At the District of Kitimat Council meeting on Monday, October 1, as part of Mayor Joanne Monaghan’s regular “good news” briefing, she told council that the Kitimat LNG project continues to “progress positively.” The news from Calgary on Tuesday, however, was not as promising.
Both Bloomberg News and the Calgary Herald reported that Apache, which owns 40 per cent of the KM LNG partnership is worried about a recent decision by a rival gas company to sell natural gas to world markets at low North American prices rather than, as been customary up until now, as percentage of the world oil price. That differential gives the North American gas companies a profit in Asia and it is that profit difference that makes Kitimat attractive for LNG projects.
At the council meeting, Monaghan reported, quoting Apache’s Apache’s Manager of Public and Government Affairs Natalie Poole-Moffatt, as saying that Kitimat LNG will be opening a full time community office in downtown Kitimat near the City Centre mall in the near future. Apache says renovations are nearly complete and they will be holding an open house in the near future.
Monaghan said that work on the Kitimat LNG site at Bish Cove continues with blasting to create proper elevation, crushing and sorting of rock and constructing an access route to the forest service road. This summer work began on the two year $25 million upgrades to the old forest service road “which will improve conditions on the road.”
However, in Calgary, the Herald quoted KM LNG vice-president David Calvert as saying “things are going so well that it has been decided to risk spending on clearing ground before completion of the front end engineering and development study and final investment decision.”
But according to several media reports, Calvert told an Energy Roundtable in Calgary on Tuesday that a final go-ahead for Kitimat LNG is not a done deal. the Herald quoted Calvert as saying: “We remain convinced that oil-linked pricing is critical to the viability of our Canadian LNG industry.”
Bloomberg reported that a recent deal by Cheniere Energy Inc. to sell liquefied natural gas based on North American pricing (also known as Henry Hub pricing) means that it is difficult for Apache to find Asian customers to sign the long term LNG contracts needed to make the Kitimat project viable. (Asian LNG prices are based on the “Japan Customs Cleared Price” set by the Japanese government as a percentage of the price of crude oil).
Bloomberg quoted Calvert as saying: “It created quite a ripple through the marketplace,” and Bloomberg said, the Cheniere deal has created “unrealistic expectations.”
Cheniere is less sensitive to prices given its role as a middleman, while Apache, Encana and EOG are producers, for whom the price is very important. One advantage of Kitimat is its west coast location, but that is only a minor cost advantage over Gulf Coast facilities.
The clock is ticking on Kitimat. It sounds like Asian buyers are sitting on the sidelines waiting for lower prices. Right now the U.S. government is sitting on future LNG approvals pending the release of a study around year-end. If the U.S. approves the pending applications, a proverbial flood of LNG will come to market with Henry Hub-based pricing. At that point Kitimat’s owners will be in a tough spot. Kitimat is vital to B.C., but the economics might not work.
In a report to District of Kitimat Council, Apache’s Manager of Public and Government Affairs, Natalie Poole-Moffatt, also reported that on September 19, an oil leak was spotted on a piece of heavy equipment at Bish Cove. The report says;
WestCoast Marine was notified and booms were deployed as a preemptive measure in Bish Cove, no machine oil has migrated to Bish Cove. Environmental crews are on site executing a remediation plan. Both the [BC] Provincial Emergency PLan (PEP) and Aboriginal and Northern Affairs Canada were notified of the incident.
The piece of equipment is currently being repaired and will undergo operational tests to ensure the equipment can function without further concern. Environmental staff will remain on the site 24/7 until remediation is complete.
The 911 system failed during the 2010 Marshall, Michigan, Enbridge pipeline breach, according to the full report in the incident released by the US National Transportation Safety Board.
The NTSB report says the 911 operators in Michigan dismissed eight calls reporting gas or petroleum odours over a period of 14 hours between the initial report of a bad odour and the actual discovery of diluted bitumen polluting Talmadge Creek.
The report also says the local firefighters were unfamiliar at that point with potential problems from a bitumen pipeline as opposed to a leak of a consumer natural gas pipeline.
Although the NTSB report puts most of the onus on an inadequate Enbridge “Public Awareness Program” (PAP) which failed to familiarize first responders to potential problems, the report raises questions whether British Columbia, especially the north, is properly prepared for all the energy development that is occurring. Whether or not the Enbridge Northern Gateway project proceeds, there are three active and possibly as many as three or four planned liquified natural gas projects for the northwest, ongoing exploration and production in the northeast and the proposed Kinder Morgan expansion in the lower mainland.
The NTSB says that Sunday, July 25, 2010, at 5:58 pm. EDT, a segment of a 30 inch (7.62 cm) diameter pipeline (Line 6B) operated by Enbridge ruptured in a wetland in Marshall, Michigan. The rupture occurred during the last stages of a pipeline shutdown planned by Enbridge. The leak was not discovered or addressed for over 17 hours, largely due to problems in the Enbridge control room in Edmonton.
