Energy and Mines

Facts and Questions

Fact 1: Currently, 300,000 barrels of heavy oil are transported across B.C. in Kinder Morgan’s Trans Mountain pipeline each day. Kinder Morgan plans to nearly triple this capacity while Enbridge has applied to build a new pipeline to the west coast. If approved, the two pipelines would increase the amount of heavy oil coming to our coast to a total of 1,415,000 barrels per day. In addition to the pipeline proposals, rail options are also being considered to transport up to 525,000 barrels of heavy oil to the B.C. coast each day.

Fact 2: According to (1) Premier Christy Clark, (2) the reports commissioned by the Ministry of the Environment and (3) the Province’s submission to the Joint Review Panel on the Northern Gateway Pipeline, British Columbia is woefully unprepared for a heavy oil spill. The Province’s submission also states that regardless of whether or not additional resources are committed, effective spill response is “impossible or severely constrained” in certain regions of the province.

Comment: I applaud the Premier for being consistent in requiring five conditions to be met before supporting enhanced heavy oil tanker traffic on the coast. I also applaud her for publicly recognizing the fact that B.C. is woefully unprepared for a heavy oil spill. Yet at the same time as the Premier is recognizing this, she is also signalling that progress is being made in meetings with Alberta Premier Alison Redford towards meeting her government’s five conditions.

My concern is that because global knowledge of diluted bitumen is so limited, the government’s current standard of “world-leading” is actually a very low standard that, frankly speaking, could easily be met without ever developing a truly effective spill response capacity. In other words, “world-leading” standards will not protect our coast from a heavy oil spill. I have therefore asked the Premier in an open letter to clarify what criteria her government uses to evaluate a “world-leading” or “effective” spill response capacity. Only by having this information can we make a fully informed choice about whether the likely benefits outweigh the enormous risks.

Fact 3: Proposals to build refineries that can turn bitumen into value-added products prior to export are already being considered in both B.C. and Alberta. Proponents of these refineries argue that it would stimulate more investment and jobs here in Canada, meaning we would exact greater gains from our limited natural resources.

Fact 4: Refined oils are, comparatively speaking, much safer to transport than diluted bitumen. There is significantly more knowledge of how to clean up refined oils, including existing procedures, protocols, equipment and expertise. According to documents from the Department of Fisheries and Oceans (DFO), this knowledge does not currently exist for bitumen, meaning it is much more dangerous to transport.

Comment: The plan to transport diluted bitumen by pipeline across B.C. for export to international markets is both environmentally risky and economically short-sited. It is looking for the quick dollar at the expense of a potentially bigger dollar—and our environment.

If we are going to continue developing the Alberta oil sands, and if oil sands products are going to be transported across B.C., then shouldn’t we seriously consider exporting refined products like gasoline and jet-fuel instead of diluted bitumen?

Refined products could sell for higher prices and stimulate the development of value-added industries (including petrochemical industries). Exporting refined, as opposed to raw, products could create more local jobs in Canada while eliminating the risk of a dilbit spill on our coastline. Taking this further, refining bitumen close to where it is extracted would also minimize the risk of a land-based dilbit spill from a leaking pipeline.

My Assessment

The threat of a heavy oil spill on the B.C. coast is not a distant possibility. Tankers leave from Vancouver habour ever week and if the Northern Gateway and Trans Mountain pipeline proposals are approved, the number of tankers will increase dramatically.

Some risks are necessary; others are not. While Premier Christy Clark has publicly recognized that B.C. is “woefully” unprepared for a heavy oil spill, the Province’s submission to the Joint Review Panel for the Northern Gateway pipeline has clearly stated that effective spill response is “impossible or severely constrained” in certain regions of the province. Meanwhile, the Department of Fisheries and Oceans has made it clear that not enough is known about what would happen to diluted bitumen were it to spill into the ocean.

The chances that a heavy oil spill will occur may be small, but the risks are massive—not just the environmental risks but also the economic risks. What would happen to the tourism or fishery industries if there was a spill in or near Vancouver habour?

