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OIL & WATER-Part Three: Is B.C. destined to be Alberta's oil superport?

Demonstrators march towards the Kinder Morgan Westridge Terminal in Burnaby in August 2011, to protest the company
Demonstrators march towards the Kinder Morgan Westridge Terminal in Burnaby in August 2011, to protest the company's plans to expand its Alberta-B.C. pipeline.
— image credit: MARIO BARTEL/Black Press file

Kinder Morgan Canada announced this month it will seek to twin its Trans Mountain Pipeline between northern Alberta and Burnaby. The twinning would mean a huge increase in the amount of crude that transits the pipeline, and in the number of oil tankers passing through local waters each year. This third instalment of a three-part Black Press series looks at the politics of the pipeline, and possible alternatives.

•••••

Hundreds more oil tankers may soon ply B.C. waters to carry crude oil from Alberta's oil sands to Asia via one of two very different routes.

Most public focus so far has been on Enbridge's controversial Northern Gateway project, which would run a new pipeline across northern B.C. to Kitimat.

But several industry watchers rate that project — beset by opposition from environmental groups, northern communities and First Nations – as a long shot.

Much more likely to proceed, they say, is Kinder Morgan's potential expansion of its Trans Mountain pipeline, which could mean a more than six-fold increase in the amount of oil now being exported by tankers out through Burrard Inlet.

The politicking will be intense to persuade B.C. to accept at least Kinder Morgan's proposal, if not both projects, to satisfy national strategic interests, according to SFU public policy professor Doug McArthur.

"The federal government is increasingly committing itself to a high level of expansion of the oil sands and making it almost the main economic issue in the country," he said.

"I think B.C. will be under tremendous pressure from the federal government."

The Enbridge pipeline faces huge hurdles.

It is a new route across sensitive ecosystems, mountainous terrain and salmon-bearing rivers, all of it in the traditional territory of aboriginal bands that have come out staunchly against the project.

By comparison, McArthur said Kinder Morgan's Trans Mountain expansion amounts to twinning its existing pipeline on an established right-of-way with few of the technical or legal challenges facing Enbridge.

Tankers already carry oil on a shipping route and with procedures that are well established, in contrast to Enbridge, which would introduce big tankers to the more challenging waters of the north coast.

PHOTO: Rich Coleman

"Kinder Morgan is the much easier one for them to get in place," McArthur said. "In terms of picking the low-hanging fruit, I would think they would push very hard to get that one through. But I think they want both."

Could B.C. say no to both pipelines and refuse to act as Canada's oil port to Asia?

McArthur predicts a provincial government that actively blocks both projects – rather than merely register its opposition – would feel Ottawa's wrath.

"There would be a huge battle," he said, adding future federal grants and support might be at risk.

"The federal government would pull out every possible means they have to make life very, very difficult for B.C."

CAUTIOUS WORDS

So far provincial officials have not taken a stand on the Northern Gateway proposal, despite pressure to do so.

B.C. Energy Minister Rich Coleman is also circumspect on Kinder Morgan's plans, but did note the Trans Mountain pipeline has a lengthy track record.

"This one's been in operation for a long time, and it does show that pipelines can operate safely for generations," he said.

"When I talk to people in my own riding, they have no idea that we have been bringing tankers into the Port of Vancouver for about 50 years."

A recent Mustel Group poll found Metro Vancouver residents were split on whether they support a Kinder Morgan expansion, increasing tanker visits to nearly 360 a year.

Opposition energy critic John Horgan, who may chart B.C.'s course on the issue if the NDP take power in 2013, said there is anxiety in the NDP caucus and the broader public about the volume of oil that would be shipped through sensitive waters.

"It is cause for concern," he said, adding he will wait to see Kinder Morgan's formal proposal, which could be two years away, before taking a position.

He noted the existing pipeline does provide benefits – refining jobs in Burnaby and lower-priced gas as a result – that should be maintained.

The NDP opposes Enbridge's Northern Gateway pipeline, he said, because it offers B.C. only risk and is strongly opposed in the northwest.

"Our view is that's a non-starter," Horgan said. "Kinder Morgan is a more complicated question, and one that has a track record of 50 years of more or less unblemished activity. So we'll have to measure that when the time comes."

PHOTO: John Horgan

He said B.C. needs to better understand tanker traffic risks and how to address them.

"There's going to be an increase in volume, so does that increase the risk? Yes it does, but we can measure that once we've got a clear understanding of what the increase in tanker traffic will really mean."

B.C. Conservative leader John Cummins has come out in support of the Enbridge pipeline, but the former commercial fisherman is more cautious about the Kinder Morgan expansion.

"There's huge issues there with the shipping through Vancouver harbour and those issues have to be addressed," he said.

"We'd be supportive," Cummins said. "But they'd have to satisfy concerns about increased tanker traffic."

REVIEWS REQUIRED

Kinder Morgan formally announced its Trans Mountain expansion plan April 12, kicking off 18 to 24 months of public consultations with affected communities and First Nations.

That would be followed by an application to the National Energy Board, leading to NEB hearings like those underway on the Enbridge pipeliine.