During the time lapse, the NTSB says, Enbridge twice pumped additional oil (81 percent of the total release) into Line 6B during two pipeline start ups; the total release was estimated to be 843,444 gallons or 3.192 million litres of crude oil. The oil saturated the surrounding wetlands and flowed into the Talmadge Creek and the Kalamazoo River.
According to the NTSB time line, at 8:56 pm., Michigan Gas Utilities dispatched a senior service technician after residents reported a natural gas odour. At 9:25 pm. on July 25, a local resident called the Calhoun County 911 dispatch:
I was just at the airport in Marshall and drove south on Old 27 [17 Mile Road]
and drove back north again and there’s a very, very, very strong odour, either
natural gas or maybe crude oil or something, and because the wind’s coming out
of the north, you can smell it all the way up to the tanks, right across from where
the airport’s at, and then you can’t smell it anymore.
By 9:32 pm., the Marshall City Fire Department had been dispatched in response to the 9:25 pm. call to 911. The 911 dispatcher told the responders there was a report of a bad smell of natural gas near the airport. The responding firefighters were also dispatched. The firefighters checked pipelines and industrial building near the airport. “using a combustible gas indicator” to try to locate the origin of the odour, but did not detect anything.
A map from the NTSB report showing where the fire department responded to the reports of a gas smell at Marshall, MIchigan, and the location of the actual pipeline break. (NTSB)
The NTSB says the service technician from Michigan Gas Utilities “crossed paths with some of the fire department personnel” but found no evidence of a gas leak.
The fire department personnel departed the scene at 10:54 pm. to return to the station.
The NTSB report says: “ a combustible gas indicator measures percentage of the lower explosive limit, it likely would not detect the oil unless it was very close to the source.”
At 11:33 pm, the area’s 911 system received the first of the seven additional calls when an employee at a business called to report a natural gas odour.
The 911 dispatcher told the caller that the fire department had already responded
to calls in the area, and no more personnel were dispatched.
A map of the incident response by the NTSB shows that the area near the airport where the firefighters responded was actually some distance from the pipeline rupture.
Over the next 14 hours, the NTSB says, 911 received seven more calls reporting strong natural gas or petroleum odours in the same vicinity. “The 911 dispatcher repeatedly informed the callers that the fire department had been dispatched to investigate the reported odours.”
Enbridge had been working on restarting the pipeline all night. In Edmonton, at 10:16 am, the Enbridge control room spoke to the regional manager based in Chicago to send someone to
walk along the pipeline, upstream and downstream of the Marshall pumping station.
According to the NTSB, the Chicago regional manager replied, “I wouldn’t think so. If it’s right at Marshall—you know, it seems like there’s something else going wrong either with the computer or with the instrumentation. …you lost column and things go haywire, right?” He went on to say, “…I’m not convinced. We haven’t had any phone calls. I mean it’s perfect weather out here—if it’s a rupture someone’s going to notice that, you know and smell it.” The Chicago regional manager told shift lead C1 that he was okay with the control centre starting Line 6B again.
At 11:17 am, a caller from a second gas utility, Consumers Energy, called the Enbridge emergency line telling the control room: “I work for Consumers Energy[30] and I’m in Marshall. There’s oil getting into the creek and I believe it’s from your pipeline. I mean there’s a lot. We’re getting like 20 gas leak calls and everything.”
At 11:18 am Enbridge closed the remote valves sealing off the rupture site within a 2.95-mile section. By 11:20 am., the shift lead had called the Chicago regional manager to tell him about the notification. By 11:37 am., another Consumers Energy employee notified 911 about the crude oil leak in a creek near Division Drive.
The Fredonia Township Fire Department was dispatched by the 911 centre shortly after the call. At 11:41 am., the Edmonton control centre received confirmation from an Enbridge crossing coordinator located at the Marshall pipeline maintenance shop confirming the oil on the ground.
The NTSB says:
The 911 operators repeatedly informed the callers that the fire department had been dispatched to investigate the issue, but the 911 operators did not contact the pipeline operator or advise the public of health and safety risks. The 911 operators never dispatched the fire department in response to the subsequent calls even though these calls occurred over several hours, indicating an ongoing problem. The actions of both the first responders and the 911 operators are consistent with a phenomenon known as confirmation bias,128 in which decision makers search for evidence consistent with their theories or decisions, while discounting contradictory evidence. Although there was evidence available to the first responders that something other than natural gas was causing noticeable odours in the Marshall area, they discounted that evidence, largely because it contradicted their own findings of no natural gas in the area. Similarly, the 911 operators, with the evidence from the first responders of no natural gas in the area, discounted subsequent calls regarding the strong odours in the Marshall area. Those calls were inconsistent with their own views that the problem causing the odours was either nonexistent or had been resolved.
