Troubled times in Canada
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Ontario, Quebec governments schedule own pipeline probes of safety, benefits
Gary Park For Petroleum News
Obstacles piling up in front of Canada’s petroleum industry and its government allies are accumulating so rapidly that hopes of exporting oil sands bitumen and LNG risk being stonewalled.
Ontario and Quebec, by far Canada’s most populous and industrialized provinces, have decided to step around Canada’s Constitution and conduct their own reviews of two pipeline proposals — TransCanada’s Energy East and Enbridge’s Line 9 reversal and Line 9B expansion.
Both projects are trapped in the whirlpool created by the successful stalling tactics used by opponents of TransCanada’s Keystone XL, Enbridge’s Northern Gateway and Kinder Morgan’s Trans Mountain expansion.
The campaign against resource development has extended to demonstrators invading the front lawn of British Columbia Premier Christy Clark’s Vancouver home, where they erected a fake rig to protest the province’s use of hydraulic fracturing to extract the gas needed as feedstock for LNG, and frightened her 12-year-old son in the process.
Paying no heeded to the prospect that Energy East and Line 9 could replace about 700,000 barrels per day of foreign crude from the Middle East and South Africa to fuel their refineries and attract new investment and new jobs to an ailing refining and petrochemical sector, Ontario and Quebec have opted to appease environmentalists by holdings hearings and conducting probes that are in the realm of Canada’s National Energy Board, NEB.
Ontario, Quebec hearings The Ontario government ordered its energy board will hold public hearings into TransCanada’s proposed Energy East project, just hours before the Quebec government named a parliamentary commission to investigate Enbridge’s planned Line 9 reversal to deliver domestic crude to refineries in the Montreal and Quebec City regions. They gave no indication of setting deadlines on the reviews.
The NEB is expected to make its final recommendations on Line 9 early next year, while TransCanada has said it should file its Energy East application with the NEB in 2014.
Both provinces conceded that the Canadian government, through the NEB, has jurisdiction over the approval of pipelines that cross provincial borders, but hinted that they are taking a “me-too” lead from British Columbia’s success in extracting concessions from Alberta in return for supporting Enbridge’s 525,000 bpd Northern Gateway pipeline from the Alberta oil sands to a Pacific Coast terminal for export to Asia and California.
More detail, conditions Ontario Energy Minister Bob Chiarelli told reporters his province wants more detail on pipeline safety and greenhouse gas emissions related to the 1.1 million bpd Energy East pipeline, as well as ensuring First Nations get consulted and the province obtains jobs and economic benefits.
Quebec Environment Minister Yves-Francois Blanchet told reporters his government will develop a set of conditions it would expect the federal government to impose on a Line 9 approval.
He said that despite Ottawa’s role it “can’t disregard” the views of the Quebec legislative assembly, especially regarding measures to protect the environment.
Yet the two provinces, without explaining why, effectively passed up their opportunity in late October to make oral presentations before the NEB hearing on the Line 9 application to carry 300,000 bpd of Western Canadian crude to Ontario and Quebec refineries.
Benefit arguments ignored They have also ignored observations by Al Monaco and Steve Williams, chief executive officers of Enbridge and TransCanada, respectively, that six refineries have closed in Quebec over recent years, and have made the case that the existing Suncor refinery in Montreal and the Valero plant near Quebec City, which account for 20 percent of Canada’s refining capacity, could be more profitable if their proposals go ahead.
Williams told a Calgary business audience earlier in November that Energy East would improve the profitability of the 137,000 bpd Montreal refinery and secure a “long-term future” for the facility.
He said the Canadian Energy Research Institute has estimated Quebec stands to gain C$14 billion in investment and taxes from new oil sands development over 25 years, including the possible addition of a coker at the Suncor refinery.
Michel Leblanc, chief executive officer of the Montreal Board of Trade, said public support for the pipelines requires clear assurances of investment in Quebec’s refining industries, which, he insisted requires assurances that Quebec will mostly be a transit route for Energy East to deliver crude to Saint John, New Brunswick, for export.
Lines in ground as far as Montreal What mystifies supporters of Energy East and Line 9 is that both pipelines are already in the ground as far as Montreal.
Energy East involves the conversion by TransCanada of an underutilized natural gas line and Line 9 proposed the reversal of a line that ships imported crude from Montreal to a refinery hub in Sarnia, Ontario.
Taking a conciliatory stance, Alex Pourbaix, TransCanada’s president of energy and oil pipelines, said his company “welcomed the chance to get the facts out about the benefits (of Energy East). The process (Chiarelli) outlined, gives us another opportunity to do that.”
Alberta Energy Minister Ken Hughes warned against any thought of imposing additional pipelines tolls on the interprovincial shipment of goods if that would reduce the competitiveness of the oil sands and hurt manufacturers in Ontario and Quebec.
But Hughes told said the chance to examine the impact of the pipelines “can only help people understand the importance of energy in their lives.”
Opposition to LNG On the LNG front, a coalition of environmental groups has filed court action against British Columbia’s Oil and Gas Commission and gas producer Encana over the use of water from lakes and rivers in fracking for shale gas.
A petition claims the province’s energy regulator has been granting repeated short-term water permits in violation of a provincial water act, limiting approvals to two-year terms.
The coalition estimates that the commission has allowed up to 2 million liters a year of fresh water to be drawn from lakes, rivers and streams to be mixed with chemicals and sand for injection to the gas deposits.
Encana declined to comment and the commission said it takes its responsibility for water allocation “very seriously and all applications go through a thorough review process” to ensure water levels are maintained.
The agency has reported that 20.4 million cubic meters of water was approved for withdrawal for various purposes in 2012 and 7 million cubic meters went to fracking.
The British Columbia government has also been accused of sitting on a report commissioned by its climate-change secretariat that measures greenhouse gas emissions associated with developing LNG.
Clark said Nov. 12 she will not let the climate-change agenda set by her predecessor, Gordon Campbell, stand in the way of LNG development.
“In terms of greenhouse gas emissions, we can either decide that we want to get to ‘yes’ (on LNG approvals) or are we going to throw up barriers ... that will ensure we don’t have a natural gas industry in British Columbia,” she told reporters.
She argued British Columbia would “do the world a favor” by helping countries such as China switch from coal-fired power generation to cleaner LNG.
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