A federal environmental assessment would also be required, but environmental groups have long distrusted them.

Now they point to provisions in the federal budget to speed up major project reviews and scrutinize the charitable status of environmental non-profits as further evidence the federal government will expedite oil pipelines through B.C. at the expense of safety.

"They're weakening something that's already weak," said Wilderness Committee spokesman Ben West. "It doesn't fill me with hope and optimism that there's going to be a serious look at what the real impacts of this project are going to be."

But even if pipeline and tanker shipments were completely safe, West says he and many in B.C.'s environmental movement would still oppose them to try to keep the vast oil reserves of the oil sands in the ground.

"I just think our coast should not be a major point for oil shipments," West said.

"Given the severity of climate change, it's fundamentally irresponsible for us to be looking at ways to profit from something like this."

HUGE PROFITS

While environmental issues loom large in B.C., vast profits are at stake for oil patch companies in Alberta looking for an outlet that eases their dependence on U.S. buyers.

Canadian producers earn $20 to $30 less for each barrel of oil right now than if they were able to sell freely from a west coast port.

"Once you're at tidewater, you're in a global market and you remove that differential, that reduction you lose by being in the U.S. market," said Travis Davies, spokesman for the Canadian Association of Petroleum Producers.

More than 1.7 million barrels a day of oil is now being pumped from the oil sands and that's forecast to reach three million a day by 2020 and 3.7 million by 2025 – an increase equivalent to twice the combined extra capacity of the Northern Gateway and Trans Mountain proposals.

"The capacity is such that both pipelines will be needed," Davies said.

He predicts the oil will move one way or another.

Pipeline companies like Kinder Morgan argue they are by far the safest conduit.

But railways have also begun exporting oil in tanker cars. Most of that traffic so far heads straight south to the U.S., but Davies said CP Rail has begun some limited shipments to the west coast for export.

ANOTHER OUTLET

The pipeline-on-rail scenario isn't the only possibility.

Kinder Morgan's Trans Mountain pipeline forks at Abbotsford, with a southern spur carrying oil to refineries in Washington State at Cherry Point and Anacortes.

Observers say it's not inconceivable that Kinder Morgan could build a new terminal on Puget Sound, if it were able to twin its main pipeline but fails to win support for increased tanker shipments through Vancouver.

Shunting Alberta oil into Washington state and onto tankers there would mean they would still sail through the Southern Gulf Islands and up the west side of Vancouver Island – as do the more than 400 tankers that each year bring oil from Alaska to the Washington refineries.

"Once we pipeline it down there we have no control over the way they run the ships," industry observer John Hunter said. "I'd rather it be our jobs and with ships we control."

Kinder Morgan spokesperson Lexa Hobenshield said the firm has no intention of developing a second tanker export terminal on Puget Sound.

But groups like the Georgia Strait Alliance say the mere possibility is one more reason to stop the Trans Mountain twinning in its tracks.

"We would just be pushing the risk down into the U.S. side, which does us no favours because the Salish Sea is interconnected," said executive director Christianne Wilhelmson.

"If we're just shifting things it's not a win for us. We need to stop the twinning of the pipeline because we need to stop the tar sands oil from coming here. It's an energy source from the past."

– with files from Tom Fletcher

KINDER MORGAN'S TRANS MOUNTAIN PIPELINE

  • $5 billion
  • Expansion would increase current 300,000 barrel per day capacity to 850,000
  • Uses existing corridor that runs from northern Alberta into B.C. near Mount Robson and down the Thompson River through Kamloops to the Lower Mainland. Some deviations expected from existing corridor in built-up urban areas.

ENBRIDGE'S NORTHERN GATEWAY PIPELINE

  • $5.5 billion
  • 550,000 barrel per day capacity
  • New route across northern B.C. to a terminal at Kitimat.

Tanker ban unlikely

Environmental groups would like to ban oil tanker traffic outright in B.C. waters.

But most observers see little scope to block tanker exports from Kinder Morgan's line that have happened for decades.

B.C. couldn't outlaw tanker shipments without cutting off the supply of diesel and gasoline to Vancouver Island or other communities on the B.C. coast.

And such a move could interfere with U.S. tanker shipments through international waters, triggering a trade dispute.

OIL & WATER SERIES INDEX

A Black Press series exploring the logistics, risks and politics of Kinder Morgan's proposed oil pipeline expansion.

PART 1:

How safe are oil tankers travelling southern B.C. waters?

Notable accidents involving oil

Boaters concerned about more oil tanker traffic coming to Burrard Inlet

Airlines pursue Richmond pipeline to satisfy growth

PART 2:

What happens if there’s an oil spill in B.C.?

‘People of the Inlet’ oppose Kinder Morgan pipeline expansion

PART 3:

Is B.C. destined to be Alberta's oil superport?

Burnaby company in the business of disaster response

Series team members on Twitter: Jeff Nagel, Wanda Chow, Todd Coyne, Sean Kolenko, Matt Hoekstra, Mario Bartel, Tom Fletcher & Chris Bryan

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