The NTSB report then says:
Although Enbridge had provided training to emergency responders in the Marshall area in February 2010, the firefighters’ actions showed a lack of awareness of the nearby crude oil pipeline: they did not search along the Line 6B right-of-way, and they did not call Enbridge. The NTSB concludes that had the firefighters discovered the ruptured segment of Line 6B and called Enbridge, the two start ups of the pipeline might not have occurred and the additional volume might not have been pumped.
The NTSB reviewed Enbridge’s PAP, which was intended to inform the affected public,
emergency officials, and public officials about pipelines and facilitate their ability to recognize
and respond to a pipeline rupture.
The report says:
Although RP 1162 requires operators to communicate with audiences every 1 to 3 years, Enbridge mailed its public awareness materials to all audiences annually. However, even with more frequent mailings, this accident showed that emergency officials and the public lacked actionable knowledge.
The NTSB goes on to say:
Public knowledge of pipeline locations and the hazards associated with the materials
transported is critical for successful recognition and reporting of releases, as well as the safe response to pipeline ruptures. The transportation of hazardous materials by pipeline is unlike hazardous materials transportation by railroad or highway because a pipeline is a permanent fixture. A pipeline presents a unique challenge to awareness because it is often buried. When pipeline releases occur, a properly educated public can be the first to recognize and report the emergency.
A survey quoted by the NTSB says that of those who responded in the United States. only 23 percent of the affected public and 47 percent of emergency officials responded that they were “very well informed” about pipelines in their community.
The NTSB says Enbridge failed to properly conduct and monitor its public awareness program and management’s “review of its PAP was ineffective in identifying and correcting deficiencies. The NTSB further concludes that had Enbridge operated an effective PAP, local emergency response agencies would have been better prepared to respond to early indications of the rupture and may have been able to locate the crude oil and notify Enbridge before control centre staff tried to start the line.”
In May 2011, Enbridge revised its public awareness plan and created a public awareness
committee, but just months later, in July 2011, the US Pipeline and Hazardous Materials Safety Administration conducted an audit of Enbridge’s plans and identified several
deficiencies in the company’s program evaluation and effectiveness reviews and required that
Enbridge correct the deficiencies.
Overall, the report says:
Although Enbridge and PHMSA have taken these actions, the NTSB is concerned that
pipeline operators do not provide emergency officials with specific information about their pipeline systems. The brochures that Enbridge mailed did not identify its pipeline’s location. Instead, the brochures directed the audiences to pipeline markers and to PHMSA’s National Pipeline Mapping System. In the NTSB’s 2011 report of the natural gas transmission pipeline rupture and fire in San Bruno, California, the NTSB made the following safety recommendation to PHMSA:
Require operators of natural gas transmission and distribution pipelines and
hazardous liquid pipelines to provide system-specific information about their
pipeline systems to the emergency response agencies of the communities and
jurisdictions in which those pipelines are located. This information should include
pipe diameter, operating pressure, product transported, and potential impact
radius.
The report concludes:
The NTSB recommends that the International Association of Fire Chiefs and the National Emergency Number Association inform their members about the circumstances of the Marshall, Michigan, pipeline accident and urge their members to aggressively and diligently gather from pipeline operators system-specific information about the pipeline systems in their communities and jurisdictions.
Fire departments in northwest British Columbia, so far, have had minimal training in potential pipeline problems, like the fire department in Michigan, enough to detect and deal with consumer and local industrial natural gas systems. It’s clear that the province of British Columbia, if it is going to promote liquified natural gas as a foundation of a new provincial economy, it must plan and budget for a major upgrade to the 911 system, with a new police, fire and ambulance dispatch centre.
A map, released by the BC government, shows the area of Crown land covered by the Haisla Framework agreement that could lead to another LNG project in Kitimat. (Govt of BC)
The Haisla Nation and the BC government have signed an agreement that will lead to a third liquified natural gas project near Kitimat.
The “Haisla Framework Agreement” allows for the lease or sale of up to approximately 700 hectares of Crown land near the Douglas Channel, and for the foreshore lease of submerged lands of up to 102 hectares for a berthing facility.
The area is just north of the Haisla Reserve land at Bish Cove where the KM LNG project will be located, but south of the proposed BC LNG and Enbridge terminals. It is all undeveloped and unserviced land within the boundaries of the District of Kitimat.
That could mean, if all projects go ahead there the west side of Douglas Channel from Kitimat almost to Jesse Falls would see three, perhaps fourm hydrocarbon facilities and terminals.
The agreement provides the Haisla with the options for up to a 60-year lease or the possibility of purchasing of the land outright.
The agreement also commits both parties to start work on land-use planning for areas around the Douglas Channel, which, the BC government says, has tremendous potential as a marine port.
A news release from the BC government today does not specify the backer of the terminal, While the most obvious candidate could be the Shell project LNG project (last fall Shell purchased the old Methanex site and the associated marine terminal at Kitimat) there is now media speculation that there could be other players involved, possibly another giant Exxon Mobile.
