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Four things have happened in relatively quick succession in regards to the Trans Mountain Pipeline Expansion project (TMX) that Kinder Morgan proposed back in 2013 and it’s important to understand those before proceeding.
- On November 29, 2016 Canadian regulators approved the Kinder Morgan Trans Mountain Pipeline Expansion project.
- On May 29, 2018, the Canadian federal government acquired the Trans Mountain Pipeline from Kinder Morgan for $4.5 billion.
- On August 30, 2018 the Federal Court of Appeals reversed the original decision of the court to approve the TMX pipeline.
- On August 31, 2018, the purchase of the TMX pipeline by the Canadian government from Kinder Morgan finally completed.
If the federal government wants to be able to restart work on the pipeline expansion project and be well placed to sell it to investors, the federal government of Canada must now enter into negotiations with the stakeholders who weren’t consulted in the original consultation process and gain their acceptance to allow the TMX pipeline expansion project to continue.
NOTE: On August 31, 2018 Alberta premier Rachel Notley pulled her province out of the federal government’s national carbon tax plan to register her displeasure with the Federal Court of Appeals and to put more pressure on the Justin Trudeau government to get the TMX pipeline completed.
How to Address Legitimate Safety Concerns of Vancouver and Burnaby Residents
It’s a huge undertaking to sail an oil tanker through English Bay and into Vancouver Harbour under the Lions Gate Bridge and the Ironworkers Memorial Bridge, park it at Parkland Oil Refinery and fill that tanker with 250-thousand barrels of oil, tar sands ‘dilbit’ material, jet fuel, gasoline or naptha (all of them highly volatile or explosive liquids) and then sail out of Vancouver through a frenetic crowd of marine traffic including float planes landing and taking off every few minutes, ferries, pleasure boats, container ships and cruise ships.
Vancouver Harbour is far too congested for this dangerous practice to continue. There are almost half a million people living and working within a few miles of both sides of that very narrow waterway.
It may have been OK back in 1953 when the Trans Mountain Pipeline was originally built, but it’s definitely not OK now.
A Solution Hiding in Plain Sight
What could solve these very serious issues, is to continue the TMX pipeline route on to Deltaport (a major industrial port south of Vancouver) and relocate the existing Parkland Oil Refinery in Burnaby, BC to Deltaport, BC. The existing site in Burnaby would need to be remediated as it’s unsuitable for housing or businesses due to the steep terrain and continuous rail traffic along the water’s edge.
The Delta Superport (Deltaport)
The Deltaport facility in Delta, BC is already the site of a major rail terminus where thousands of rail cars offload 29 million of tonnes of coal every day for transport to ports around the Pacific Rim trading area and other large scale industries operate in Deltaport.
There are container ship facilities there and also some shipbuilding and ship repair businesses operate within the industrial zone. The Delta Superport site (Deltaport) was specifically chosen because it’s well away from major population centres in case of land or marine-based accident at the site.
Also, in the event of pipeline construction delays or oil spills along the Trans Mountain Pipeline corridor, railcars could haul Alberta’s oil and dilbit to the Delta Superport as they already travel from Alberta and Saskatchewan to Deltaport 365 days of the year.
For an extra $5 billion (for example) the federal government could continue the pipeline to Deltaport and assist Parkland Oil Refinery Ltd. to move their existing oil refinery to Deltaport, thereby neatly solving every safety issue.
If taxpayer revenue isn’t used to enhance the safety and security of hundreds of thousands of people, what is the point of collecting taxes in the first place? Surely Job Number One for any level of government is the safety of its citizens — especially when such large numbers of people could be adversely affected in the case of a major marine spill and/or fire in Vancouver Harbour.
Moving the Burnaby Oil Refinery to Deltaport Solves Every Safety Concern
Captains of oil tankers that leave port full of refined oil products (like gasoline, for one example) will be happy to find they won’t be ‘deking around’ a dizzying flow of float planes taking off and landing, small transit ferries packed full of commuters, pleasure boats, container ships and cruise ships — as they are forced to do when they arrive and leave through Vancouver Harbour and Burrard Inlet.
In fact, the only activity at Deltaport is the ten bulk carriers (coal) that leave port every day and (judging on personal observation, although not recently) the one container ship that leaves port every night.
As mentioned earlier in this blog post, way back in 1953 the Burnaby location was probably the best option for the region — but with the huge increase of marine traffic in Vancouver Harbour and English Bay since those days, it’s an accident waiting to happen.
If the federal government wants a solution that works for everyone this should be their Number One priority — and failing that — perhaps the proposal I’ve suggested should become a requirement for any potential purchaser of the TMX pipeline before their bid would be accepted.
It’s the responsible thing to do.
Vancouver is suffering the worst bout of poor air quality in its 132-year history
Since the 2018 forest fire season began, smoke has been accumulating in the atmosphere and finding its way to lower elevations in the province of British Columbia.
The greatest concentration of BC residents live in the province’s Lower Mainland (also called the MVRD or Metro Vancouver Regional District) home to 2.8 million people and the average elevation of the region isn’t that much higher than sea level.
The mountains that surround the area keep the smoke from moving out of the region, which is why all that smoke is concentrating in the MVRD, instead of dispersing.
How to Solve Air Quality Issues in Vancouver (and in every other city)
Every year, Vancouver is inundated with smoke from distant forest fires. It’s no surprise that Vancouverites are visited by a virtual wall of smoke every summer and it seems to be completely uncontrollable even with today’s modern fire-fighting methods. Therefore, the only variable that can work to improve air quality in the Vancouver region is to drastically limit the use of motor vehicles within the MVRD during the worst air quality days.