The more we increase the number of heavy oil tankers, the higher the chance that a spill will occur. We need to be smart about how we manage this risk and to recognize that, in some cases, if we cannot manage the risk, we should not be shipping the product.

I have therefore proposed two ideas:

1. I have called for a moratorium on tankers carrying diluted bitumen on the B.C. coast.
2. I have proposed that if we are going to continue developing the Alberta oil sands, and if that oil is going to cross B.C., then at the very least, we should seriously consider refining it into value-added products prior to transportation and export, in order to increase the economic benefits and decrease the environmental risks.

Further Reading

Christy Clark’s statement to Mansbridge: http://www.cbc.ca/news/politics/christy-clark-warns-canada-unprepared-for-tanker-oil-spills-1.1876514

Five conditions for heavy oil pipelines: http://www.newsroom.gov.bc.ca/2012/07/british-columbia-outlines-requirements-for-heavy-oil-pipeline-consideration.html

Spill response reports: http://www.env.gov.bc.ca/main/west-coast-spill-response-study/

Province’s submission on Northern Gateway: http://www.env.gov.bc.ca/main/docs/2013/BC-Submission-to-NGP-JointReviewPanel_130531.pdf

Oil by rail: http://www.cbc.ca/news/canada/british-columbia/cn-feds-eyeing-oil-by-rail-to-prince-rupert-b-c-1.1863916

With the development of the Alberta oil sands, the Federal government and stakeholders in the oil sands industry have been looking for new heavy oil export opportunities. One path that is under consideration is to transport heavy oil across British Columbia for shipment by tanker to international refineries.

There are two major heavy oil pipeline proposals that are being considered in British Columbia. The first is the Northern Gateway Pipeline, proposed by Enbridge. This pipeline would run 1,177km from Northern Alberta to the port of Kitimat, B.C. and would transport up to 525,000 barrels of heavy oil per day. The second proposal is an expansion of Kinder Morgan’s existing Trans Mountain Pipeline, which runs 1,150 km from Strathcona Country, AB, to Burnaby, BC. The expansion would increase the carrying capacity of the pipeline from 300,000 barrels per day, to 890,000 barrels per day.

One of the key concerns with these pipeline projects is that the type of oil that will be transported is not traditional crude oil. Instead, the heavy oil that would be transported is called “diluted bitumen” or “dilbit”. Bitumen by itself is very viscous (like window putty, caulk or vegetable shortening) and so does not flow through pipes. As such, it is mixed with condensates (other very light hydrocarbons) with an API (American Petroleum Institute) gravity range of typically >50 (see Figure 1). Unlike traditional crude oils, bitumen is heavier than water that, by definition, has an API gravity equal to 10 (see Figure). What this means is whereas traditional crude oil will largely float on the surface of the ocean in the event of a spill, up to 50% of dilbit would sink (particularly in the presence of suspended particles in the water column), making it much more difficult to clean up. Traditional oil spill recovery techniques will not work nearly as effectively on dilbit and our current knowledge of what happens to the portion of dilbit that sinks is severely limited. One therefore needs to make a clear distinction between dilbit and other crude oils.

Figure 1: Typical density of a variety of oils characterized using the American Petroleum Institute (API) gravity scale. Water is measured as 10 so numbers <10 are heavier than water and numbers >10 are lighter than water. Source: http://carnegieendowment.org/2012/12/18/carbon-contained-in-global-oils/euzi#

In response to the public backlash against these pipeline projects, the Liberal government announced 5 conditions that will guide BC’s approval of any new heavy oil pipeline. The conditions are as follows:

1. Successful completion of the formal environmental review processes.

2. World-leading marine oil spill response, prevention and recovery systems for British Columbia.

3. World-leading practices for land spill prevention, response and recovery systems for British Columbia.

4. Legal requirements regarding Aboriginal and treaty rights must be addressed and First Nations be provided with the opportunities to benefit from these projects.

5. British Columbia receives a fair share of the fiscal and economic benefits of proposed heavy oil projects that reflect the risk borne by the province.

