Flawed NEB process recommends approval of the Trans Mountain pipeline expansion

 

In a fundamentally flawed process the National Energy Board has concluded that it is in Canada’s public interest to build a new pipeline across sensitive BC landscape and dramatically increase the number of loaded oil tankers travelling through BC’s inland waters.  If adopted by the federal Government this recommendation would:

 

increase the risk of a catastrophic oil spill that could destroy significant portions of BC’s coastline and coastal economies;

 

undermine the inherent rights of indigenous peoples

 

advance the extinction of the endangered Southern Resident Orcas; and

 

negatively impact the health of coastal communities

 

The expansion of the Trans Mountain pipeline is a pipe dream that relies on false economics and misleading claims that the new pipeline will result in 15,000 new construction job and higher prices for Alberta bitumen. The pipeline expansion will undermine Canada’s international commitments to reduce GHG emissions and advance the pace of climate change at a time when world scientists agree that we have 11 years to take bold action to dramatically reduce the pace of climate change.     

 

Any careful analysis will show that another pipeline to bring bitumen oil to the BC coast is definitely not in the public interest of all Canadians. 

 

 The sevenfold increase in oil tanker traffic increases the risk of a catastrophic oil spill

 

The NEB considers that a worst-case spill volume along the tanker route is 16,500 m3  (103,000 barrels). An Aframax tanker can carry up to 850,000 barrels.  The NEB considers that a spill larger than 103,000 barrels would not be credible because of double hull ship construction and other mitigating factors.  This is based on the presumption that the worst case scenario is an oil tanker running aground damaging only one of its tanker compartments.

 

On January 6, 2018, the MV Sanchi tanker carrying 960,000 barrels of oil collided with the cargo ship CF Crystal, caught fire and sank losing the entire crew and spilling 960,000 barrels of oil in the East China Sea. While a spill greater than 16,500m3 (103,000 barrels) may be unlikely, available evidence shows that a tanker collision with another ship is a possibility that must be taken into account in any risk assessment.  

 

In our November 2018 submission to the NEB we conveyed our concern about a possible ship collision at the 90 degree navigational turn at Turn Point where Boundary Pass meets Haro Strait on the tanker route.  Turn Point is recognized as one of the most hazardous navigational areas on the tanker route.  We also provided a photo of an oil tanker “Commitment” passing in close proximity to the auto carrier Liberty Ace in the Turn Point “Special Operating Area” in apparent non compliance with the recommended vessel separation requirements.  The NEB indicated “that due to the voluntary nature of the Turn Point Special Operating Area, not all instances of apparent noncompliance are problematic.”  The NEB acknowledged that there may be rare cases where ships “operate outside the standard” navigational rules, but indicated the pilots on board ensure that these departures for the navigational standard are “safe and properly applied.” 

 

Pender Island would be ground zero if a tanker collision occurred at Turn Point.  The very active tidal currents at the junction of Boundary Pass and Haro Strait would disperse the dilbit into the water column and make any clean up efforts difficult under the best of conditions and would devastate Gulf Islands, Vancouver Island and the San Juan coastlines and threaten the survival of the wide abundance of marine life that thrives in the Salish Sea. 

 

In 2013 Kinder Morgan President Ian Anderson assured the NEB that oil producers and shippers would pay the costs of tanker traffic safety and cleanup.  Somewhere along the line that commitment was assumed by the Trudeau government which takes great pride in the $1.5 billion Oceans Protection Plan now paid for by Canadian taxpayers.

 

 

The sevenfold increased risk of a catastrophic oil spill on the BC coast is definitely not in the public interest.

 

Pipeline approval fails to recognize and respect indigenous rights   

 

First Nations representatives expressed strong concerns about the impacts of spills within their traditional territories and the impacts that spills would have on their Indigenous and Treaty rights, including interruptions to fishing and harvesting activities and the long-lasting impacts to their cultural practices and activities.  The continuity of their culture and identity is dependent upon access to healthy marine resources. A catastrophic oil spill would cause further dislocation from their territories and their resources.

