Optimism and anger as Albertans react to pipelines

 

tim-mcmillan

Industry in Alberta was quick to celebrate the federal government’s approval of the Trans Mountain and Line 3 pipelines on Tuesday, but opponents vow to delay or kill the projects by any means possible.

“I think that Canada’s reputation as a place that can move projects forward took a step forward today,” said Tim McMillan, the president and CEO of the Canadian Association of Petroleum Producers.

McMillan said this was a positive move toward reducing the price differential for Canadian oil. Producers face sometimes steep discounts on the price they receive for a barrel of oil in the U.S. compared with world prices.

With the ability to send more oil to Pacific markets, and increased capacity on a rebuilt Line 3 pipeline to the U.S., Canada’s oil and gas companies should be able to get a better price.

University of Calgary economist Trevor Tombe said that without new pipelines, the National Energy Board predicted a shortfall of $10 per barrel.

“That adds up to over $10 billion a year in forgone revenue for producers,” he said.

READ THE REST AT CBC CALGARY

Staunching the flow: As Alberta reviews its pipelines, critics cry foul

Illustration by Mariella Villalobos.

Illustration by Mariella Villalobos.

On Thursday, June 7, approximately 475,000 litres of oil started pouring into the Red Deer River from a ruptured pipeline owned by Plains Midstream Canada. By the next day, Premier Alison Redford was on scene, eager to show she cares.

Just over a month later, a coalition of 54 groups penned an open letter to the premier demanding more than a well-timed photo op. The groups wanted the Redford government to initiate an “immediate independent provincewide review of pipeline safety in Alberta, similar to the one which was recently conducted for the auditor general of Saskatchewan’s 2012 report.”

The letter was signed by a wide array of groups including the Alberta Surface Rights Group, the Alberta Union of Provincial Employees, Greenpeace Canada, the Confederacy of Treaty 6 and more. By July 20, the groups had gotten their wish. Sort of. Energy Minister Ken Hughes announced that the government would conduct a pipeline review, but the signatories are upset that they have been left out of the conversation while the government consults with players in the energy sector, and they have raised concerns about the review’s effectiveness and impartiality.

Specific concerns are that the provincial regulator, the Energy Resources Conservation Board, was put in charge of hiring a third party to conduct the review, the scope of the review is too narrow, and the month-and-a-half timeline for finishing the report is far too fast for any meaningful examination.

“There have been other reviews done, both nationally and provincially,” says Mike Hudema of Greenpeace. “Most recently by the province of Saskatchewan, and their review was done by their provincial auditor. It was a very expansive review and looked at most of the sort of wide-breadth of Saskatchewan’s pipeline infrastructure, and what came out of it was several different places that the Saskatchewan government was failing communities and their environment when it comes to pipeline safety, and then a lot of suggestions for improvement.”

Hudema doesn’t hold out much hope for the same kind of result emerging from Alberta’s review. “Unfortunately we have a lot of questions about the review process and that’s, again, one of the reasons why we wanted to meet with the premier,” he says.

To that end, the 54 groups have initiated a petition to try and force Redford and Hughes to meet with them. In just over a week the petition collected over 5,000 signatures, but the response from the government has been silence.

Don Bester, of the Alberta Surface Rights Group, which represents concerned landowners, doesn’t think that silence will be broken any time soon. “There’s a push,” he says, “but there isn’t much response.”

JUST THE FACTS

Albertans have reason to be concerned. Although most oil, gas and energy byproducts reach their destination safely, the ERCB’s latest figures still highlight the dangers.

In its 2010 Field Surveillance and Operations Branch provincial summary, the regulator says there were 687 incidents spread over Alberta’s more than 400,000 kilometres of pipeline in 2010, which resulted in 1,175 recorded “liquid releases.” In total, approximately 25 million litres of produced water (an oily byproduct of extraction) and three million litres of liquid hydrocarbons were released into the Alberta landscape.

The ERCB directed 30 pipeline operations to suspend activities in 2010. Of those shutdowns, 47.3 per cent were due to internal pipeline corrosion, followed by external corrosion at 11.2 per cent.

Of course, most Albertans don’t hear of these “incidents.” Many happen far away from urban centres and the watchful eye of media. But there were three high-profile spills this year that brought the problem to public attention and forced the government’s hand. Earlier this year, 230,000 litres of heavy crude spilled onto farmland northeast of Edmonton and 800,000 litres of oil gushed near the border between Alberta and the Northwest Territories. Including the spill in Red Deer, these three “liquid releases” alone have let loose 1.5 million litres of oil in 2012.