The BC government, however, has yet to outline the specific criteria that it will use to evaluate the extent to which these conditions are met. For instance, what is the maximum allowable response time to a spill under condition three? Or what percentage of heavy oil must be recovered from a marine spill to satisfy condition two? Nevertheless, the BC government has released three comprehensive reports providing: 1) an Assessment of British Columbia Marine Oil Spill Prevention & Response Regime; 2) a past and potential future Vessel Traffic Study; 3) an assessment of what one World-Class Oil Spill Prevention, Preparedness, Response & Recovery System might look like.

Figure 2: Three volumes of the West Coast Spill Response Study (click on image to load report).

In addition to the environmental considerations, there are also economic questions that have yet to be fully addressed. Could British Columbia, Alberta and Canada more generally benefit more from refining the oil here at home, rather than simply selling off our raw resources?

The Joint Review Panel that has been considering the Northern Gateway proposal is due to submit its report to the Federal Government in December 2013. Meanwhile, Kinder Morgan is currently finalizing its submission to the National Energy Board for the Trans Mountain Pipeline Expansion project. Once the assessments are completed, it will be up to the Federal Government to decide whether or not to approve the projects.

Over the next twenty years, BC Hydro has forecasted that our energy needs will increase by about 40% as a consequence of both population and economic growth. To meet this growing electricity demand, BC Hydro has proposed to build the Site C dam on the Peace River near Fort St. John (see Figures 1–3). Here I explore whether or not there are better ways from an economic, social and environmental perspective  to meet our future power needs.

The Site C dam

Upon completion, this dam would produce 1,100 MW (megawatts, i.e. millions of Watts) of power capacity and up to 5,100 GWh (gigawatt hours, i.e. billions of watt hours) of electricity each year. According to BC Hydro, this is enough electricity to power about 450,000 homes.

Figure 1: Location of the proposed Site C dam. Source: Site C Project Working Group Environmental Impact Statement Presentation, February 19, 2013.

Figure 2: Panoramic view of the eastern end of the Peace River valley that will be flooded with the construction of the Site C dam. The proposed dam would be constructed just east of the Peace River junction with the Moberly River seen the centre of the photo.

The price tag for the construction of the Site C dam was estimated in 2011 to be 7.9 billion dollars. Assuming a real discount rate (accounting for inflation) of between 5.5% and 6%, BC Hydro estimates that Site C would produce electricity for a cost of between 8.7¢ and 9.5¢ per kWh (kilowatt hour). At present, BC Hydro residential customers are charged 6.9¢ per kWh for their first 1,350 KWh of electricity usage over a two-month billing period and 10.34¢ per kWh after that.

a) b)

c)

Figure 3: Photos of the Peace River Valley to be flooded with the construction of the Site C dam. a) photo of some agricultural land; b) photo taken at Hudson’s Hope with (left to right) Brad Densmore (Legislative Assistant to Vicki Huntington), Arthur Hadland (Director, Peace River Regional District), Vicki Huntington (MLA Delta South), Gwen Johansson (Mayor of Hudson’s Hope); c) photo of a mid-river island important for animal migration and breeding.

The Potential for Wind Power

Currently only about 1.5% of BC’s electricity production is supplied by wind energy (see Table 1). With British Columbia’s mountainous terrain and coastal boundary, the potential for both onshore and offshore wind power production is enormous. The Canadian Wind Energy Association and the BC Hydro Integrated Resource Plan 2013 indicate that 5,100 GWh of wind generated electricity could be produced in British Columbia for about the same price as the electricity to be produced by the Site C dam. And this despite the fact that all costs (including land acquisition costs) incurred to date by BC Hydro with respect to the Site C project are not counted in their estimate for future construction costs. The potential scalability of Site C is minimal; the potential scalability of wind energy is very large.

 Table 1: Percentage of electricity supply provided by wind for a number of jurisdictions. Source: Wind energy in British Columbia, Canadian Wind Energy Association presentation by Nicholas Heap, September 20, 2013.

