Strong opposition to the proposed oil pipeline to Kitimat could cause increased tanker traffic in the Burrard Inlet as energy companies Enbridge and Kinder Morgan compete to transport crude oil to high-paying markets in Asia.
Delays in building Enbridge’s northern pipeline, such as the recently announced one-year extension to the consultation process, are a boon to Houston-based Kinder Morgan, which hopes to secure lucrative contracts to transport Albertan heavy crude to Asia through an existing pipeline. Its Trans Mountain pipeline is currently the only pipeline connecting Alberta’s oil sands with the Pacific Coast. Kinder Morgan has applied to the National Energy Board to boost its daily capacity from 300,000 barrels to 700,000 barrels.
“It might surprise you, but no Enbridge pipeline actually means more tankers in Vancouver Harbour,” says Ben West, communication coordinator at the Wilderness Committee, an environmental group. “Kinder Morgan has been quietly trying to increase capacity of its pipeline that runs from Edmonton into Burnaby and they are bidding for a lot of the same contracts as Enbridge, and even that Keystone was, in terms of export. Quite frankly, no one is happier than Richard Kinder when these other projects are under so much scrutiny.”
Kinder Morgan is well placed to take advantage of regulatory challenges that have delayed plans by its competitors. The consultation process for Enbridge’s proposed northern pipeline to Kitimat was extended by a year after more than 4,000 people signed up to participate in public hearings. Given the likelihood of legal challenges by Aboriginal communities, the project could be tied up long after the federally appointed joint panel releases its decision in April 2014.
Meanwhile, TransCanada, based in Calgary, is coming up with new plans after its Keystone pipeline was rejected by US President Barrack Obama.
West is concerned that exporting more oil from Kinder Morgan’s pipeline would bring larger tankers to the Burrard Inlet. “The Second Narrows is quite shallow and right now the biggest tankers we can get through carry about a maximum of 700,000 barrels,” West says. “To get the tankers that are a million barrels or bigger, they would have to drastically increase dredging of the Burrard Inlet.”
Counter-intuitively, increasing oil exports from Greater Vancouver could hurt local refineries, which produce gasoline, jet fuel, diesel and asphalt for domestic use. Burnaby-Douglas NDP MP Kennedy Stewart has initiated a series of hearings in the House of Commons to draw attention to how exporting oil to Asia is threatening the viability of the Canadian refining industry. “In 1980, we had 39 refineries in Canada. We now have 15,” says Stewart. “We’re losing one refinery a year.”
Last year, the National Energy Board, which regulates everything from price to foreign ownership, approved Kinder Morgan’s request to change the way it sells its oil, effectively allowing the company to sell more oil for export rather than for domestic use. “It’s opened up the oil to more bidders and driven up prices,” Stewart says. “Local refineries can’t afford to buy Canadian oil, so they shut down.”
That could lead to local job losses at refineries like Chevron’s in Burnaby. “Eastern Canada imports oil from places like Nigeria and Angola, places with much lower environmental and labour standards,” says Stewart. “It’s bizarre. We’re becoming an oil exporting superpower but we have no way of protecting our domestic supply.”
Much of the opposition to the Northern Gateway pipeline is concerned with unanticipated consequences. But the opposition may bring some consequences of its own, including bigger tankers in Burrard inlet, more oil flowing though the Lower Mainland, and more competition for domestic refineries.