 

The W̱SÁNEĆ First Nations located on the Saanich Peninsula are known as the Saltwater

People and share the SENĆOŦEN language. Their culture is embedded in the marine

environment. Marine foods make up a substantial and preferred part of their diet.

The traditional Reef Net Fishery has played an important role in their economic, cultural,

and spiritual evolution.

 

The W̱SÁNEĆ First Nations live in close proximity to the oil tanker shipping lane where

Boundary Pass meets Haro Strait. Saanichton Bay, home of the TSAWOUT First Nation,

is directly exposed to the risks of a shipping accident and an oil spill near Turn

Point.  An oil spill would impact the Tsawout reliance on marine foods, an essential element of their economy and culture.

 

 

Many First nations do not accept the NEB process as being determinative of their rights.  Rueben George of the Tsleil-Waututh First Nation states, “We are comfortable

with the Canadian Constitution protecting our Indigenous rights, we have won

90% (over 250) of our court cases around resource extraction projects.”  He vows that First Nations will do what it takes to stop this pipeline.

 

The failure to fully recognize and respect the inherent rights of indigenous peoples is not in the public interest. 

 

Increased oil tanker traffic increases the threat of extinction of the Southern Resident Killer Whales

 

The Canadian government has acknowledged that the Southern Resident Orca population is facing an imminent threat to its survival and recovery.  The NEB concluded that the sevenfold increase in oil tanker traffic is likely to cause additional significant adverse impacts on the endangered Southern Resident Orcas.  Recent research indicates that the survival and recovery of the Southern Resident population will require reducing acoustic disturbance by 50% combined with increasing Chinook by 15% to allow the population to reach 2.3% growth.

 

 

It is well established that the Southern Resident orca population is fragile and in a slow decline, with no ability to withstand additional threats and an inability to recover unless current conditions are improved.  The NEB report (p. 398) shows that that while oil tankers and escort tugs are not as loud as some other vessel classes, they are louder than most in high frequencies of critical importance to the Southern Resident Orcas ability to communicate and forage for prey.  The cumulative effects of oil tanker noise disturbance in combination with other sources of noise such as whale watching vessels, have a significant impact on the Orcas’ ability to survive.

 

The sevenfold increase in oil tanker traffic will add to cumulative effects of both underwater noise and the risk of ship strikes that threaten the survival of the Southern Resident Orca population.  The recent death of J34, a prime aged male found to have died from large blunt force trauma, highlights the threat of ship strikes. The very small size of the SRKW population and the low numbers of prime age males and females that support the reproductive potential and genetic diversity of the population means that a threat that could remove one animal will have significant consequences on the survival of the population as a whole.

 

Increasing the threat of extinction for the Southern Resident Killer Whale population is not in the public interest.

 

Health impacts are measured, not mitigated

 

The board addressed the contribution of operations to ambient air quality in the Edmonton terminal, along the pipeline and in the Burnaby and Westridge Marine Terminals.  They acknowledge that pollution is already significant in the Burnaby and Westridge Marine Terminal areas due to existing industrial activity and that the increased activity from the new pipeline will increase the ambient background concentrations for particulate matter 2.5 microns or less in diameter (PM 2.5) of ozone, nitrogen dioxide, volatile organic compounds and other pollutants.  However many proponents said that there are not good data on how much these will increase and how widely they will be dispersed.  The board agrees and they state  “ dispersion modelling is a complex process and, as with any predictive modelling, uncertainties and limitations are inherent.”  

Their response to this is largely to set conditions for additional measurements to be taken when the project goes into operation. Plans for the monitoring are required to be in place prior to operations but the impact will only be known when operations start.  So what if levels are excessive?

The conditions include development of “the criteria or thresholds that, if triggered or exceeded, would require implementing additional mitigation measures;” and, “ a description of additional mitigation measures that would be implemented as a result of the monitoring data or ongoing concerns.”  It is unclear what mitigation strategies could be employed other than shutting down operations! 

