Oil sands bitumen exports undermine Canada's economic future

Canada is headed down the wrong economic path by exporting raw oil sands bitumen, former ICBC CEO Robyn Allan said in a stirring presentation a week ago at the West Coast Oil Pipeline Summit. Allan highlighted the economic danger posed by oil sands pipelines including Keystone XL, Northern Gateway and Kinder Morgan that the federal government has been promoting in the name of jobs and growth. Below are excerpts from her presentation, "Oil Sands Development and the Economic Consequences".

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What is not commonly appreciated is that Northern Gateway has been designed to ship 60% more crude oil and 40% more condensate by simply adding pumping power.

More tankers

The supertankers needed to transport it? It’s not 220 a year, but closer to 340—almost two supertanker transits a day in BC’s northern coastal waters.

More crude. More condensate. More Tankers. More Risk. Way more risk.

If there are 60% more oil tankers there is more than a 60% increase in the risk of an oil spill.

None of that risk is being considered in the current approval process for Northern Gateway, but capital expenditures to support expanded throughput are.

The oil industry is counting on less scrutiny and rapid approval when they apply to significantly expand capacity.

At the recent Kinder Morgan Toll Application Hearing, Suncor explained to Kinder Morgan that, Founding Shippers on Northern Gateway can: compel expansion; that it has been commercially contemplated; and is expected to be more efficient because its a streamlined regulatory process.

Until 2005, TransMountain pipeline capacity was 225,000 barrels a day. In 2006 they applied for expanded capacity to 300,000 barrels a day under a streamlined environmental screening process.

More risk of spills 

A growth in oil tanker traffic in Burrard Inlet was triggered. The number of oil tankers through English Bay has increased three fold since Kinder Morgan expanded Trans Mountain’s pipeline capacity.

At no time has an adequate terrestrial and marine environmental assessment been conducted on this increased volume, nor has the unique risk presented by diluted bitumen been assessed.

Potential costs from a spill have not been appropriately calculated, and adequate financial resources to compensate for a spill have not been assured.

The current economic risk from the existing Trans Mountain system is extensive and British Columbians are exposed to unnecessary risk.

Now, Kinder Morgan plans to twin Trans Mountain and they have told us their new pipeline will ship 540,000 barrels a day of diluted bitumen triggering 408 tankers a year.

 

This proposed new pipeline is a 36” diameter pipeline—the same diameter as Northern Gateway’s proposed oil pipeline.

It is possible that the proposed Trans Mountain twin has designed capacity much greater than what we are being led to believe. If this new pipeline can move up to 850,000 barrels a day as Northern Gateway can, this would mean the oil pipeline system flowing into the lower mainland of BC could accommodate over 1.2 million barrels a day of crude oil. 

That volume would mean either more supertankers—or bigger supertankers—or both. 

We know in 2011 Kinder Morgan planned to dredge Burrard Inlet to accommodate Suezmax supertankers which can ship about 25% more oil than Aframax—because they are bigger.

It becomes very important later this year when Kinder Morgan applies for approval to build Trans Mountain’s twin that the risk of the existing pipeline and the full designed capacity and risk of this capacity be the scope of the review—not just the capacity Kinder Morgan wants us to see.

 

The “The Top 10” economic reasons to reject oil pipelines and supertankers along BC’s coast are:

1. Decades of higher oil prices for Canadian consumers and businesses across the country.

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