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Dread leads to frenzy for pipelines Canadian governments and industry buckle under public pressure; order pipeline safety reviews and demand tougher regulations Gary Park For Petroleum News
The Alberta government and Enbridge have been browbeaten into action, the British Columbia government is trying to decide which direction it should take and Kinder Morgan is moving with haste to seize a shrinking window of opportunity.
Seldom, if ever, have Canadian governments and pipeline industry giants shown such dread as they attempt to head off a groundswell of opposition to their hopes of shipping crude out of Alberta to all points in North America and Asia.
Despite drastic Canadian government measures to streamline and speed pipeline approvals by reworking environmental reviews and securing new markets in Asia for oil sands production, public opinion has swung in the opposite direction.
An already solid wall of opposition to Enbridge’s Northern Gateway and Kinder Morgan’s Trans Mountain expansion plans to offer their shippers a route to Asia has stiffened in recent weeks with a series of pipeline spills in Alberta and a scathing report by the U.S. National Transportation Safety Board of Enbridge’s mishandling of its 2010 pipeline rupture in Michigan.
In response to a call by a coalition of 54 community, environmental, aboriginal and landowner groups for an independent review of pipeline safety, Alberta Energy Minister Ken Hughes has told the province’s Energy Resources Conservation Board to hire a third party to review the safety of Alberta’s 240,000 miles of regulated pipelines.
“Our pipeline integrity standards must be among the best in the world,” he said. “If changes are needed, Albertans can rest assured that we will make them.”
But the government statement noted that the number of pipeline incidents has dropped to 641 in 2011 from 885 in 2007.
Enbridge getting proactive Enbridge has also acknowledged the concerns among aboriginal groups and the public around “pipeline safety and integrity,” shedding a laid-back, low-key response to mounting resistance to the Northern Gateway system, designed to export 525,000 barrels per day of crude and import 193,000 bpd of condensate through a deepwater port at Kitimat, in northern British Columbia.
Janet Holder, executive vice-president in charge of the project, tried to snuff out the flames by announcing “further enhancements” to Northern Gateway’s design and operations.
“We will make what is already a very safe project even safer in order to provide further comfort to people who are concerned about the safety of sensitive habitats in remote areas,” she said.
The measures include: Thicker pipeline walls, with added thickness for water crossings; increasing the number of remotely-operated isolation valves by 50 percent in British Columbia; increasing the frequency of in-line inspection surveys by a minimum of 50 percent over and above current standards; installing duel leak detection systems; and staffing pump stations around-the-clock in remote locations, along with heightened security and rapid response to abnormal conditions.
Enbridge estimates these changes could add C$500 million to the C$5.5 billion Northern Gateway budget.
Kinder Morgan on guard With its rival showing evident signs of squirming, Kinder Morgan has apparently decided it needs to step up the pace of plans to increase capacity of its Trans Mountain pipeline to 750,000 bpd from 300,000 bpd.
Chief Executive Officer Richard Kinder said his company now hopes, assuming regulatory approval, to start work on the expansion in 2015-2016, ahead of the earlier 2016 schedule, and be in service in 2017.
But that stepped up timetable is likely to be met with even sterner opposition from aboriginal communities and environmentalists, along with municipal governments in Greater Vancouver who fear the dangers posed by increased tanker traffic in their area.
BC wants more revenues Meanwhile, the British Columbia government is trying to get off the fence, having passed up the chance to participate in the Northern Gateway regulatory hearings and declared it wants a fatter chunk of revenues and tougher environmental regulations before it will accept the risk of heavy crude pipelines crossing its territory from Alberta to tanker ports on the Pacific Coast.
Although final approvals of pipelines that cross provincial borders and involve exports rest with Canada’s National Energy Board and the federal government, Environment Minister Terry Lake hinted that his government has other means of stalling projects if its minimum requirements are not met.
Lake noted that the provincial government must issue “scores” of permits for pipelines to cross water courses, but would not say whether that strategy will be used to delay the proposed 525,000 barrels per day Enbridge Northern Gateway system or the expansion of Kinder Morgan’s Trans Mountain pipeline to 750,000 bpd from 300,000 bpd.
He said British Columbia currently estimates it would collect only C$8 billion of the C$81 billion Northern Gateway could generate in provincial and federal government taxes over 30 years, despite shouldering what he said was 100 percent of the marine and 58 percent of the land-based risks.
The case for a larger share of the revenues was made last week at unannounced meetings between B.C. Premier Christy Clark and her counterparts in petroleum-producing provinces to the east — Alberta’s Alison Redford and Saskatchewan’s Brad Wall.
“We do not feel the current approach to sharing the benefits is appropriate,” Lake said.
He also said his government will require all new crude pipelines to meet five conditions to receive British Columbia backing, including “world-leading” practises to prevent or handle oil spills, with the industry carrying the full cost of cleanup and remediation.
The conditions would not apply to proposals to export LNG from British Columbia to Asia and Clark’s goal of having three LNG projects operating by 2020.
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