Bester thinks things can be done better. The farmer, whose group includes landowners affected by the most recent Red Deer spill, says technology must be improved, particularly when it comes to river crossings. “We have people that own land right there and they’re telling us that Plains Midstream knew that this pipe was exposed and floating in the river well before the break even happened,” he says. “It was reported to them and they did nothing.”

Bester wants the current practice of lowering pipelines into river beds and fixing them in place with gravel to be replaced with new technology, including horizontal drilling far below the river bed. “I mean, they can drill a horizontal well a mile-and-a-half, you can drill your pipelines just the same as you do highway crossings,” he says. “You don’t rip up number 2 every time you want to put a pipeline across Highway 2.”

JUST THE POLITICS

Of course, the recent publicity around oil pipelines in Alberta has as much to do with pipelines that haven’t been built as it does with oil clogging up rivers and muskeg. TransCanada’s Keystone XL pipeline through the States and Enbridge’s Northern Gateway that will transport oilsands bitumen to the West Coast are both high-profile fights that have galvanized public opinion and focused attention on Alberta.

“The world’s watching us and we need to make sure that people know that the regulations, the standards and the processes in place are, first and foremost, meeting Albertans’ expectations, but now also national and international scrutiny,” says Mike Deising, a spokesperson for Alberta Energy. “So we want our regulator to take a look at it and we also want them to bring in an independent third party. It just makes sense.”

MLA Laurie Blakeman, who, among several other portfolios acts as the energy critic for the Alberta Liberals, agrees that pipelines are inevitable. “I’m going forward with, if it’s going to happen, how do we make it the least damaging,” she says. “How do we take steps to make sure that if something goes wrong, it’s the least amount of something going wrong; there’s the most protection for the environment and the people that are around it. That’s my point of view.”

Her other point of view is that the government isn’t fulfilling its role when it refuses to listen to all sides of a story. In this case, the 54 groups representing a broad swath of dissenting Alberta voices.

“We all live here, we all breathe this air, we all have children that we want to be able to drink the water. So, having the government divide and conquer is not helpful,” says Blakeman from her office in Edmonton.

“There’s a lot of smart people in Alberta and some of them work in these organizations. And to completely go, ‘No, I’m not going to talk to a whole bunch of smart people that have things to tell me that would be helpful’ is kind of stupid, I think.”

Nobody thinks that the government should be ignoring the oil and gas industry, at this time or any other, but it’s a familiar complaint in the province that the government’s ear is a little too attuned to the messages put out by the royalty-gushing industry.

“I do think that the public deserves some degree of input,” says Hudema. “There’s definitely, when we’re talking about pipeline spills, the environmental impacts are a huge issue…. Also, when you look at the members of the 54 groups, a lot of them are landowner groups and landowner associations, so they have first-hand experience with what a spill means to a local farmer or a local rancher, what it’s done to their property, what some of their concerns are. I think the government should hear some of those voices.”

It doesn’t appear, however, that the government will be discussing pipelines with any of these groups any time soon. The premier’s office directed all questions to Hughes’ office, and Deising says it’s now out of their hands. “With respect to the review, now it’s in the hands of the regulator and the independent party to look at the three aspects that the minister wanted to see completed as part of the review. Taking that aside, because really we’re talking about the technical expertise of water crossings, spill response and pipeline integrity, that is a specific technical expertise that is required to look at those things…. With respect to broader stakeholder discussions, we’re open to always hearing from Albertans and their perspectives.”

THE OUTCOME

The signatories of the open letter to Redford aren’t happy about the ERCB playing a role in any pipeline review, insisting that it’s too close to the industry that it oversees. The process for the review allows the regulator to not only choose the third party that will review pipelines in Alberta, but also to review that third-party report and submit its own report to the energy minister with any recommendations it thinks are necessary.

According to Hudema, “they are part of Alberta’s pipeline problem and really shouldn’t be reviewing themselves.”

On September 10, the ERCB announced that it selected Group 10 Engineering of Calgary to conduct the review, citing their technical competency. In total four organizations were vying for the job, but the ERCB won’t comment on who else was in the running.

Group 10’s engineering managers, Theo Abels and Daryl Foley, both have years of experience working in the oilpatch, from regulatory compliance to technical inspections. Of course, hiring an organization with so much experience is a double-edged sword, bringing expertise on one hand, and cries of bias on the other.

According to Hudema, it’s another indication that the government isn’t serious about the review. “I think what most Albertans were expecting was a very balanced review process that would not just look at things from an industry perspective, but really from an independent perspective, and would hopefully include some of those other voices in the process,” he says.

The ERCB, by necessity a thick skinned organization, isn’t fazed.