 

This response is similar to the general tone of the report (i.e. we are sure things will get worse with the expansion, we don’t know how much worse but we should go ahead with it anyway, monitor the consequences and then try to mitigate!)  It is exactly in these circumstances that the precautionary principle should prevail. Don’t do anything if you don’t know the consequences!

 

Pipeline approval is based on false economics

 

Section 52 of the National Energy Act lists “the economic feasibility of the pipeline” as one of the key factors to consider in determining whether the pipeline expansion is in the public interest.  The 2016 NEB report concluded that Kinder Morgan “would be able to finance the Project”. The 2016 panel dismissed the extensive submissions by many interveners that: “Trans Mountain’s application and related evidence provides a distorted and unrealistic picture of the economic impact and economic feasibility of the proposed Project,” and that Trans Mountain has misinformed the Board, obfuscated issues and withheld from the hearing record pertinent financial and economic information.

   

 

The claims in the NEB’s 2016 report that the pipeline was on a sound financial footing has been shown by respected economist Robyn Allen and others to be based on flawed math

. In 2018 Kinder Morgan decided that the economic feasibility of the pipeline was in doubt and negotiated a sweetheart deal with finance minister Morneau and the Trudeau cabinet.  This admission by Kinder Morgan raises serious questions regarding the economic viability of the pipeline expansion without the infusion of billions of taxpayers dollars. Kinder Morgan’s estimated $5.5 billion cost to build the pipeline has now ballooned to $10 billion or more.  

 

Finance Minister Morneau’s claim that paying $4.5 billion for the 65 year old Kinder Morgan pipeline was a good deal for Canadian taxpayers has been challenged by the Canada’s Parliamentary Budget officer who indicated that Canada “…overpaid by nearly a billion dollars.”

  Minister Morneau’s claim that the purchase of the Kinder Morgan pipeline would bring in “…over $200 million on an annualized basis,” did not include the cost of the $256 million in interest on the pipeline loan which when added in would result in a loss of $56 million.

 

Earlier this year economist Robyn Allan warned that Trans Mountain has proposed a grossly reduced toll rate for shippers who use the existing pipeline that will result in a $2 billion taxpayer subsidy over the next 3 years if the NEB approves their request for a reduction in tolls.

 

 

Given these serious and substantial problems with “the economic feasibility of the pipeline,”  many of the interveners in the 2018 reconsideration hearing called on the NEB to further consider whether the pipeline expansion was economically viable.  The NEB flat out refused to consider “…any new evidence filed on need for the project, economic feasibility, or financial matters.”  The NEB panel concluded that the economic feasibility was now “out of scope” for the current review and refused to consider the substantial new evidence provided by intervenors on this issue.  

 

If the “out of scope” dodge sounds familiar, you may recall that the original NEB panel concluded that the increase in oil tanker traffic and its impact on marine mammals including the Southern Resident Orcas was “out of scope” and not considered in the 2016 report and recommendation to approve the pipeline expansion.  The Federal Court of Appeal called the NEB on that shell and pea game and set aside the Trudeau Government’s 2016 green light for building the pipeline.

 

By placing the economic feasibility “out of scope” for the current review and approval, the NEB sidestepped and failed to address one of the primary reasons why this pipeline is not in the public interest of Canadians. Given the clear evidence that the  2016 NEB panel was wrong in concluding that Kinder Morgan had the necessary resources to build the proposed new pipeline, and given the significant changes in the oil markets since the 2016 NEB report, The NEB had an obligation under section 52 of the National Energy Act to review “the economic feasibility of the pipeline.

 

Approval of the pipeline on uncertain and shaky financial grounds is not in the public interest.

 

Pipeline approval undermines the need for climate action now

 

Perhaps the most critical factor weighing against the pipeline expansion is the impact it will have on our international commitments to meet our greenhouse gas reduction commitments under the Paris Climate Agreement.  The October 2018 report by the UN Intergovernmental Panel on Climate Change (IPCC) calls for urgent and unprecedented changes to be initiated immediately if the planet is going to avoid a serious and imminent crisis.