A news release from the BC government says that the “framework agreement” is a “significant step toward government’s commitment to have three terminals and their connecting pipelines operating by 2020, creating more than 1,400 ongoing jobs and generating an estimated $600 billion in economic activity over 30 years.”
The release says the agreement “provides the structure for a land purchase or lease that will allow the Haisla to partner with industry to develop a liquefied natural gas (LNG) facility and marine export terminal on the west side of the Douglas Channel in the areas around Haisla Reserve #6.”
The release quotes, Ida Chong, BC Minister of Aboriginal Relations and Reconciliation as saying:
Our government is working with First Nations like the Haisla to create new jobs and opportunities throughout British Columbia. This agreement builds on our strong partnership with the Haisla Nation, and it is the key to unlocking the vast potential of a whole new natural gas export industry in British Columbia which will provide long-term stability for families and communities.
It also quotes Ellis Ross, Chief Councillor of the Haisla Nation: –
This agreement allows the Haisla to look at the land on the west side of the Douglas Channel in a different light. This gives the Haisla and associated projects the certainty needed for the LNG proposals and other projects coming forward for our territory. If we are able to do this, the Haisla people will benefit, as will all British Columbians and Canadians.
Ida Chong and Ellis Ross sign the Haisla Framework Agreement in Vancouver, Sept.14, 2012 (Govt of BC photo)
The release goes on to say that the agreement signals a closer working relationship between the Haisla and BC in and around the Kitimat and Douglas Channel area. It commits both parties to start work on land-use planning for areas around the Douglas Channel, which has tremendous potential as a marine port. This certainty will allow other development projects in the area to proceed.
The agreement says the Haisla will work independently to find a suitable partner for the development of the land. Details of the lease or sale are expected to be finalized this fall.
Spectra Energy Corp of Houston, Texas, today announced that the company has signed a Project Development Agreement with BG Group PLC, based in the United Kingdom, to jointly develop plans for a natural gas transportation system from northeast B.C. to serve BG Group’s potential liquefied natural gas (LNG) export facility in Prince Rupert.
A map released by Spectra Energy shows the proposed pipeline project from the shale gas fields of northeastern BC to Prince Rupert (Spectra Energy)
A release from Spectra Energy and BG Groupsays each company will initially own a 50 per cent interest in the proposed transportation project. Spectra Energy will be responsible for construction and operation and BG Group has agreed to contract for all of the proposed capacity.
The approximately 850-kilometre, large diameter natural gas transportation system will begin in northeast B.C. and end at BG Group’s potential LNG export facility in Prince Rupert.
A fact sheet released by Spectra says the project would provide 50 to 60 permanent jobs on completion and about 4,000 jobs during construction.
The Spectra BG project will be the fourth using BC’s strategic position on the Great Circle Route to Asia to export liquified natural gas. TransCanada has signed a deal with Shell for a pipeline, Coastal GasLink, that would initially carry up to 1.7-billion cubic feet a day of gas to the Shell Canada project at Kitimat The Pacific Trails pipeline, could carry more than 1-billion cubic feet a day to the KM LNG partners ship where Apache, EOG and Encana are building a terminal at Bish Cove, south of Kitimat. The fourth project, BC LNG, would use either existing pipelines or share one of the proposed Kitimat pipelines to produce LNG for customers at a barge-based floating terminal at what is sometimes called North Cove, between the KM LNG project at Bish Cove and the proposed Enbridge Northern Gateway project which would be close to the Rio Tinto Alcan smelter.
The Spectra release says the new transportation system will be capable of transporting up to 4.2 billion cubic feet per day of natural gas. The project will connect with the Spectra Energy facility at Fort St. John, the centre of the still growing shale gas production and exploration in the northeastern BC.
Greg Ebel, president and chief executive officer, Spectra Energy says in the release:
We are excited to be partnering with BG Group, a recognized world leader in natural gas and more specifically, LNG. This project offers B.C. a unique opportunity to access new markets, strengthen its energy infrastructure, engage stakeholders in economic growth and job creation, and ultimately secure the province’s position as a competitive energy leader.
Furthermore, today’s announcement initiates our next wave of investment opportunity in B.C. We are ideally positioned to create further value for our investors by leveraging surplus B.C. natural gas supplies and facilitating its export to high-demand markets in Asia. This, in turn, will provide multiple opportunities for further investment in our gathering and processing facilities in the province.
Doug Bloom president of Spectra Energy Transmission West adds in the release:
For more than half a century, Spectra Energy has been a part of communities in B.C. This project will build on our expertise and track record of delivering natural gas responsibly, listening to the needs of Aboriginal and local communities, and protecting the environment, as we help deliver on B.C.’s energy potential.
Working together with affected stakeholders and based on preliminary assessments of environmental, historical, cultural and constructability factors, early conceptual routes have been developed. Spectra Energy and BG Group will continue engaging with interested and affected stakeholders, including Aboriginal and local communities, environmental organizations and regulatory agencies, to further refine the project route.