“Someone’s going to be upset with this, no matter what we do, usually, when we make a decision, so this is no different from any other time we make a decision,” says Bob Curran, an ERCB spokesperson. “We make thousands of those every year. For us, it’s business as usual.”

Of course, business as usual is what many of the critics are, well, criticizing. They view the government, the regulator and the industry with suspicion — a closed loop bent on extracting and shipping oil and gas despite the consequences. For Bester, this review is merely window dressing and he’s not surprised. “They do not want to know. Put it that way. As long as the royalty dollars can keep flowing, they have no concerns, everything is just swept under the table.”

This post originally appeared in Fast Forward Weekly.

Ethical oil and China

Operation Iraqi Freedom is the multi-national coalition effort to liberate the Iraqi people, eliminate Iraq’s weapons of mass destruction, and end the regime of Saddam Hussein.

A great deal of attention has been paid to two pipeline projects — one that will see Alberta’s oilsands bitumen transported across the U.S. to the Gulf of Mexico (Keystone XL), and one that will run it through the Great Bear Rainforest in B.C. for shipment to Asia (Northern Gateway).

The projects have serious implications, ranging from potential environmental devastation due to a spill, to our further dependence on a resource that is long past its gone-stale date.

But there is another implication, specifically tied to the Northern Gateway pipeline and the inevitability of increased investment from state-controlled Chinese companies. At what point does investment from an autocratic regime undermine Canadian claims to ethical oil, if such a thing ever really existed in the first place?

Journalist David Ebner, in an article in this month’s Alberta Views magazine, asks an important question: how much foreign investment, specifically from state-controlled Chinese enterprises, is too much for Canada? What if PetroChina buys Syncrude?

The argument for Canada’s oil somehow being more ethical than other producers in the Middle East, Africa and Latin America, was first posited by conservative muckraker Ezra Levant. It should come as no surprise that his book Ethical Oil: The Case for Canada’s Oilsands has essentially become a guidebook for pro-oilsands rhetoric and the Conservative government of Canada. Alykhan Velshi, a former director of communications for immigration minister Jason Kenney, started ethicaloil.org in order to spread the ideas first developed in Levant’s book.

There are flaws in the rhetoric, especially around the environmental implications of the oilsands and whether a product that is harmful to the environment can ever truly be ethical, no matter if one jurisdiction takes more care than another. But what is ignored is whether increased investment from state-controlled business from China undermines, or will undermine, the claim that to buy from Canada is better than, say, Saudi Arabia.

Now, China isn’t sweeping through the oilsands region, hungrily consuming companies and laying the groundwork for a takeover of the reserves. Even if the Chinese government had an interest in doing that, the Canadian government would step in and regulate the transactions. China will never own the oilsands. But it is steadily increasing investments.

Over the last few years, Chinese companies have invested approximately $10 billion in the oilsands. Considering the billions of dollars of investment, capital and profits flowing from northern Alberta, that’s not a terribly high number. But that number, by all accounts, is going to go up.

Ron Liepert, Alberta’s energy minister, Prime Minster Stephen Harper and Alberta’s man-of-many-hats Lloyd Snelgrove (president of the treasury board, minister responsible for corporate human resources and minister of finance and enterprise), have all indicated that increased investment in the oilsands by China is not only positive, but inevitable. Recent talks between government officials and business leaders from China and Canada suggested that Chinese investment in the oilsands could triple in the coming years, though without the Northern Gateway, that investment prediction could fall.

On ethicaloil.org , the website seeks to put distance between bad oil (mostly Saudi Arabia) and good oil (mostly Canada). When the group paid for TV ads condemning Saudi Arabia’s terrible human rights record, the kingdom threatened to sue media outlets if they ran it. In response, Velsi said: “They’re just not used to being criticized. So they immediately reverted to thuggish censorship tactics.”

That’s an interesting choice of words: Thuggish censorship tactics. It’s a phrase that applies just as well to the autocratic Chinese government, which stifles dissent on a regular and chilling basis. There is a long list of infractions that are even worse: the wholesale destruction of Tibetan culture, the suffocation of the Uyghur people or the Tiananman Square massacre, to name a few.

But if the connection between Chinese investment and claims of ethical oil are a little too abstract for you, then perhaps you should consider this: In order to ship bitumen through those shiny new pipelines, the heavy oil from Alberta must be diluted. Often, that means blending it with light oil. That light oil comes from some pretty unseemly places, including Saudi Arabia. We are literally blending the so-called evil oil with the ethical stuff.

So, what happens when good oil meets bad? And what happens when peace, order and good governance gets in bed with a tyrant? Who knows, but it doesn’t sound very ethical, does it?

This post originally appeared in Fast Forward Weekly.