Will Canada ever build the oil pipeline capacity the world needs? ~ Hugh Holland

A reliable and affordable source of energy for transportation is vital to life for the world’s growing population. The world’s vehicle manufacturers are aggressively developing vehicles with electric motors to replace oil-burning engines, but there are many constraints. It will take two generations to replace the world’s easiest applications and longer to replace the more difficult applications along with enough clean electricity to power them. How many readers are driving EVs now, and if not why not?

Canada is home to the world’s third largest proven reserves of oil. Based on current production rates, proven reserve–life is 125 years for Canada, 81 for the Middle East, 21 for Russia, 19 for the USA, 19 for China, one year for the European Union, and 55 years for the entire world.

According to the International Energy Agency, carbon emissions from producing Canada’s oil sands product are about seven per cent higher than the average of other sources and seven per cent lower than some sources. The IEA says, “The difference in emissions is too small to be a factor in the sourcing of oil.”

Canada has the right and also the obligation to share our vital resource with the 185 countries that will need oil for the foreseeable future. Consequently, Canada must find the best ways to minimize greenhouse gas emissions from oil extraction and other sources and to transport our oil to the countries and people who need it. Given that pipelines are clearly the safest way to get our oil to markets that need it, what efforts have been made to date?

1. After eight years of engineering and analysis, the Harper government approved the Northern Gateway Pipeline to Kitimat BC in 2014. The project was opposed by First Nations and environmentalists citing the risk of passing through the narrow Douglas Channel, even though the same safety measures used successfully for decades in similar conditions on the coast of Norway were prescribed. In 2015, to appease opponents, the new Trudeau government abruptly cancelled Northern Gateway and locked in that decision with a moratorium on oil tanker traffic on the north-west coast of BC.
2. In 2013, TransCanada proposed the Energy East Pipeline to idled refineries in Eastern Canada. In 2017, TransCanada cancelled the project in frustration. To appease environmentalists, the Trudeau government had added the meaningless requirement to forecast carbon emissions from the pipeline. That was seen as a sign of non-support since emissions come from burning the oil, not from moving it. The then mayor of Montreal sided with environmentalists about spill risk crossing the river. That was clearly solvable with a well-designed dual purpose bridge.
3. In 2012, Kinder-Morgan tabled a proposal to upgrade and expand their existing pipeline from Alberta to the port of Vancouver. The Trudeau government supported that proposal on the grounds that the original pipeline had been operating successfully on the existing route for 60 years. But the probability of ever getting approval for that expansion is now in question.

Kinder-Morgan also became frustrated by endless delays, so the Trudeau government decided to reduce uncertainty around the expansion by buying the pipeline. But on August 30, 2018, The Federal Court of Appeal ruled that the National Energy Board’s analysis was incomplete because:

• “The NEB had not considered the aspect of potential oil spills during marine shipping.” In fact that aspect was properly considered by Transport Canada. TC determined the risk to be minimal and acceptable given investments in extensive risk reduction measures exceeding those used successfully in similar conditions on the coast of Norway for decades. Vancouver is Canada’s largest ocean port. The KM expansion would increase traffic from 0.4 to 1.2 oil tankers per day compared to 22 in Rotterdam, 30 in Houston, and 61 per day in Singapore. The mid-sized (Aframax) tankers would be escorted by expert Canadian-trained pilots and two tugs, with one tug tethered at all times until they reach the open ocean.
• “First Nations Groups were not afforded ‘meaningful consultation’ by the NEB.” The NEB held hundreds of meetings to hear concerns of thousands of people, but apparently that was not enough. Several questions remain:
  1. What constitutes meaningful consultation? The court has not defined quantity or quality.
  2. Does it mean that every single concern must be addressed to the satisfaction of the asker?
  3. Does it mean that the NEB has to spend more and more millions to go through the process over and over, hoping that someday it might be deemed enough?
  4. Will there ever be “enough” consultation?

At this point we have nothing to show for 12 years of effort by three world-class companies and two governments. If the KM expansion is doomed to failure, the existing KM capacity is still useful and the government’s investment will not be wasted. But what other alternative should be pursued?

First Nations in Northern BC want jobs to become self-sufficient in their area. They developed a proposal called the “Eagle Spirit Energy Corridor” to move upgraded Alberta bitumen, BC natural gas, and BC hydroelectricity along a route from Alberta and eastern BC to the more accessible port of Prince Rupert BC. The Eagle Spirit proposal would carry one million barrels per day; the same as the Energy East pipeline and twice the additional capacity of the Kinder-Morgan pipeline. Eagle Spirit offers the least problematic marine route to reach the huge and growing Asian markets for both Alberta Oil and BC gas. Eagle Spirit project leaders say they have support of 95 per cent of First Nations along the route, but environmentalists want to build parks on First Nations land and lock them into perpetual poverty. Unfortunately, Hyder Alaska could get the port and the jobs to bypass Canada’s oil tanker moratorium.

Hugh Holland is a retired engineering and manufacturing executive now living in Huntsville, Ontario.

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