Trans Mountain Expansion clears the first hurdle - now comes the hard part
After a 2 year review, the National Energy Board (NEB) recommends the federal government approve Kinder Morgan's proposed expansion of the Trans Mountain pipeline (TMEP) subject to 157 conditions. The NEB concludes the project is in Canada's public interest and that the benefits outweigh any potential risks.
Among the benefits cited by the NEB:
- market diversification and improved competitiveness for Canadian crude
- considerable job creation during construction and operation, mostly located in BC
- economic benefit to local communities through purchase of goods and services required during pipeline construction
- increase in government revenues at the municipal, provincial and federal level.
The most significant risks outlined by the panel:
- increased greenhouse gas (GHG) emissions by the extra oil tankers (that run on diesel), which is not reported as part of Canada's GHG emissions and represents a very small fraction of the country's total emissions
- additional stress on the Southern Resident Killer Whales, a small group of 80 whales that reside off the coast of Oregon, Washington State and BC
- disruption to land owners during construction of the pipeline
- the increased probability of spills along the line, in the harbour or at the loading terminal.
The NEB outlined 157 engineering, safety and environmental conditions. Some of the standard boiler-plate items include:
- ensuring safety and integrity of the pipeline
- ensuring environmental protection of land, water and air
- ongoing consultations with land owners and aboriginal communities
- committing to pipeline inspections during construction and operation
- submitting all engineering drawings and geotechnical reports prior to construction.
Kinder Morgan was asked to quantify GHG emissions for the oil tankers that dock at their Westridge Marine Terminal. The company must also purchase carbon offset credits for emissions attributed to construction of the pipeline. Those emissions result primarily from the clearing of trees and vegetation around the pipeline's right of way, which Kinder Morgan failed to take into account.
UPSTREAM GHG EMISSIONS
Environment and Climate Change Canada has already released its report on upstream greenhouse gas emissions that could result from the Trans Mountain expansion. Among its findings:
- The entire Trans Mountain line emits 20 to 26 megatonnes (Mt) of CO2 equivalent per yer. The expanded portion of the pipeline represents 14 to 17 Mt/year. Those emissions are in reference to the extraction, transportation and combustion of the petroleum contained in the pipeline.
- Upstream emission (which are a function of oil production) will vary with oil price, availability of other transportation modes (such as crude-by-rail) and whether other pipelines are built.
- If no other pipelines are built, then TMEP would not increase GHG emission since it would carry oil already in production or will be in production by 2019.
- If the price of oil increases and more pipelines are built, it is likely more oil will be produced in Alberta, which will increase Canada's GHG emissions.
The GHG emission report is draft and open for public consultation for the next 30 days.
REFORMING THE NEB
The federal government has vowed to modernize the NEB, calling it an outdated organization, too heavily weighted towards the energy sector and staffed with too many technical personnel. The federal NDP and Green Party have called the review process a sham, criticizing the NEB for failing to undertake sufficient public consultation. The Liberals have introduced Interim Measures for Pipeline Reviews while it reforms the NEB process for pipeline approvals.
As a step towards restoring public confidence, Natural Resources Minister Jim Carr announced a new 3 member panel to solicit feedback from the public and local indigenous groups. The panel will present their findings to the public and the federal government in November. The federal government has promised to give its blessing (or not) by Christmas.
TANKER TRAFFIC CONTROVERSY
Vancouver-area municipalities remain opposed to the pipeline, regardless of the benefits or safety measures in place. Area mayors have gone to extreme measures to scare residents about the dangers of oil tankers, going so far as providing Twitter alerts whenever a tanker pulls into port. Opposition groups have commissioned several doomsday reports outlining the catastrophic consequence of an Exxon-Valdez-type spill in the Burrard Inlet. However, many have pointed out that oil spills that occur in BC's harbours come from cargo, container and passenger ships, which are not subject to the same safety standards as petroleum tankers.
Traffic in the harbour has grown dramatically in the past few years due to increased trade. The Straight of Georgia sees 20,000 vessels per year. Exports of Canadian crude out of Kinder Morgan's Westridge Marine Terminal in Burnaby is currently about 1 per week and will grow to 1 per day if the expansion goes ahead.
Kinder Morgan plans to use Panamax tankers (less than 75,000 tonnes DWT) and Aframax tankers (75,000 to 120,000 tonnes DWT) for crude transport. Those tankers are considerably smaller than the Very Large and Ultra Large Crude Carriers (VLCC and ULCC) used on open waters. The NEB panel concluded the risks of oil spills in the harbour are very low.
OPPOSITION FROM THE PROVINCE OF BC
The province of BC has outlined several conditions that remain to be met before it can support the project, including better spill response plans and more revenue sharing for the province and aboriginal groups. BC will be undertaking its own environmental review. The NEB has already concluded most of the economic benefits incurred during construction and operation of the pipeline will be in BC.
It is unclear whether provinces have the right to veto such a project. Pipelines that cross provincial borders are under federal jurisdictions.
If the federal government approves the project in December, construction could start as early as late 2017 with oil flowing through the line by the end of 2019.
The NEB decision concludes a multi-year review process but is only the first step in getting a pipeline built. It's worth noting Enbridge's Northern Gateway Pipeline was approved by the NEB in 2013 with 209 conditions but the project has since been stuck in political limbo.
- The existing Trans Mountain line runs 1,000 km from the Edmonton Terminal to Burnaby, BC with a branch to Washington State. The current capacity is 300,000 bbl/day. The line has been in service since 1953 without major incident. The existing Trans Mountain line carries a mix of refined products and crude oil.
- The US$5 billion expansion will involve twinning the pipeline along the existing route, using 90% of the existing right-of-way. The capacity will increase to 890,000 bbl/day. The project also includes:
- 6 new storage tanks at the Edmonton Terminal
- 1 new tank at the Sumas Terminal in Abottsford, BC
- 14 new storage tanks at the Burnaby Terminal
- 2 new loading docks at the Westridge Marine Terminal
- The new line will be specifically designed for diluted bitumen but will also have the capacity to carry light oil.
- Once completed, it is likely BC's lower mainland will no longer need to import fuel from Washington State or rely so heavily on crude-by-rail imported from Alberta.
- Kinder Morgan has already secured customers for the new line, which include:
- BP Canada
- Canadian Natural Resources
- Cenovus Energy
- Devon Canada
- Husky Energy
- Imperial Oil
- Statoil Canada
- Suncor Energy
- Total E&P Canada.
There is only one small refinery in the Vancouver area with a capacity of less than 55,000 bbl/day operated by Chevron. Chevron did not book capacity on the expanded Trans Mountain line. Conspiracy theorists have suggested Chevron may close the plant if the Trans Mountain line is expanded. This may explain in part why the city of Burnaby is so opposed to the pipeline project.
Full text of the 533 page report and conditions can be found on the NEB website (www.neb-one.gc.ca).