What started out as a reported four-barrel spill on an Enbridge pipeline in the Northwest Territories, is now estimated to be in the range of 700 to 1,500 barrels.
Around the same time, there was a leak of about 10 barrels from a Kansas pump station on TransCanada’s existing Keystone pipeline, forcing a week-long shutdown of the 591,000-barrel-per-day system — the 11th break, averaging less than 10 barrels, along the 1,260-mile U.S. portion of the line in its first year of operation.
Not much in the grand scheme of things, but unfortunate timing for the two Canadian pipeline companies as they try to sway regulators, governments and citizens to support their massive new undertakings — TransCanada’s 500,000 bpd Keystone XL addition and Enbridge’s 525,000 bpd Northern Gateway project.
Their safety records are an overriding concern as two export pipeline applications enter a crucial round of regulatory decisions in the United States and Canada, with analysts warning that unless there is a go-ahead Alberta faces problems.
Ralph Glass, an economist and vice president at AJM Petroleum Consultants, said new supplies of Canadian oil could be denied access to existing transportation systems, with a “dramatic impact” on plans to raise oil sands output from the current 1.6 million barrels per day to 3.5 million bpd by 2020.
Alberta Energy Minister Ron Liepert said he could be kept awake at night by the fear his province will be “landlocked in bitumen … we’re not going to be an energy superpower if we can’t get the oil out of Alberta.”
He is calling for a North American energy pact that would commit the United States to guaranteeing market access to Canadian oil in return for security of supply.
Keystone issuesThe American Petroleum Institute came to TransCanada’s defense, saying the company’s response to crude spills on Keystone should reinforce, not erode its case for the XL project.
It said TransCanada can detect problems “very quickly” and shut the pipeline down “within minutes.”
On the final day for the public to comment on an environmental review of the US$13 billion XL project, API said it is time for the State Department to end a process that has dragged on for three years, denying jobs and taxes to the United States.
TransCanada’s Chief Executive Officer Russ Girling found some cause for hope, predicting that, because no new issues have been raised in the final public comment phase, the State Department will meet its year-end deadline for making a decision.
Frank Verrastro, senior vice president for the Washington-based Center for Strategic and International Studies’ energy program, said the State Department and the Environmental Protection Agency now appear to be moving closer to an agreement on examining alternative XL routes and finding ways to reduce the impact on communities near the pipeline.
Harold York, vice president of Wood Mackenzie’s downstream consulting team, said he has noticed an easing of rhetoric that gives him reason to believe an approval might be imminent.
Environmental concernsEven so, the EPA has expressed some “significant” fears about the safety of an XL pipeline and claimed State Department officials have underestimated by as much as 20 percent potential lifecycle greenhouse gas emissions from the production of Alberta’s oil sands, the source of crude for XL.
The EPA asked the State Department to seek “detailed descriptions” of efforts by the Alberta government and Canadian oil producers to reduce emissions before it passes judgment on the project.
The agency also argued TransCanada’s plans to detect spills by monitoring pressure drops along the pipeline and by aerial surveys are inadequate and “may result in smaller leaks going undetected for some time.”
Criticism of XL scaled new heights when Dennis Kucinich, a Democratic congressman from Ohio, likened bitumen from the Alberta oil sands to nuclear waste and said the pipeline would turn the U.S. into a “sewer” for Canadian oil.
He urged his Democratic colleagues to carefully evaluate the environmental impact of XL and pressure the State Department to delay its ruling.
“We cannot trust the oil interests to do the right things for the economy, for the environment,” he said. “We saw what happened when we let the oil interests get ahead of the regulation of their industry in the Gulf of Mexico.”
Having secured alliances with U.S. lawmakers, environmentalists have now turned their sights on the banks that would help finance XL, including threats to organize a boycott of Citigroup by up to 260,000 bank clients. Citigroup, while noting that TransCanada is an “important and longstanding client,” said it is reviewing the concerns of various stakeholders.
The API warned the U.S. should not take for granted its access to the oil sands resource.
“Other nations will aggressively develop this key strategic resource for their future energy needs if we fail to act,” API Chief Executive Officer Jack Gerard said in a letter to Secretary of State Hillary Clinton.
Although he did not name those countries, Gerard said XL should be approved “to enhance our energy and national security, preserve our global competitiveness and maintain our role as a world economic leader.”
David Jacobson, the U.S. Ambassador to Canada, speaking at a Calgary conference June 7, said Alberta will continue to export oil to the U.S. but must clean up its resource extraction operations.
“We’re aware of the progress that has been made to address some of the environmental impacts in the oil sands … but, as I’ve said on many occasions, additional improvements are necessary.”
Enbridge spillsThe Enbridge spill occurred on a 26-year-old pipeline from the Norman Wells field in the Northwest Territories to northern Alberta that operates well below its capacity for 45,000 bpd.
Enbridge said no water courses are threatened and any contaminated soil will be removed once site conditions permit.
But, coming after an Enbridge line rupture last summer that released about 20,000 barrels, the incident provides more ammunition for opponents of Northern Gateway.
The company is making only slow headway in its attempt to build First Nations’ interest in its pledge of about C$1 billion in financial sweeteners through jobs and business contracts.
Documents filed with the National Energy Board show Enbridge has offered its benefits package to 35 groups and First Nations, but as of March 31, 13 had not received the package and some, mostly coastal First Nations, have refused to meet with Enbridge.