The Daily Twigg: Clark gov't should try for better benefits for B.C.from proposed Northern Gateway oil pipeline

The Daily Twigg Vol. 1 No. 2 Jan. 6, 2012

Clark gov't should try for better benefits for B.C.from proposed Northern Gateway oil pipeline

Exports to Asia could start asap with oil-on-rail to ports, project could add local jobs with new refinery near tidewater

By John Twigg

In keeping with the focus on opinion polls in the previous issue, it's all the more interesting to closely examine a poll released Thursday (Dec. 5) which reportedly finds considerable support in B.C. for the proposed $5.5-billion Northern Gateway oil pipeline that would carry refined bitumen from the Alberta oil sands to an export terminal in Kitimat, B.C.

Public hearings by the National Energy Board and the Canadian Environmental Assessment Agency begin next week on the project, which is backed by Enbridge Inc., a major pipeline operator with its share of accidents in other parts of North America, but the project has already been contentious for years and even was a difference-maker in some local government elections last year.

Many local interests are rightly concerned about the threat of polluting spills and many provincial interests even more worried about the threat of oil tanker accidents in B.C.'s rough waters, while First Nations interests naturally point out that there is a blatant lack of treaties along most of the proposed pipeline route and so far there hasn't been much in it for them except added risks to their environments and communities.

As well, numerous environmental activists and climate-change hawks are opposed to the project simply because it involves increased environmental damage in the "tar sands" and increased carbon emissions into the atmosphere, though the latter logic fails to recognize that if the Alberta product is not used then other sources will be used, sources that probably are much more polluting.

B.C. Premier Christy Clark has been officially non-committal on the project, wanting to wait to see what the hearings produce, though after a recent meeting with new Alberta Premier Alison Redford she acknowledged that B.C. also has some moral and pragmatic obligations to help facilitate trade for the rest of Canada, and for its overseas customers who already trade in other commodities.

The issue was virtually ignored at the B.C. NDP provincial convention but B.C. Conservative leader John Cummins issued a statement suggesting how the hearings process could be accelerated for a worthwhile project that would create many new and high-paying jobs and send a positive message to investors in other projects.  

Knowing that background, what does it mean when Ipsos-Reid surveys about 1,000 people on-line and finds that 48 % of respondents favour the proposed project, 32 per cent oppose it, and 20 per cent are undecided? The survey was done on Dec. 15 and appears to be the same one that asked respondents about their approval or disapproval of Clark vs NDP leader Adrian Dix and other politicians, which we analyzed in the previous issue.

The survey questions - which were commissioned by Enbridge - seem to indicate that while there is a high level of undecideds based on inadequate information those who are aware of the project tend to support it.

However at least one news item noted that an earlier poll commissioned by opponents of the project found a similar split but it was against the project, which naturally raised comments about how different wordings in different questions can trigger different responses, such as whether to omit or include words about tankers, the pipeline's contents and where they come from, e.g. tar sands versus oil sands.

What both polls have in common is the finding that a major proposed project is contentious and would benefit from a public-hearings process that is accessible and transparent and truly informative, which is not an impossible expectation. As Ipsos-Reid pollster Kyle Braid pointed out, "A lot of people don't know much about it yet." So yes let's see what the hearings bring out.

Premier Clark should seek better spinoffs for B.C.

But meanwhile it would behoove Ms. Clark to be more aggressive and more creative in lobbying for improvements in the project, not merely getting assurances of state-of-the-art pipelining techniques but also getting things like Enbridge posting performance bonds to ensure funds will be available for emergencies if any, and Enbridge committing to some local hiring programs with internship and apprenticeship features, and Enbridge ensuring there would be more value-added content, such as participating in the construction of a conventional refinery near tidewater (B.C.'s economy now being overly dependent on only a few petroleum product refineries, mainly Chevron in Burnaby) and maybe establishing a regional office in Vancouver.

However there's a good argument for doing more than that because a study of the project's benefits by the University of Calgary's School of Public Policy found that over about 15 years Alberta would gain $10.5 billion in activity and 52,000 person-years of jobs, Ontario $10 billion and 44,000 person-year jobs and B.C. only $131 million and 2,000 person-year jobs.

In other words, there is virtually nothing for B.C. in the Enbridge proposal except added pollution impacts UNLESS A SPECIAL EFFORT IS MADE TO CREATE SPECIAL SPIN-OFFS FOR B.C. !

So going further, B.C. could for example insist that if it is going to co-operate on the project (and not for example tax or regulate it to death) then the project proponents would have to create some kind of a payment system to First Nations to recognize their interests in unceded lands, which could include preferred share holdings that would pay fixed perpetual dividends or royalties with a small proportion from gross volumes and another from project net income, with some concomitant understandings that First Nations taking such benefits would have to co-operate in facilitating it too, notably by not launching long and costly lawsuits against it.

