This Article is part of the Tar Sands Reporting Project special report See the full report

Kinder Morgan's $136 million pipeline 'war chest' to be paid by Canadians

"The decision to enable this unfair advantage is unprecedented. The approach has been rejected out of hand by US regulators," said economist Robyn Allan.

Photo of tanker in Burrard Inlet by "Judy_and_Ed" on Flickr Creative Commons
In what an economist calls an "unfair" decision, the National Energy Board has allowed Kinder Morgan to build a $136 million 'war chest' to fund its Trans Mountain pipeline expansion application through shipping surcharges. The charge, called a "firm service fee",  allows Texas-based pipeline company Kinder Morgan to offload the cost of the pipeline application to Canadian shippers. 

"The decision to enable this unfair advantage is unprecedented. The approach has been rejected out of hand by US regulators," said Robyn Allan, an independent economist and former CEO of ICBC, who outlined the finding in her report. 

The NEB's ruling -- made back in 2011 -- grants Kinder Morgan permission to start charging a firm service fee of $1.45 for every barrel of oil shipped from its Burnaby facility. When these fees are incurred by Canada-based shippers, they reduce Kinder Morgan's taxes payable. As a result, Allan wrote, "it is Canadians who are helping to finance Kinder Morgan’s expansion plans through foregone tax revenue, not Kinder Morgan’s shareholders, which is the normal course of business practice".

The controversial pipeline expansion proposes to twin the existing 60-year-old Trans Mountain pipeline and triple the current flow of bitumen from Alberta to Burnaby. The expansion, if approved, would increase pipeline capacity to carry 890,000 barrels of diluted bitumen, and boost oil tanker traffic more than five-fold from around 60 to 408 tankers a year in the Burrard Inlet.  

"No risk" to Kinder Morgan 

"The NEB has allowed a situation where Kinder Morgan's shareholders bear no risk or cost in advancing its (Trans Mountain expansion) Application," Allan said. 

She noted that Kinder Morgan Canada President Ian Anderson said in 2013 that even if Trans Mountain pipeline expansion plans fall through, "all of the development costs are being covered by the firm service fees that we are collecting, so there is no risk to us." 

Kinder Morgan spokesperson Andy Galarnyk wrote in an email to the Globe and Mail: 

“Development of a project such as the Trans Mountain expansion entails significant study and environmental and engineering work such that Kinder Morgan and its customers are collectively sharing the development cost risk for the project.” 

But the response, Allan said, is inconsistent with what Anderson said under oath during a cross-examination on February 12, 2013. When questioned by Suncor lawyer Bernard Roth, Anderson agreed that 100 per cent of the application cost would being covered by the added fee for shippers, and not by Kinder Morgan. Roth said the Trans Mountain pipeline was "excellent" and "well-respected" but pressed Anderson to acknowledge that the service fees would be used to offset the cost of the Trans Mountain pipeline application.  

More in News

SZA performing live

Review: SZA hosts surprise quiz night at Fortune

What happened when rising "PBR&B" artist SZA decided to call out members of Vancouver’s hip-to-what’s-hop community?
PM Harper arrives in Israel for first official visit

Harper's Nobel Peace Prize nomination slammed as 'outrageous'

"You don’t know whether to laugh or cry," says the Canada Palestine Association in Vancouver, in reaction to B'Nai Brith's nomination of Stephen Harper for a Nobel Peace Prize
Taylor Ho Bynum

Taylor Ho Bynum begins musical odyssey from Vancouver to San Diego

The Acoustic Bicycle Tour: endurance and improv.

Comments

Image Credit

You've chosen to use a lovely Creative Commons licensed photograph to illustrate this important article.  Unfortunately "Photo of tanker in Burrard Inlet via Flickr Creative Commons" is not adequate attribution.  Who took the photo?  Flickr is a photo sharing web platform, not a photographer.  And creative Creative Commons offers a range of licenses which have dramatically different terms. 

When you use a photo with a Creative Commons License, you must follow the terms of the license; if you don't, you commit copyright infringement.  These days that's a pretty serious offence in Canada.   

And every Creative Commons License requires attribution.  This is what the basic (most free) CC attribution license requires:

Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.

(https://creativecommons.org/licenses/by/4.0/

"Appropriate Credit" means:

"If supplied, you must provide the name of the creator and attribution parties, a copyright notice, a license notice, a disclaimer notice, and a link to the material. CC licenses prior to Version 4.0 also require you to provide the title of the material if supplied, and may have other slight differences."

I love that you've chosen to use CC, but it is important to do it properly.  I would think attribution is due to the photographer who generously licensed the work so you could use it.  

