BC re-opens the dilbit vs "regular" crude debate
BC's NDP government stirred the pot again this week by announcing another round of public consultations for its emergency response plan in the event of a diluted bitumen (dilbit) spill.
The province says it wants to limit additional exports of dilbit until it gets certainty over its "ability to adequately mitigate spills." The move is yet another attempt to throw up roadblocks in Kinder Morgan's expansion of its Trans Mountain pipeline.
DILUTED BITUMEN VERSUS "REGULAR" CRUDE
There have been numerous studies on the differences between dibit and conventional crude, with respect to corrosivity and clean-up ability after a spill.
Research shows that dilbit and conventional crude essentially behave the same during a spill, and dilbit is no more corrosive than "regular" crude. Oil sands opponents say dilbit is more toxic and difficult to clean-up, pointing to Enbridge's spill in the Kalamazaoo River, where the dibit separated into bitumen and condensate due to the company's delayed response. The condensate evaporated, leaving the bitumen to sink to the bottom of the river.
BC STEPPING ON MANY TOES
Export terminals fall under federal jurisdiction, since they serve the country's national interest. Spill response was already thoroughly reviewed as part of the Trans Mountain Expansion regulatory review process. The federal government has already poured billions into boosting BC's marine response plan, none of which has appeased project opponents.
The Trudeau Liberals say TMEP is in "Canada's national interest" and they remain committed to helping Kinder Morgan get the line built. Beyond lip service, the Liberals have so far been reluctant to flex their muscles for fear of losing 4 valuable seats in the Vancouver area, where the pipeline faces its greatest opposition.
Alberta Premier Rachel Notley called the move an attack on jobs, Canada's Constitution and Confederation. Newly minted Saskatchewan Premier Scott Moe condemns BC's latest attempt to stop the Trans Mountain Expansion, throwing his support behind the province of Alberta.
CUTTING OFF YOUR NOSE TO SPITE YOUR FACE
It's unclear how Alberta can retaliate against BC's latest attempt to choke off crude exports. Alberta has suspended talks with BC over plans to purchase electricity, although it will need that electricity given as it phases out coal-fired power. Another idea was to impose a ridiculously high toll on BC's eastbound natural exports pipelines, although many of those producers and pipeline operators are Alberta-based.
Alberta opposition party leader Jason Kenney would like to see Alberta withhold shipments on the existing Trans Mountain line, starving BC of its main crude and refined products supply. But that move would also likely send the heavy oil differential through the roof. The discount on Canadian heavy oil widened to over US$30 a barrel this week as Alberta's crude output continues to rise while export capacity remains constrained. The widening discount is hurting Alberta's crude producers despite a recent run up in global oil prices.
The timing of BC's announcement is interesting given the Green Party's recent threat to topple the fragile provincial government over Premier Horgan's travels to Asia to drum up support for LNG, which the Greens oppose. Green Party Leader Andrew Weaver was also miffed at the NDP for not pulling the plug on the Site C hydroelectric dam, as promised during the coalition talks.
BC says they will appoint an "independent scientific advisory panel" who will determine "if and how" dilbit can be safely transported and cleaned up in the event of a spill. More details are expected by the end of February.
The Trans Mountain Expansion will boost Alberta's export capacity by 590,000 bbl/day and increase oil tanker traffic out of the Port of Vancouver to about 1 per day. The expansion's in-service date has already been delayed by one year to late 2020. So far, Kinder Morgan has not yet commented on BC's latest move.