Energy and Mines

Media Statement—September 19, 2013

For immediate release

Vancouver, BC: Andrew Weaver calls for moratorium on dilbit tanker traffic from Burnaby port.

The British Columbia government has rejected the proposed Northern Gateway pipeline due in part to inadequate preparedness for potential marine and land heavy oil spills, while ignoring the fact that the heavy oil, diluted bitumen (dilbit), is shipped weekly from Burnaby, posing serious risks to BC’s coast.

“I am calling on Premier Clark and the BC government to be consistent in their approach to standing up for BC by placing a moratorium on all dilbit tanker traffic on our coast, including existing and proposed traffic from the Trans Mountain facility in Burnaby.”

The government has made it clear that any heavy oil pipelines and tanker traffic along the BC coast must meet 5 basic criteria, including world-leading marine and land oil spill response and recovery systems.

Meanwhile, documents from the Department of Fisheries and Oceans identified that: “Behaviour models specific to dilbit spills do not exist, and existing commercial models for conventional oil do not allow parameter specific modifications.” In short, should a spill occur, the research, data and evaluation of the effects of dilbit on land, fresh water and marine environments are simply not available, neither are the procedures, protocols, equipment and expertise that will be required to respond. A dilbit spill in Vancouver harbour would have profound and long-lasting consequences.

In its thorough submission to the Northern Gateway Joint Review Panel the British Columbia Government stated: “the Province is not able to support approval of the project, and submits that its concerns respecting NG’s ability to respond to a spill should be given serious consideration by the JRP”.

However, while the government has made a strong case against dilbit exports from the Northern Gateway pipeline, it has failed to address the very real threat that existing dilbit tanker traffic from the Trans Mountain facility in Burnaby already poses to the BC coast. Currently 5 tankers pass through the harbour each month carrying dilbit, a number that could increase dramatically to 34 with the proposed twinning of the Trans Mountain pipeline. If the proposal is successful, the Trans Mountain pipeline will transport 890,000 barrels a day, making it nearly double the capacity of the proposed Northern Gateway pipeline, which would transport 525,000 barrels a day.

BC Hydro can’t seem to stay out of the news, and on people’s minds. Over the past few weeks a number of constituents have contacted our community office with concerns about additional charges for opting out of a BC Hydro smart meter: If they chose to keep their old meter, would it cost them more per month? And if so, how much more?

We now know. BC Hydro has submitted letters to customers outlining a fee structure for keeping their old meter. Customers who do not want a smart meter will be charged an additional $35 monthly monitoring fee. Customers who have a smart meter but would like to turn off the radio transmitter will be charged a ‘one-time’ fee of $100 and a $20 monthly monitoring fee.

There are many people who have expressed their concerns about having a smart meter attached to their home. The position that I advocated for was that people should have the right to determine what is attached to their homes. The response from BC Hydro was to grant an opt-out option, which I am in favour of

Understandably, the two options–to either transition to a smart meter or to keep one’s original meter–have different costs associated with them for BC Hydro. Switching to a smart meter requires initial capital costs to purchase and install the meters but is relatively inexpensive when it comes to monitoring usage. Keeping an old meter, on the other hand, means no initial capital cost, but higher monitoring costs. My stance is that if these costs are incurred by the customer, they should adequately reflect the costs incurred by BC Hydro and should not be used to generate additional profit.

To charge a customer $35 a month to keep their old meter, when manual readings are traditionally done every 2 or 3 months, translates into customers paying between $70 and $105 per visit. This is outrageous. Several jurisdictions in the United States have created similar opt-out programs for smart meters and only charge their customers $10 to $12 per month, such as in Maine and California . There is also a low income fee structure in California which reduces customer costs from $75 to $10 initial fee, and from $10 to $5 for the monthly fee: a program BC Hydo should consider, or even better, the BC Government impose.

Even though letters sent out by BC Hydro indicate they are going ahead with the new charges, this still requires approval from the BC Utilities Commission.

I am urging the commission to carefully review the fees charged and options available in other jurisdictions, and not to approve the BC Hydro proposal.