Fact box from Spectra Energy on the proposed pipeline to Prince Rupert (Spectra)
As is now common with proposed energy projects for northwestern British Colulmbia, Spectra has set up a website for consultations Energy for BC.
Spectra says: “The new outreach initiative is designed to engage with stakeholders on the jobs, revenues and environmental benefits that natural gas can create in British Columbia.”
Spectra also makes the usual commitment to “spend the next several years closely conferring with stakeholders and working through the permitting process for the proposed transportation system.”
Map from the United States Federal Energy Regulatory Commission showing LNG export terminal projects in North America (FERC)
What is it about the islands in Douglas Channel? First, Enbridge gets in to a lot of hot water, so to speak, for erasing the islands in Douglas Channel in an animation promoting the Northern Gateway Pipeline. See for example The Vancouver Sun on back on Aug. 16, 2012, when it picked up a story from the Times Colonist – Enbridge map sinks islands, angers critics. The controversial video segment showed Douglas Channel wide open for navigation, rather than marked with about one thousand square kilometres of mountainous islands. This map, created by the Leadnow.ca and Sumofus.org websites was widely used by the media to show the difference. Enbridge later amended its video with a disclaimer that it is “broadly representational.” A video by Shortt and Epic Productions “This is Not An Enbridge animation” showing the beauty of northwestern BC quickly went viral.
As this was happening, the United States government Federal Energy Regulatory Commission issued a map that shows Liquified Natural Gas import and export terminals across North America, a map that adds an island to the Channel–“Douglas Island.”
In fact, the map manages to get a lot about Canadian LNG projects wrong. It locates the BC LNG project on the non-existent Douglas Island. The company’s name Douglas Channel Energy Partnership actually gives the proper location this way
south of the Moon Bay Marina, within the District of Kitimat and the asserted traditional territory of the Haisla Nation. The site is approximately 10 km southwest of Kitimat and 7 km north of Bees Cove Indian Reserve 6 (Bish Cove)
The small cove where BCLNG will put its barges to create the LNG is often locally called North Cove.
The FERC map also misplaces the Shell LNG project, now known as LNGCanada, in Prince Rupert, even though Shell confirmed the Kitimat location on May 15, 2012. It also calls it Prince Rupert Island, although the town of Prince Rupert is actually located on Kaien Island.
The map does apparently get the KM LNG project somewhat correct, attributing it to Apache Canada, but leaving off Apache’s partners, Encana and EOG.
The map recently also appeared on the website of Oregon Public Broadcasting in an article Five Keys To The Pacific Northwest’s Natural Gas Export Debate by reporter Amelia Templeton, which outlines the growing controversy over the plans to export US LNG through Coos Bay, Oregon via the Jordan Cove Project.
It appears that in Oregon, the Coos Bay LNG project is becoming as controversial as the Northern Gateway project is in Canada.
The issues outlined by Templeton include the threat of expropriation (called “eminent domain” in the US and also a key issue in the debate over the Keystone XL pipeline on the plains). There are arguments on jobs versus the environment, especially the perceived threat to wild rivers and salmon spawning grounds. Finally one issue that is lower on the agenda in northwestern BC but a big worry in Oregon, the potential for a devastating earthquake along the Cascadia fault.
During the NEB hearings on the KM LNG (Apache/EOG/Encana) project in June, 2011, many of the “expert” witnesses urged that that first Kitimat project go ahead quickly because of perceived competition from Oregon.
Unlike in Oregon, LNG projects are generally perceived positively in the northwest and all three are going ahead, although not as quickly as originally planned due to market volatility among prime potential customers in Asia.
There’s one question about the Enbridge Northern Gateway project that many people ask and few can answer: Who is responsible for the port of Kitimat? Who would be liable should there be a disaster in the port? Nobody really knows.
Unlike many harbours in Canada, the port of Kitimat is “private,” although as the District of Kitimat says, “Transport Canada and other federal agencies continue to regulate navigation, security and environmental safety.” Kitimat has promoted that private status as an economic advantage.
If there’s a dispute, the question of responsibility and liability would probably end up in the Supreme Court of Canada, with the justices sorting out a historic puzzle. Or perhaps that historical puzzle could mean that the future of the port of Kitimat might be decided by the next B.C. provincial election.
Most of the other harbours in Canada are the responsibility of Ports Canada, a branch of Transport Canada or run by (usually not-for-profit) semi-public port corporations or local harbour commissions.
To find out why Kitimat is one of the few private ports in Canada, the first thing to do is watch Eliza Kazan and Bud Schulberg’s classic 1954 multiple Oscar winning movie, On the Waterfront, starring Marlon Brando, about how the mob ran the New York docks.
What has On the Waterfront got to do with Kitimat? It goes back to when the then Aluminum Company of Canada/Alcan (now Rio Tinto Alcan) was planning the Kitimat project; much of that work was done in New York both by employees and consultants. It was in 1949, that Malcolm Johnson, a New York Sun reporter, wrote a Pulitzer Prize winning series of investigative reports called “Crime on the Waterfront,” exposing corruption and Mafia involvement with the docks and the longshoremans’ union. The movie was based, in part, on that investigative series.