Image

Laurel L. Russwurm wrote:

You've chosen to use a lovely Creative Commons licensed photograph to illustrate this important article.  Unfortunately "Photo of tanker in Burrard Inlet via Flickr Creative Commons" is not adequate attribution.  Who took the photo?  Flickr is a photo sharing web platform, not a photographer.  And creative Creative Commons offers a range of licenses which have dramatically different terms.   

Thanks for taking the time to comment, Laurel. Unfortunately the only name given on this is "Judy_and_Ed" and the full names were not available. I have posted the name that appears on the account. 

 

This should be more widely known!

This well-written article reveals how the permissive, pro-corporate atmosphere created by the Harper government is leading to economic disaster for ordinary Canadians. The NEB is essentially a tool of the Prime Minister's Office. Stephen Harper's father was an accountant for Imperial Oil, and the PM described him as "the most important man in my life." It is therefore his personal history that is leading him to ignore common sense and his responsibility to protect the economic security of Canadians. Instead, he's protecting oil companies, and doing so in strange and unprecedented ways -- ways so extreme they are rejected by even the generally pro-corporate USA. We simply have a rogue leader, ensconced in a political office that is endowed with unprecedented powers, who's abusing those powers to promote the profits of his friends.

Link to the Photo

juechi wrote:

Laurel L. Russwurm wrote:

You've chosen to use a lovely Creative Commons licensed photograph to illustrate this important article.  Unfortunately "Photo of tanker in Burrard Inlet via Flickr Creative Commons" is not adequate attribution.  Who took the photo?  Flickr is a photo sharing web platform, not a photographer.  And creative Creative Commons offers a range of licenses which have dramatically different terms.   

Thanks for taking the time to comment, Laurel. Unfortunately the only name given on this is "Judy_and_Ed" and the full names were not available. I have posted the name that appears on the account. 

 

Great that you posted the Flickr names but I agree that a link to the photo should be added as well.

And good article.

 

Kinder Morgan

Well I am glad you have taken care of commenting on the really important stuff contained in this article.  The actual content is extremely important to Canadians and indicative of how our fed. Government is giving big oil every possible advantage in their drive to produce more and more (to the detriment of the planet) using our tax dollars....BUT lets get the photo credit to your satisfaction.  Sigh.

pipeline development cost

Pipeline development costs

dvDesigning a pipeline and trying to obtain approval for it is a normal business expense. If it costs $ 1.45 per barrel to recover the cost it should be charged to the end users not to those who are shipping it. Nothing is said about how llong this surcharge will apply. The cost of the inquiry can be reduced significantly if Kinder Morgan would clearly explain what the problems in the industry have been and how they can be overcome. Between 2002 and  2012 the customary leak detection system using internal sensors detected only 5% of the leaks in the US. It does not detect leaks smaller than

1 ½ % of the flow and even for larger leaks there are so many false alarms that the real ones can be misinterpreted as happened in the 17 hours shut-off delay during Enbridge’s  Kalamazoo spill. Since Kinder Morgan also had some major spills I had expected that they would start off explaining how these were caused and show that they now have much more sensitive leak detection instrumentation, better crack detection equipment and stricter crack repair regulations. They could also have made a commitment to upgrade the old line with the new technology. Maybe they did all this but it is not widely reported. Instead we read that they submitted a dubious report dealing with clean-up costs. “But the company's costs estimates for oil spills on land and sea are based a scientific report that the U.S. Environmental Protection Agency threw out as bad science”. Furthermore they made a gaffe by mentioning the positive side of spills “"Spill response and clean-up creates business and employment opportunities for affected communities, regions, and cleanup service providers."

 

As I see it, if all the technical and regulatory details for pipelines were published for open discussion there would be less objection. I had several email exchanges with Enbridge on the subject and they refer to their blogs for answers. That is not enough to reach the general public. After I sent the entire post 1 of neilwilhees.blogspot.ca to Enbridge with a special note pointing out that at the very end there is a list of unanswered questions about pipelines and tanker traffic, they thanked me for my support but the questions have as yet to be answered.