The minimal production of wind power in British Columbia compared to other jurisdictions (Table 1) is particularly surprising in light of the fact that BC is the home of a number of existing large-scale hydro projects. These include, but are not limited to, the W.A.C. Bennett and Peace Canyon dams already on the Peace River and the Mica, Duncan, Keenleyside, Revelstoke and Seven Mile dams on the Columbia River system. Hydro reservoirs are ideally suited for coupling with wind power generation to stabilize base-load supply. That is, when the wind is not blowing, hydro is used; when the wind is blowing, the reservoirs refill and hydropower is not used. In fact, hydro dams act just like rechargeable batteries with wind providing the renewable recharge to the battery system. And British Columbia is one of the few places in the world that can take advantage of such reservoirs as wind power is introduced into the grid.

Figure 4: Photo of Bear Mountain Wind Park near Dawson Creek.

Given that wind power can easily be introduced into British Columbia at the same, or even lower, price than equivalent power from the Site C dam, we should ask if there are any other reasons that would favour Site C over wind for the production of power to meet BC energy needs. I can think of none. In fact, I can think of a number of reasons why wind power should be considered over Site C to produce the equivalent 5,100 GWh per year of electrical power:

1. The construction of the Site C dam will flood 6,427 acres of Class 1 & 2 agricultural land (a total of 15,985 acres of Class 1-7 agricultural land). Wind power sites would not affect agricultural land. In fact, the Peace River valley contains the only Class 1 agricultural land north of Quesnel.
2. Key regions in the archive of British Columbia history will be flooded. The Peace River has been designated as a BC Heritage River. It was, in fact, traversed by the explorers Alexander MacKenzie, John Finlay, Simon Fraser, John Stuart, A.R. MacLeod and David Thompson (and others) in their early ventures during the 17^th and 18^th century. Rocky Mountain Fort, thought to be the first trading post established in British Columbia (by John Finlay in 1794) as well as Rocky Mountain Portage House (across the river from Hudson Hope and established by John Finlay and Simon Fraser in 1805) are both located in the valley.
3. Job creation associated with wind power is province-wide. Job creation associated with the Site C dam is constrained to one region.
4. The risk of any cost overruns associated with the construction of the Site C dam is borne by the taxpayer. The risk of any cost overruns associated with the construction wind farms is borne by industry. This is important as it limits any risk to the taxpayer.
5. The installation of wind farms can be done in partnership with First Nations who would benefit from both local jobs as well as revenue from the installed facilities. In contrast, the affected Treaty 8 Tribal Association has already expressed a number of serious concerns regarding the Site C dam proposal.
6. It would take much longer to complete the Site C dam project than it would to install wind farms. In addition, wind power is scalable where as the Site C dam is not.
7. Wind farms are distributed and so can be located close to where the energy is needed thereby reducing energy loss during transmission.

To summarize, it is clear to me that the development of the Site C project makes little sense. For the same, or even lower cost, we could develop a similar capacity for wind-power in British Columbia. And the co-benefits of choosing wind power over the Site C project are profound.

Wind power instead of the Site C dam both makes sense and cents.

“We are woefully under-resourced,” Clark said in a recent interview with Peter Mansbridge on CBC. This in response to both internal and public reports that British Columbia is unable to respond to an oil spill along the coast, and certainly does not have the techniques, equipment or expertise to manage a diluted bitumen (DilBit), or heavy oil, disaster.

Meanwhile, the Premier is actively seeking revenue guarantees for any heavy oil pipeline originating from Alberta, sending a mixed message to industry, developers and communities. On one hand the fact neither provincial or federal resources will be able to handle even a relatively small marine spill would seem to be a line in the sand – no pipelines, no tankers. On the other hand, smiles and handshakes with Alberta Premier Alison Redford with words suggesting the provinces are closer to a revenue agreement.

Before the province continues down a path of dilbit transport, here are four questions that need to be answered.