 

 

The “out of scope” dodge was also used by the NEB to refuse to address the environmental effects of upstream and downstream greenhouse gas emissions. The Board determined that these impacts were out of scope and refused to include climate change impacts in the list of issues they were prepared to consider. This refusal is curious since a different NEB panel made an entirely different decision in 2017 requiring a major evaluation of climate change impacts during its review of the Energy East pipeline, a project that was later terminated by its proponent, TransCanada.  

 

Consideration of the upstream and downstream impacts are issues that are of considerable interest to a large majority of Canadians given new scientific findings about climate change and the direct experience of the catastrophic wildfires and devastating floods related to climate change that have occurred over the past two years.  

 

A portion of the $10 billion of Canadian taxpayer dollars now destined to construct the proposed pipeline could be better used to assist the Alberta government to accelerate building the renewable energy sector that has the potential to generate at least $10.5 billion in new investment by 2030 and at least 7,000 new jobs.

 

 

The NEB’s refusal to consider the increased impact of the pipeline approval on greenhouse gas emissions is definitely not in the public interest.

 

Exaggerated benefits of the pipeline

 

The NEB concludes that the benefits of the Project are considerable, including increased access to diverse markets for Canadian oil and jobs created across Canada.  Available evidence does not support this conclusion.  

 

In 2013 Kinder Morgan told the NEB there would be 2,500 jobs in each of the two years of construction.  When Prime Minister Trudeau announced approval of the Trans Mountain project, he said the expansion would “create 15,000 new, middle class jobs, the majority of them in the trades.”  The evidence shows that Alberta premier Notley and PM Trudeau adopted Trans Mountain’s inflated re-estimate of 15,000 construction jobs over 3 years.  In 2017 economist Robyn Allan showed that the 15,000 job estimate was “bogus” and was adopted and repeated by Premier Notley and PM Trudeau without any investigation into the validity of this claim.

 The evidence shows that investment in green energy jobs offers a more sustainable long term path forward and is in the best interests of Canadians.

 

The second major “benefit” the NEB relies on is the importance of access to Asian markets that would, according to the oil industry, fetch an increased price per barrel of the heavily discounted bitumen that requires specialized refineries to process.  The evidence does not support that contention.  The evidence shows that, “…shipping diluted bitumen across the Pacific Ocean is a money loser.”

 In a detailed study

 for the Centre for International Governance Innovation, Canadian economist and world-leading energy expert Jeff Rubin warns that: “The claim that additional pipeline capacity to tidewater will unlock significantly higher prices for bitumen is not corroborated by either past or current market conditions.”  Rubin’s analysis shows that recent international commitments to reduce global carbon emissions will significantly reduce the size of future oil markets and higher cost bitumen producers “will be forced to exit the market”.

 

The NEB’s 2019 conclusion that the pipeline expansion is in the public interest is based on a bureaucratic shell and pea game that fails to consider relevant evidence that shows that the Trans Mountain pipeline expansion is not in the public interest.  The Morneau/Trudeau decision to bail out Kinder Morgan by purchasing the existing 65 year old Trans Mountain pipeline at an inflated price was not in the public interest.   The 2019 NEB recommendation to approve construction of a new $10 billion pipeline dream will limit available funding to meet the government’s obligations to fund health care, infrastructure upgrades, climate change impacts, housing and other important social and economic programs.

 

 

 

 

Not in the public interest

 

The NEB’s conclusion that approval of this pipeline and the sevenfold increase in oil tanker traffic is in the public interest is completely undermined by the combined risks associated with a catastrophic oil spill; the failure to fully consider the inherent rights of indigenous peoples; and the added impacts that threaten the extinction of the Southern Resident Killer Whales.  The fact that there are serious questions about the economic viability of the new pipeline reinforces the fact that the pipeline expansion is not in the interest of the Canadian taxpayer. The pipeline’s contribution to increased greenhouse gas emission undermines Canada’s international commitments under the Paris Climate Change Agreement.   

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