200 acres (487 hectares) of land at the expanded port.
The new tank terminal construction would consist of the following:
• Fourteen petroleum storage tanks (11 oil and three condensate);
• A security fence to encompass the tank terminal;
• A 180-foot-wide (55 metre) firebreak area around the outside perimeter of the terminal;
• Electrical supply and distribution (this terminal would be serviced by the Texada Island
Reactor substation); and
• Buildings (control center and civil infrastructure including roads).
The scenario calls for adding approximately 13 trains with 100 tanker cars per day on the 1,100 miles (1,770 kilometres) of CN and Canadian Pacific rail lines between Lloydminster and Prince Rupert.
(On the other hand, media mogul David Black who has proposed a refinery at Onion Flats half way between Kitimat and Terrace is considering a rail link to Kitimat if the Northern Gateway pipeline is stopped. Black estimates there would be six trains per day, 120 cars in each direction. While there is usually only one train a day to Kitimat or less, that idea would increase traffic along the Skeena and in his news release Black says
If BC remains set against a pipeline the oil will come to the refinery by rail. CN and the oil companies are keen on this. A great deal of crude in North America is being moved by rail now. The costs are not that different in this case and no permits are required. Rail tankering is, however, not as safe and it is more disruptive. Small towns along the route with level crossings would rue having 12 more trains running through every day.
The State Department scenario says that if the Prince Rupert option actually happened there would be “one to two additional Suezmax tanker vessels per day (430 tankers per year) would travel between Prince Rupert and the Gulf Coast area refinery ports via the Panama Canal.”
The concept of the Suezmax tankers is critical to the west coast, even if none of the scenarios eventually happen, because the State Department report notes that the Panama Canal is now being expanded, so that larger ships, including tankers, can go through the canal after 2014.
The current size is Panamax (maximum size for the current Panama Canal) to Suezmax (the maximum size for the Suez Canal), and, according to the State Department that means even if the even bigger Very Large Crude Carriers are not calling at west coast ports, the newer, larger Suezmax tankers may be.
It should be noted, however, that if WCSB crude oil reaches a Pacific port, regardless of whether by rail or by pipeline, the economics for movement via tanker would favor shipping the oil to Asia rather than the Gulf Coast area. The cost of transporting crude oil via tanker from Prince Rupert to Houston and Port Arthur is estimated to be approximately $4.70/bbl, whereas the transport cost via tanker from Prince Rupert to refinery ports in Asia (e.g., Ulsan, South Korea and Dalian, China), is estimated to be only approximately $1.70 and $2.00/bbl, respectively. The lower transport cost to Asia versus the Gulf Coast area is attributable to shorter trip duration (30 to 37 days to Asia versus about 45 days to the Gulf Coast area), avoiding the Panama Canal toll(about $0.70/bbl), and being able to use a larger tanker because it would not be constrained by the Panama Canal (a VLCC tanker to China would have a capacity of almost 2 million bbl versus a Suezmax tanker to the Gulf Coast area with a capacity of about 884,000 bbl).
So what would happen if there was a scheme to truck bitumen and crude to Prince Rupert and ship via the Panama Canal to the Gulf?
The State Department EIS says:
the transport of the crude oil via tankers from Prince Rupert to the Gulf Coast area refineries would not have any effects on geology, soils, groundwater, wetlands, vegetation, land use, socioeconomics, noise, or cultural resources, other than in the event of a spill.
It goes on to note:
The Gulf Coast area refineries already receive crude oil shipments via tankers from Mexico, Venezuela, and other locations; the Rail/Tanker Scenario is expected to simply displace these sources of crude oil with WCSB crude oil. Therefore, no new construction or new operational impacts are expected to occur as a result of this scenario at the Gulf Coast area refineries or surrounding habitats or communities.
In its study of a possible expanded Prince Rupert terminal that would welcome tankers, the State Department says:
The proposed Northern Gateway terminal at Kitimat, British Columbia was used as a surrogateto estimate the marine facilities needed at Prince Rupert. The Northern Gateway facility isdesigned to handle about 525,000 bpd of crude delivered by pipeline for loading on vessels to theWest Coast and Asia. In addition, it is designed to receive about 193,000 bpd of diluent (a verylight oil obtained from natural gas production) from cargoes arriving by water and discharging into storage at the terminal and moving back to Alberta via a parallel pipeline. The total volumeof about 718,000 bpd approximates the volume of WCSB heavy crude oil that would be loaded at Prince Rupert.
More Details: Northwest Coast Energy News Special report links