An Open Letter to Premier Christy Clark

October 9th,2013
Honourable Christy Clark Premier of British Columbia
Parliament Buildings Victoria BC V8V 1X4

Dear Premier Clark:

I applaud the fact that your government has been consistent in requiring five conditions to be met before you will support enhanced heavy oil tanker traffic off our coast. Consistency is important in providing certainty to the public, business and investors alike. It is for this reason that I am writing to you to seek some further clarification on the second and third of your five conditions. As written, these conditions require:

“World-leading marine oil-spill response, prevention and recovery systems for B.C.’s coastline and ocean to manage and mitigate the risks and costs of heavy-oil pipelines and shipments.”

“World-leading practices for land oil spill prevention, response and recovery systems to manage and mitigate the risks and costs of heavy oil pipelines.”

The Department of Fisheries and Oceans has identified that behaviour models specific to diluted bitumen (dilbit) do not exist. In short neither research nor data on the effects of dilbit released into a marine environment is available. In addition, the procedures, protocols, equipment and expertise that will be required to respond to a potential spill do not exist. This suggests that the current standard for a “world-leading” response is, practically speaking, a fairly low standard.

In my view, the Province’s May 31, 2013 thorough and comprehensive submission to the Joint Review Panel (JRP) did an outstanding job representing the interests of British Columbians. The submission specifically stated that the BC Government required an “effective” heavy oil spill response capacity before it could support a proposal. In that report, the government implies that its criteria for an “effective response” includes meeting specific standards for:

1. Removing dissolved oil from the water column;
2. Dealing with sunken oil in a water course;
3. Implementing a precise leak detection threshold;
4. Committing to a specific and realistic response time to any oil spill at any affected geographic location;
5. Ensuring accessibility of the pipeline year-round to respond to any spill, regardless of seasonal conditions.

In order to provide further clarity to the public, business and investors I have four further questions:

1) Could you please provide a detailed outline of the specific standards and criteria your government uses to evaluate the effectiveness of a proposal’s heavy oil spill response capacity?

2) In your interview with Peter Mansbridge that aired on October 5, 2013, you stated that British Columbia is “woefully under-resourced” to deal with a heavy oil spill. You also acknowledged that BC is already at risk of a heavy oil spill, since tankers leave Burnaby harbour every week transporting dilbit from the Kinder Morgan Trans Mountain pipeline. As I am sure you are aware, the product transported in the Trans Mountain pipeline has changed since it was initially constructed in 1963 and dilbit is a relatively new addition. Given the numerous concerns that you and your government have raised about our current heavy oil spill response capacity, will the proposals to expand the Trans Mountain pipeline or transport heavy oil by rail be subjected to the same specific criteria of “effectiveness” that you have laid out for the Northern Gateway proposal?

3) In this same interview you made it clear that you expect the federal government to provide more resources for marine spill response “before any more heavy oil comes off the coast”. However, the Province’s submission to the JRP clearly states that an effective spill response will “be impossible or severely constrained” in certain regions, regardless of available resources. How, realistically, will further Federal resources address the fact that effective spill response may not even be possible in certain instances?

4) In regards to the heavy oil that is already being transported out of Burnaby harbour as well as any additional heavy oil that is to be transported to the BC coast, would you not agree that it would make far more sense to refine that heavy oil in its entirety in British Columbia prior to shipping it offshore both to mitigate against the risk of a marine dilbit spill and to provide jobs and an economic stimulus to British Columbia?

I thank you in advance for your consideration of these four questions and I very much look forward to your response.

Yours sincerely

Andrew Weaver

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This week Andrew Weaver is in Fort St. John for the BC Energy Conference. The conference brings together industry leaders, government representatives, and academics to generate awareness and general literacy relating to the energy sector in Canada, and particularly relating to the natural gas sector which is prominent in this region.

Andrew Weaver has raised serious concerns about the government’s plan to develop a liquefied natural gas sector in British Columbia. This conference serves as another helpful step in ensuring that he can continue to offer an informed and constructive voice to the debate.

The first day of the conference was spent touring some of the nearby natural gas facilities. Below are a few of the highlights.