So in its planning, Alcan was determined that the longshore unions would not be involved in running the docks in Kitimat. The publicly stated reason has always been that Alcan wanted a seamless 24/7 operation that would be integrated with the aluminum smelter. Alcan would sign a collective agreement with the United Steelworkers that covered both the smelter and the docks. (CAW 2301 now represents most of the workers at the Kitimat smelter.)
When the Kitimat project was being finalized in 1949 and 1950 at the height of the Cold War, aluminum was a strategic commodity, security was high on the agenda, and it was not just the Soviet bloc but the mob as well that worried the authorities.
Add two factors. First, in 1949 the province of British Columbia was anxious to promote what would today be called a “mega-project.” Second, in the post-war era when corporations were relatively enlightened compared to today, Alcan was determined not to create the traditional “company town.”
To promote private-sector development of both hydro-electricity and aluminum, B.C. signed a rather loosely worded agreement with Alcan, noting that the project was going on “without investment by or risk to the government.” That agreement was implemented by the Legislative Assembly of B.C. by an equally wide open Industrial Development Act. One aim of both was try to ensure that future “socialists” would not expropriate the project.
Industrial township
With the province handing over the Crown land at the head of Douglas Channel at a very nominal price to Alcan, next came the creation of the District of Kitimat. With the town under construction, with few buildings and a small population, under normal B.C. practice, the area would be “unincorporated” and would not have a municipal government. But Alcan and the province came up with a new concept, which they called “an industrial township,” which would allow a municipal government to be established in anticipation of future growth.
The act that established the District of Kitimat put the boundaries outside the land owned by Alcan (excluding land reserved for the Haisla Nation).
The District of Kitimat has some legal responsibility for “wharfs” at the port of Kitimat. At council meetings, the environmental group, Douglas Channel Watch, has raised the question of the district’s responsibility and liability in case of an Enbridge incident but there’s been no definitive response from district staff. There is no municipal harbour commission as there is in other jurisdictions.
Up until recently, it was a convenient arrangement for everyone involved. Alcan, Eurocan and Methanex ran their dock operations without any interference, beyond standard Transport Canada oversight.
Things began to change in 2007, when the Rio Tinto Group bought Alcan, creating Rio Tinto Alcan. A couple of years ago, a senior staff source in the Canadian Auto Workers explained it to me it this way. “Alcan was a big corporation, but Alcan was a corporation with a big stake in Canada. As a union, we could do business with them. Rio Tinto is a transnational corporation with businesses in lots of countries but no stake in any of them. So it’s a lot harder now.”
With the Rio Tinto acquisition of Alcan, things tightened up in Kitimat. Negotiations between the District and RTA for the District to obtain more land stalled. Access to the estuary and other RTA lands that had been somewhat open under Alcan became more restrictive. In 2010, the Eurocan paper mill shut down along with its dock. In 2011, Rio Tinto bought the dock from West Fraser, owner of Eurocan. The Kitimat community noted that when the dock was repainted, it said just “Rio Tinto.” not “Rio Tinto Alcan” and that led to lots of gossip and wondering about what the Rio Tinto Group really plans for Kitimat. Last fall, Shell Canada purchased the former Methanex dock for part of its liquified natural gas operations.
With the Enbridge Northern Gateway project, the BC LNG project at North Cove and the KM LNG project at Bish Cove all along the shore of Douglas Channel and within the boundaries of the District of Kitimat which extends as far south as Jesse Lake, the question that has to be asked is, what happens now? If the Enbridge project is built, it will start just beyond the boundaries of the land owned by Rio Tinto Alcan.
That old arrangement between Alcan and the District of Kitimat is facing many new challenges.
The district once had a harbour master, but the position was eliminated because he had nothing to do. Alcan owned its docks, Alcan managed the docks and Alcan union employees worked on the docks. Later came the Eurocan (now owned by Rio Tinto) and Methanex (now owned by Shell) docks, again owned and operated by private corporations.
The District of Kitimat, nominally in charge, was content to sit back and collect taxes.
With the Enbridge Northern Gateway project, the B.C. LNG project at North Cove and the KM LNG project at Bish Cove all along the shore of Douglas Channel and within the boundaries of the District of Kitimat, the question that has to be asked is, what happens now? If the Enbridge project is built, it will start just beyond the boundaries of the land owned by Rio Tinto Alcan.
In Canada, ports and harbours are normally under federal jurisdiction and Transport Canada has oversight. But Alcan’s “private port” and the District of Kitimat were created by acts passed by the B.C. government.
The original agreement between the province and Alcan mentions an “aluminum plant” and “low-cost electrical power,” it doesn’t mention bitumen or liquified natural gas. Those provincial acts do not cover bitumen, supertankers and liquified natural gas.