 

Due to objections to pipelines, rail transport increases rapidly. In the US over 500,000 barrels per day are already shipped by rail. That amount is almost as much as the 525 000 bpd Enbridge Northern Gateway pipeline. Canada is not yet as far advanced. Only 230 000 barrels per day are shipped by rail from Alberta. If it all goes to the Gulf Coast, where refiners prefer our oil over the North Dakota Bakken oil, we already supply by rail about 1/3 of the initial Keystone XL flow. At the moment new loading stations are being built and a lot of rolling stock is on order to transport far more by rail. Probably the most significant plan is a 1,500,000 bpd railway line from Alberta to Alaska. When it is double tracked it can ship far more oil. Double tracking would also allow shipping potash, grain, lumber and minerals. It was original conceived by Alaska and the Yukon in 2005 and 2007 because oil shipments through Valdez are dwindling.  Following increased opposition to the Northern Gateway Pipeline the potential was further discussed with First Nations and an agreement has been reached. The present estimated cost is $8.4 billion for the single track and $ 10.4 billion for the double track. The main advantage is full participation of Canadian First Nations and Alaska Indian Tribes. Another aantage is that shipping from Valdez to Asia is 2-4 days less than through BC ports.

  

No Tar Sands in the Fraser River

Clark has to stop Kinder Morgan from piping toxic, tar sands through the Trans Mountain pipeline, because there is no equipment to clean-up a spill. The toxins in a spill are bad for your health. A tar sands spill down into the Fraser River will kill the salmon and destroy the salmon spawning areas and destroy BC's salmon industry.

Kinder Morgan pipelines

Kinder Morgans reputation for oil spills is, even worse that of the Ebridge spills. I think people in BC are well past the time of, the bs going on in this country. BC has constantly been harassed by, the greed of governments, as well as the oil and gas barons.

Vancouver is a very popular tourist destination. This is the only industry, that hasn't been thieved and sold out of BC. BC can not afford an oil spill of any sort, anywhere in BC.  The people of this province, make their living from tourism. No-one has the right, to take our means of living away from any of us.

BC has been treated as dirt by, the *Harper* government. The Campbell/Clark BC Liberal government. Harper and Christy Clark gave the BC ship building contract, to Poland.  Alberta wants the Enbridge pipeline forced through. And Enbridge who, posted a map of the channel into kitimat, missing all of the small islands. And now, we have to fight Kinder Morgan as well. So to hell with it,  BC has everything to lose again. We can do nothing other than, fight the Kinder Morgan pipelines.

 

Some people.

Waggle your finger harder mom. If you were of any use you'd educate without the pedantic scorn and you'd do it privately instead of hauling an entire piece of useful news off track to fulfil your internet warrior desires. Feeling pretty big right now?

For the authors of this useful piece, it took five minutes of googling: http://getthewholepicture.blogspot.ca/ - this is the Judy of Judy and Ed.

Flickr profile -> Ross-Park Homepage -> getthewholepicture

... and yes, attribution is very important, sorry to have further dragged this piece away from where it should be, on this Kinder-Morgan atrocity.

Feel free to zap this reply, it's pretty testy but I can't believe the nerve of some people, folks who make us working in the copyright field look like a bunch of persnickety dbags.

Image Credit

This is an important article about an important issue, but copyright is an important issue, particularly for anyone committing journalism.  This is especially true when the journalism of a political nature, as this is.  Copyright law has proven to be a powerful censorship tool since its inception in 1710.

juechi wrote:

Laurel L. Russwurm wrote:

You've chosen to use a lovely Creative Commons licensed photograph to illustrate this important article. Unfortunately "Photo of tanker in Burrard Inlet via Flickr Creative Commons" is not adequate attribution. Who took the photo? Flickr is a photo sharing web platform, not a photographer. And creative Creative Commons offers a range of licenses which have dramatically different terms.

Thanks for taking the time to comment, Laurel. Unfortunately the only name given on this is "Judy_and_Ed" and the full names were not available. I have posted the name that appears on the account.

Thanks for adding the name "Judy_and_Ed" to the attribution, Jenny.  

But which Judy and Ed?

The Flickr account with that name: https://www.flickr.com/photos/Judy_and_Ed/ has no images posted to it.  

I can guess that the account you mean is the one at https://www.flickr.com/photos/65924740@N00 which goes by the alias judy_and_ed.  But when I scroll through the first few hundred images on judy_and_ed's photostream, I don't see the photo you used, so maybe this isn't the correct judy_and_ed after all.  Before giving up, I searched judy_and_ed's Flickr photostream for "Kinder Morgan" but there were no matches.  Referring back to your caption, I tried searching for "Burrard Inlet" and finally found the original image you used.

This is why CC attribution requires a link to the original image. My original comment quoted the actual Creative Commons Attribution License language because CC attribution requires more than the name of the creator. While you can use any caption you wish, the appropriate attribution should look like this:

“Maneuvering” © judy_and_ed is released with a Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0) License.

A Creative Commons License is a legal instrument like a contract.  Failure to fulfil the terms voids the license.  

 

Special reports

Tar Sands Reporting Project

Our award-winning team's crowd-funded series on the people, places and conflicts associated with Canada's tar sands.
Support this report