Andrew Weaver

Below are links to information on smart meter programs in Maine and California in the United States, for those readers who would like further information on other jurisdictions:

Maine: http://www.cmpco.com/smartmeter/smartmeteroptions.html

California: http://docs.cpuc.ca.gov/PUBLISHED/NEWS_RELEASE/164434.htm

In a press conference on September 4th, Elizabeth May MP (Saanich and Gulf islands) and Andrew Weaver MLA (Oak Bay – Gordon Head) presented information that the federal government is moving forward with a Kitimat region research program, while the BC government has said no to the Northern Gateway Project.

The Federal Government is moving forward over the next two years with a $100 million plus, ‘Complementary Measures Project’ (now called ‘World Class’) to research and model the complex waterways in the Kitimat and Hecate Straights region. In essence this is a federal government subsidy to the Northern Gateway Project, as they are unable to satisfy basic safety, environmental and regulatory requirements. In fact documents from the Department of Fisheries and Oceans identified that: “Behaviour models specific to dilbit spills do not exist, and existing commercial models for conventional oil do not allow parameter specific modifications.”

On the federal level contrary to what Stephen Harper has said about awaiting the evidence and panel results, the Government of Canada has been pushing ahead with spending over $100 million to support what should be industry based research. This comes at a time of major cuts to science funding for climate change, marine contaminants and ELA.

In its thorough submission to the Northern Gateway Joint Review Panel the British Columbia Government stated: “the Province is not able to support approval of the project, and submits that its concerns respecting NG’s ability to respond to a spill should be given serious consideration by the JRP”. Should a spill occur, the research, data and evaluation of the effects of diluted bitumen (dilbit) on both land, fresh water and marine environments are simply not available, neither are the procedures, protocols, equipment and expertise that will be required to respond.

Available Downloads:

Media-Statement – media-release – Background Slides

LNG: Facts and Comments

Fact 1: According to the Honorable Richard Coleman, Minister of Natural Gas Development, revenue projections from LNG are based on B.C. supplying 84 million tonnes of natural gas to the Asia-Pacific market. According to Minister Coleman, this is the projected amount that could be supplied by B.C., but it does not take into consideration competitive supply from other countries, which he describes as “staggering”.

Fact 2: British Columbia is not the only jurisdiction vying to sell its natural gas to Asian markets. Here are some basic facts:

• Canada has less than 1% of the world’s proven natural gas reserves.
• Russia has 20 times as much natural gas as all of Canada combined and recently signed agreements to trade natural gas with China. Russia can transport its gas to China via pipeline and does not need to undergo the costly process of liquefying the gas for tanker transport.
• Australia has similar-sized shale gas reserves as Canada and is much further ahead in the development of its LNG industry.
• The United States has more than twice the shale gas reserves as Canada and the US government recently decided to allow natural gas export. The US already has some of the necessary infrastructure in place on their coastline to facilitate a relatively quick development of an LNG export industry.
• China could soon be well positioned to take advantage of its own natural gas reserves, which are 3 times the size of Canada’s.

First Comment: There are many other countries with much larger natural gas reserves than Canada–let alone BC–that will be vying to sell to the Asia-Pacific markets. Many of these countries are well-positioned to do so. If Minister Coleman’s statement is in fact true—that the supply projections for B.C. do not take into consideration competition from other suppliers—then we are headed for a rude awakening. Russia, Australia, Qatar, the US, to name a few—none of these countries will simply stand by and allow BC to sell as much LNG to Asia as it needs—they will fight as hard as they can to beat out LNG from B.C. and control the market. To base promises of wealth on airy-fairy scenarios is disrespectful to taxpayers.

In either case, what we know from economics is that as supply increases, price usually decreases. In the context of a drastic increase in the global supply of natural gas, the Liberal government has yet to provide adequate evidence to show that the demand for, and therefore price of, LNG will remain high enough, for long enough, to justify spending hundreds of millions of taxpayer dollars to develop this industry.

Fact 3: The Liberal government has claimed that LNG export could add up to $1 trillion to the provincial GDP over 3 decades and could finance a $100 billion prosperity fund that, in addition to benefiting local communities and First Nations groups, could be used to eliminate the provincial sales tax and pay off the provincial debt (currently approximated at more than $55 billion and predicted to rise to $69 billion by 2015).

Second Comment: When I asked the Minister for Natural Gas Development how he arrived at the $100 billion estimate for the prosperity fund, he was unable to provide a clear answer.