You may call that a bribe or a payoff if you wish, but really it is simply a sensible business move, to buy support from an affected party, and it could even become a step towards finally setting land claims in the province.

That may sound like a pipe dream to some readers but actually those kinds of arrangements are already in place on a similar proposed project nearby, the construction by B.C. LNG Export Co-operative of a liquefied natural gas development worth about $5 billion on Haisla First Nation land on Douglas Channel near Kitimat, according to a Vancouver Sun story by Derrick Penner on Dec. 13. The project would use an existing natural gas pipeline left behind when Methanex Corp. closed a methanol plant there are few years ago, as well as using spare capacity in the Pacific Northern Gas line to Kitimat.

The Kitimat LNG project even enjoys the support B.C. NDP energy critic John Horgan, who points out that B.C. has been facing a glut of gas supplies for several years now and so developing new markets offshore would be beneficial to the provincial economy and to government revenues. As well, if a natural gas pipeline does rupture the damage is usually relatively minor because the escaping gas simply disperses in the atmosphere. Yet another benefit of natural gas is that it burns relatively clean and so releases fewer greenhouse gases than would say tarsands crude.

Project could start early by using railway cars

One other feature that Ms. Clark could push if she wanted to be more creative and constructive on the Northern Gateway proposal would be to investigate and maybe even support the possibility of beginning Enbridge's shipments even before the pipeline construction begins by using railway oil-tanker cars to carry Alberta oilsands output to tidewater.

As a recent profile of Canadian Pacific Railway Ltd. noted, part of its plans to boost its earnings include expanding its thriving "oil-on-rail" business from the North Dakota Bakken oilfields presumably into the U.S. Midwest by adding carloads of crude from Alberta and Saskatchewan too, which suggest that rail car shipments from Edmonton to (probably) Prince Rupert could work too.

But really the challenge of finding new markets for the truly massive reserves of oil in Western Canada (roughly the same as in the whole Middle East) comes down to three choices, moving it southward into the U.S. where refineries are now overly-dependent on unstable and costly oil deliveries from the Middle East and Venezuela, moving it eastward to Central Canada (which is a long distance to a small and already-well-supplied market), or moving it westward through B.C. to Asia via large tankers.

In terms of geopolitics the ideal solution is to send Alberta energy southward to back out unreliable imports but of course U.S. politics in a Presidential election year of course have perhaps-temporarily thwarted that "Keystone" proposal and meanwhile the huge Chinese market is desperate for more oil supplies, especially with Iran threatening to block shipments through the Strait of Hormuz, possibly even triggering a world war. (And don't believe that nonsense about China's economy slowing down - all that's happening is that its meteoric rates of growth are becoming more sensible and manageable.)

There's no replacing oil for decades to come

And finally, here's one more piece of common sense: as much as we would like to see the world suddenly convert to clean, green and renewable sources of energy for all of its needs, the reality is that that is just not going to happen any time soon and meanwhile whether we like it or not the dominant fuel will be oil for many decades to come, especially for transportation, and with forms of natural gas close behind, followed by coal for electrical generation and steelmaking, and the rest of the fuels are relatively minor, with the possible exception of uranium in its nuclear version which regrettably takes tens of thousands of years to dispose of in its toxic waste form and so probably should be phased out before coal is, IMO.

I'm not a great fan of the International Energy Agency, which like many international bodies tends to advance its own special interests, but in November its deputy executive director Richard Jones made an particularly cogent analysis to the Sun's Peter O'Neill in Ottawa to the effect that the world is going to need energy from all sources to meet the still-rising demand in coming years and that coal-fired power plants are the main source of global warming because they are much dirtier than oil sands [actually one could debate what is the main source of global warming and even whether anthropogenic sources are greater or less than natural sources such as erupting volcanoes but for the sake of argument we'll let his comment stand here].

"Obviously we think over time fossil fuels should be phased out, but we recognize that for the foreseeable future there's going to be major demand for oil and gas. And some of that demand might as well be filled by oilsands because of the security benefit," said Jones, meaning that U.S. oil imports from the Middle East and Venezuela could be too easily disrupted while imports from Canada could be reliable for many decades more.

But of course China knows that too, and is quite happy to see America's poisoned partisan politics preventing the urgent development of a major new south-flowing pipeline.

So, Ms. Clark, with that reality in mind you should crank up your jobs rhetoric and apply it to Enbridge and Ottawa and see what you could extract from a project aimed at finding a much-needed market for Canada's massive in situ oil reserves. Maybe start with proposing a few trainloads of Alberta oil sent to a small demonstration oil refinery to be built near Kitimat or Prince Rupert and see who else buys in.

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