B.C. Opposition Leader Adrian Dix has made it clear that his New Democratic Party opposes the Northern Gateway project. The federal government has said the province can’t really do anything to stop Enbridge Northern Gateway once Stephen Harper has decided that the pipeline project is in the national interest.
At this moment, Dix is a “contender” for the premiership, with Christy Clark and the B.C. Liberals dropping in the polls and with key members of her government deciding not to run in the election next spring.
So, if, as expected, Adrian Dix becomes the next B.C. premier, he has one very strong hand to play. Any act can, with proper legal advice, be amended by the B.C. legislature. That means the “socialists” so feared by Alcan and the premier of the day, Byron “Boss” Johnson, could alter the 1949 law. That in turn may upset the decades-old arrangement that created the private port which Enbridge is banking on.
On the opposite site of the world, Kitimat, site of the Rio Tinto Alcan aluminum smelter, is poised to become a major export port for Canadian liquefied natural gas.
Fog and low clouds shroud Kitimat harbour on the morning of June 27, 2012. (Robin Rowland/Northwest Coast Energy News)
If there is a major disconnect between the people who live in the Kitimat region and the rest of Canada, it is the question of vessel traffic on the Douglas Channel, with Enbridge spinning that there is already major tanker traffic on the Channel.
This section from the Northern Gateway website, is often quoted by Enbridge supporters, the vast majority of whom live in Alberta, thousands of kilometres away, have never been to Kitimat, but, somehow from Calgary or Fort McMurray, claim to know more about the Douglas Channel than people who live in Kitimat, including those who have sailed Douglas Channel for decades.
According to numbers from the Port of Kitimat, not only have vessels carrying industrial products been travelling the channels safely for some 35 years, but so too have ships carrying petroleum products—like the one featured arriving in the Port of Kitimat through the Douglas Channel in the picture above.
In fact, some 1,560 vessels carrying methanol and condensate called on Kitimat port from 1982 to 2009 – that’s over 3,100 transits of vessels dedicated to the transport of petroleum products.
When you add vessel traffic of all industrial activity into Kitimat port, the number jumps to 6,112.
To be clear…the number of ships servicing industry arriving at Kitimat port between 1978 and 2009 is 6,112. That’s 12,224 transits!
So in its questions to the Haisla, Enbridge asked:
c) Please confirm that the Haisla Nation is aware of existing and proposed
marine vessel activity within its Traditional Territory, including:
(i) fuel barges
(ii) cargo/container ships
(iii) commercial fishing vessels
(iv) condensate tankers
(v) liquefied natural gas tankers
Enbridge’s question was an obvious attempt to enhance their spin on vessel traffic on the Douglas Channel, by fishing for an admission that large vessels already ply the Channel, something the residents of the Kitimat, both First Nations and non-aboriginal already know well.
In its response, the Haisla Nation replies:
The Haisla Nation is aware of the existing and proposed marine vessel activity within its Territory, including fuel barges, cargo/container ships, commercial fishing vessels, condensate tankers, and liquefied natural gas tankers.
The Haisla Nation is also aware of the increased cumulative effect of additional marine vessel activity as projects are approved. The presence of this shipping increases the significance of the potential impacts of the project on Haisla Nation aboriginal title and rights, through cumulative impacts.
The Haisla Nation is responsible for some of the vessel traffic within its Territory, with modern forms of transportation having replaced canoes. Until legal developments in the early 2000s which have defined the content of the honour of the Crown with respect resource decisions and potential impacts on First Nations, the Haisla Nation had little say about the projects with associated vessel traffic in its Territory.
While standard petroleum product tankers, many carrying condensate, a natural gas product, have been visiting Kitimat for years, there have. so far, been no supertankers, much less Very Large Crude Carriers. No bitumen carrying tankers have visited Kitimat, a fact always ignored by the region’s critics in Alberta and by Enbridge on its website.
Not only the filing by the Haisla Nation but most of the testimony at the recent public comment hearings in at Kitamaat Village, were about the fear of the growing cumulative effect of greatly increased tanker traffic on the Channel.
In their filing with the Joint Review Panel, the Haisla Nation point to what they say is inadequate information provided by Enbridge on the Northern Gateway project, including:
To date the material provided by Northern Gateway does not adequately explain the known risks inherent to the proposed project and lacks significant detail with respect to the extent and degree of potential effects. The material provided by Northern Gateway does not provide sufficient information to determine how the risks inherent to the proposed project will be minimized, nor how the potential for significant adverse effects will be avoided.
There are a number of areas where the Haisla Nation has identified inadequateinformation, including but not limited to:
.
Design: there is a lack of information about detailed design considerations and monitoring procedures for pipeline integrity to avoid accidents and malfunctions due to corrosion, seismic events, and terrain instability. A notable example of this problem is in the Kitimat River Valley, where Northern Gateway has identified a high level of risk but has not offered any solutions. Another is the concern about the corrosive nature of the material to be transported. Northern Gateway denies that this is a problem, yet the US Department of Transportation Pipeline and
Hazardous Material Safety Administration (PHMSA) has commissioned a major study to investigate the corrosive nature of diluted bitumen in pipelines.