Obviously, the prosperity fund statements are based on an assumed average global pricing for LNG. However, like all fossil fuels, natural gas tends towards boom and bust cycles. In the past 6 years, natural gas prices have fluctuated from a high of $9.34 in June 2008 and to a low of $0.76 in April 2012. That’s a factor of 12.3. Even assuming that B.C. can achieve its supply goals (First Comment) there is no guarantee the assumed price of gas will stay constant enough to realize these revenue projections, in the context of intense price competition.

That said, even if B.C. is able to raise $100 billion prosperity fund, it is unclear how that fund alone could do everything the Liberal government has suggested.

Fact 4: Since 2008 British Columbia has led the continent with its visionary climate policy. Part of this policy requires the government to keep provincial carbon emissions below a certain level. The fact is we will not be able to meet our carbon targets if we develop the liquefied natural gas industry as the Liberal government has currently proposed.

Third Comment: Here’s why: Liquefying natural gas requires enormous amounts of energy. This energy cannot come from renewable energy alone—even with the development of the Site-C dam there simply is not enough. Most likely, the power will come from burning natural gas to then liquefy natural gas. Even though natural gas is a relatively clean energy, so much of it will have to be burned that we will exceed our carbon targets. Knowing this, the Liberal government made changes to the Clean Energy Act last year to allow the use of natural gas to power LNG facilities. These changes were contrary to the very purpose of the Clean Energy Act.

The fact is Clean Energy Act was not created based on politics and convenience. It was created based on science. And the science is clear: Natural gas is not a clean energy. It is a cleaner energy, but not a clean energy. The effects of climate change will cost our province billions if we do not make smart investments today to shift to a low-carbon economy.

That said, I do believe there is a role for LNG to play in transitioning to a low carbon economy. For instance, I have proposed transitioning the BC Ferries fleet to LNG. Such a transition could make BC Ferries significantly less expensive to operate while also decreasing their carbon footprint.

LNG: My Assessment

The Liberal government is selling British Columbians on a pipe dream. They are making promises based on risky projections while doubling down on an industry that, as it stands, would add to the climate crisis instead of helping to mitigate or adapt to it.

When I asked the Minister of Natural Gas Development if the government ever compared returns on investment from similar levels of government support for other industries with what they are proposing for LNG, his answer ranged between a ‘non-response’ and a ‘no’. I consider this fiscally irresponsible.

Rather than looking backward to fossil fuels, I believe BC needs to look forward to clean technology. Clean tech jobs are growing 4 times faster than the national average in the United States. BC is well positioned to be a leader in the clean tech sector, but we need government leadership and support to make it happen. Together, let’s get there.

LNG: Background

For many years now, companies have extracted natural gas from deposits in Northeastern BC for use domestically and for export to the United States. Recently, due to innovation in horizontal fracking technology and growth in the U.S. natural gas sector (you need to be more clear that it is actually the combination of horizontal drilling AND fracking), North America has experienced a significant increase in natural gas supply, leading to a decline in gas prices in North American markets. Meanwhile, demand for natural gas has increased substantially in Asian markets–particularly in Japan, China and Korea–leading to a rise in gas prices in those markets.

The Liberal Government campaigned on a plan to further develop BC’s natural gas industry with a view towards breaking into these Asian markets. The hope is that if BC can sell natural gas to Asian countries, we can take advantage of the relatively higher prices to make a significant profit.

The challenge with selling natural gas to Asian markets is that it cannot be transported across the ocean in a gaseous state. It must first be liquefied by decreasing its temperature to -160 degrees Celsius, so that it can be shipped by tanker. This is where the term, liquefied natural gas–or LNG–comes from. Liquefying and transporting natural gas requires enormous capital investments to create the necessary infrastructure (E.g. liquefaction facilities on the coast, pipelines to transport gas from Northeastern BC to the coast, fuelling terminals at the harbours). It also requires enormous ongoing energy investments to liquefy the natural gas.

According to the Liberal government, as much as $1 trillion could be added to our provincial Gross Domestic Product (GDP) between now and the year 2046 if we act decisively and develop the industry. However, many serious questions and assumptions have yet to be addressed, leaving me deeply concerned that the Liberal government’s LNG plan is little more than a pipedream.