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Exporters face troubled waters Crude tanker trade from B.C. growing; regulatory approval to be sought for more shipments; members of Parliament press for ban Gary Park For Petroleum News
Growing numbers of crude oil tankers have been quietly slipping out of Vancouver, destined for Asian markets and Kinder Morgan Canada is preparing to seek regulatory approval to allow even more crude to cross the Pacific.
At the same time, opposition to tanker traffic off the British Columbia coast is intensifying, with members of the Canadian Parliament pressing for a legislated ban on the vessels.
Enbridge’s plan to deliver 525,000 barrels per day out of Kitimat on the northern B.C. coast is currently before an environmental review panel, while Kinder Morgan is applying to issue long-term contracts for about 50,000 bpd to leave its Westridge Marine Terminal in Vancouver.
It has already held an open season to convert 50,000 bpd of existing capacity at Westridge to firm-service contracts in 2011 after several years of increasing China-bound shipments, almost unnoticed by those concerned about the risks of allowing crude tankers to ply waters in a heavily populated area.
Four ships in 2008; eight last year In 2008, about four ships sailed across the Pacific. Those numbers doubled last year and are expected to rise again this year, averaging about one vessel a month, each carrying about 600,000 barrels.
Ian Anderson, president of Kinder Morgan’s Canadian operations, said during the summer that his company is eager to tap into the Asian market, as shippers and producers take an increasingly serious view of the long-term prospects of opening a route to Asia.
To that end, Kinder Morgan is applying to Canada’s National Energy Board to start issuing long-term contracts for about one-sixth of the 300,000 bpd of capacity on its Trans Mountain system from Alberta to the Westridge terminal and Puget Sound in Washington state.
Kinder Morgan also has on hold plans to go head-to-head with Enbridge in shipping crude out of Kitimat.
But opposition members of Parliament are lending their support to environmentalists, First Nations and others who are taking their case to Ottawa.
Ujjal Dosangh and Hedy Fry, both Liberals who represent Vancouver areas, and Nathan Cullen, a member of the New Democratic Party, whose constituency embraces Kitimat and Prince Rupert, are leading the campaign among lawmakers for an outright ban.
Unwritten moratorium not law Currently an unwritten moratorium on tankers in British Columbia waters stems from a policy directive in 1972, but doesn’t have the force of law to regulate such traffic.
Enbridge’s Northern Gateway project has indirect backing from federal and provincial politicians and industry leaders who argue Canada needs to become less reliant on the United States for its energy exports, but not everyone in the industry is enthusiastic about opening markets in Asia.
Murray Edwards, vice chairman of Canadian Natural Resources, which has recently opened its Horizon oil sands project, said shipping crude to Asia would be one way for producers to diversify.
“As with any good seller, you want more customers,” he said, but downplayed any thoughts that turning the current trickle to Asia into massive volumes will happen any time soon.
Edwards said Alberta should give more immediate priority to expanding its market in the United States by extending pipelines to the Gulf Coast refinery region.
“Longer term, if you had capacity to export barrels off the West Coast, although there are lots of issues with that, the competition would be good for Canadians to make sure we have competitive prices for our products,” he said.
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