Materials to be transported: there is a lack of information about the fate, behaviour and effects of diluted bitumen, synthetic crude and condensate in the cold water marine and freshwater environment. This concern has been identified by federal government participants as well as by numerous intervenors, and Northern Gateway has acknowledged the need for more research and information. Yet, Northern Gateway has not agreed to undertake this work so that it is available for review in this process.
Volume of material to be transported: Northern Gateway’s application is for a pipeline that will transport 525,000 barrels of diluted bitumen per day. Yet the pipeline will be built to have a capacity of up to 850,000 barrels per day, and Northern Gateway’s application materials identifies future phases with increased volumes up to this amount. The risk assessments conducted by Northern Gateway are premised on 525,000 barrels per day, and fail to contemplate higher volumes which would affect a number of matters, including but not limited to: pipeline risk; volume of potential spills; and tanker traffic volume. The risk assessment needs to be revised, to address the risks associated with the pipeline transporting 850,000 barrels of diluted bitumen per day. Without this revision, Northern Gateway is asking the JRP to conduct its assessment on incomplete information that, by definition, understates the true potential risk of the proposed project.
.Baseline information: Northern Gateway has not undertaken the studies necessary to generate baseline ecosystem assessments for the Kitimat River drainage and Kitimat Arm, including seasonal habitat utilization by species and life stages throughout the watershed. This information is necessary to determine both stream crossing construction strategy and to assess the potential impacts of a spill, as well as to determine how to respond to a spill and when. A ‘one-size fits all’ approach to stream crossings during construction and spill response, when adequateinformation about seasonal habitat utilization by species and life stages throughout the watershed is lacking, is not adequate. This information is needed to determine when construction can proceed and what timeframe limitations there are for activities, to ensure that adverse effects to fish and wildlife are avoided. This information is also required, should a spill occur, to enable a proper assessment of the extent and degree of adverse effects as well as to provide a proper basis for restoration of affected habitat.
Past spills: there is a lack of information about the cause, effects, emerging information and lessons learned as a result of Enbridge’s large diluted bitumen spill into the Kalamazoo River. We know that 3,785,400 liters of diluted bitumen were pumped out of the pipeline, with a largeportion of that ending up in to the Kalamazoo River. We know the large volume of the spill was the result of numerous attempts to re-pressurize the pipeline despite repeated spill alarms being triggered. We know that government agencies stepped in to manage the spill because Enbridge’s response was not swift enough. We know that Enbridge’s clean-up costs to date exceed insurance coverage. We know that two years later Enbridge is still under a clean-up mandate from the US Environmental Protection Agency and the Michigan Department of Environmental Quality, and that portions of the Kalamazoo River are still closed to recreational use. What we do not know, however, is what the cause of the pipeline rupture was, what Enbridge has learned about how diluted bitumen behaves once it is released into the environment, or how a local population that relies on the river for fishing, for traditional harvesting and gathering of foods and medicines would have been affected.
Oil spill response: there is a lack of information about oil spill response and planning, including best practices, best available technology and the local on-site equipment and personnel required full-time to respond properly to a spill. This is largely due to the lack of adequate baseline information on which to base response planning. Further, Northern Gateway has demonstrated an unwillingness to fully consider how spill response would be carried out until it receives a certificate for its project.
Yet Northern Gateway seeks to rely on spill response as a mitigation strategy. If Northern Gateway seeks to rely on spill response as a mitigation strategy, it should provide in detail, prior to project approval, what its oil spill response would include and demonstrate that it is logistically, technologically and economically feasible. Northern Gateway has not done this.
.Mitigation measures: there is a lack of information about existing proven mitigation measures and their effectiveness in cleaning up an oil spill, restoring habitat and regenerating the species dependent on the affected habitat. This should be evaluated as part of project review, prior to project approval. Where Northern Gateway seeks to rely on a mitigation measure as a basis for project approval, it must demonstrate that the proposed mitigation will actually work.
Avoidance of any significant adverse effects must be the primary goal and dictate the design and location of the proposed project. Mitigation (e.g. complete resolution) of any potential environmental effects should be the preferred option, when all efforts to avoid such effects fail. Compensation for environmental effects must be a last resort and relied on only when best efforts have been made to avoid or mitigate effects. Unfortunately, the material submitted by Northern Gateway suggests that compensation is the primary option and lack of evidence on project design and procedures makes it impossible to evaluate how potential effects could be avoided or mitigated.
For example, Northern Gateway proposes to have spill interception points (river control points) along the Kitimat River Valley as part of its mitigation, but has no realistic plan in place that takes into consideration response delay times, rates of transportation, access issues or baseline ecosystem, fish and wildlife information for the receiving environment.