Several cities in the world have already adopted ‘Car-Free’ days in an attempt to mitigate their urban air pollution and it can work wonders for local air quality. Seoul, Paris, Copenhagen and other modern-thinking cities simply issue a ‘Car-Free’ notice and cars and trucks are banned from the cities roads until further notice.
In Paris, emergency vehicles still operate and people with medical emergencies may use their car to drive someone to the Hospital or to an Ambulance station — but they are speed-limited to 20 miles per hour — though with zero traffic in Paris on ‘Car-Free’ days it means you get to the Hospital much sooner than compared to normal traffic days. Also, the city’s transit system boost the number of buses to accommodate the extra ridership.
Parisians instructed to leave cars home during the city’s third official ‘Car-Free’ day
“Vehicles were forbidden from all of the city’s historic centre for the day on Sunday, making way for environmentally friendly modes of transport such as cycling.
The first journee sans voiture (day without cars) was held in September 2015 and was found to reduce exhaust emissions by 40 per cent. The idea has since been repeated twice.
But this time the zone has been expanded, covering 40 square miles over the historical centre of the French capital, and was in force between 11am and 6pm.
Paris Mayor Anne Hidalgo was first elected in 2014 on a promise to tackle pollution in the city, which is estimated to kill 6,000 every year. She has begun building new bus and cycling lanes to reclaim the roads from cars.” — The Independent
‘Car-Free’ Days for Vancouver?
It’s long past the time for the Metro Vancouver Regional District to embrace the idea of ‘Car-Free’ days during peak air pollution events such as forest fires, weather inversions or other events that wreak havoc with air quality — and by doing so — lower ambient emission levels by 40% or more.
Screenshot of the most recent Air Quality Advisory in Effect for Metro Vancouver and the Fraser Valley of British Columbia
If you care about air quality in Vancouver and the Lower Mainland, call or write your elected officials to suggest they implement ‘Car-Free’ days during periods of poor air quality.
Such ‘Car-Free’ days have been found to lower air pollution by 40% or more in other cities, which can dramatically improve air quality and improve the personal health of everyone who lives in the region.
Let’s get one thing out of the way, right now. Much earlier in Canadian Prime Minister Justin Trudeau’s tenure he should’ve solved the entire Kinder Morgan pipeline situation — and the same is true for former Prime Minister Stephen Harper.
Allowing the situation to drag on for so long that two western premiers got into a trade spat, and Canada looked to foreign investors like a country that doesn’t have its act together, hasn’t served the country well.
It’s likely that billions of dollars of foreign investment simply bypassed Canada since 2000 due to the way the Trans Mountain Pipeline Expansion (TMX Expansion) proposed by Kinder Morgan has been mishandled by the various levels of government in Canada. That missed foreign direct investment (FDI) is gone, never to return.
The Government of Canada Buys a Pipeline Project…
To solve the entire problem (which will likely usher in an entirely new set of problems) PM Justin Trudeau announced on May 29 that the government of Canada will purchase Kinder Morgan’s TMX Expansion project which is one way to change the conversation around this entirely needless, Canadian own-goal fiasco.
Nevertheless, let’s give credit where credit is due! It’s much better that Trudeau (better late than never) decided to take a leadership role on the energy file. Congrats!
…and Plans to Sell it
Which is a great idea! Buy the project with intent to eventually sell it to a pipeline company, an investor group (pension plans love pipelines and other critical infrastructure) or to another level of government. “Hey Alberta! Wanna buy a pipeline?”
Even Kinder Morgan, conceivably, could decide to purchase the TMX pipeline once it is up and running.
Or, (best-case scenario, IMHO) it could be sold off in an IPO where the entire pipeline is sold as a going concern — and although that probably represents the longest-term plan — it’s probably the plan that would net the highest return on Canada’s investment.
Other Options that Should Have Been Considered
Oil and dilbit (dilbit is tar sand material that is mixed with a light petroleum liquid called ‘diluent’ to make it easier to move) can also be moved by rail instead of by pipeline.
Moving oil and dilbit via rail has some significant advantages.
One, in the case of an oil spill, pipeline spills average around 1 million barrels (yes, barrels) while rail tanker oil spills tend to range around 264,000 gallons (yes, gallons) of oil. It’s a huge difference, to put it mildly.
Each DOT-111 rail tanker carries up to 220,000 gallons of oil, and in the case of accident with a resultant spill, typically it is one or two rail tankers that spill onto the railbed and immediate area (usually a service road that is accessible by emergency vehicles) making a quick response easier by orders of magnitude.
Note: DOT-111 rail tankers are being retired later in 2018 and replaced by the much higher safety standard TC-117 tankers.
Also, the rail lines travel directly from Edmonton to the Burnaby oil refinery that is presently the terminus for the TMX pipeline. It doesn’t get any more convenient than that!
The one advantage that pipelines have over rail tankers is the price. Shipping oil by rail is slightly more expensive.
Finally, both pipeline operators and rail companies can suffer labour disruptions (workers go on strike in both segments of the economy) which can result in late deliveries of oil to the refinery. Although, when a refinery has both pipeline and rail access, if one goes on strike the other simply ramps-up their deliveries.
How Justin Trudeau Could Score a Win with Environmentalists
The federal government should take this opportunity to implement a new tax of 6-cents per barrel on all liquids that move through pipelines to cover future oil spill cleanup and land remediation.
Six cents per barrel is practically nothing. But over many years and with that pool of money invested in the stock market, a sizeable fund would accrue that could be used to ensure that future oil spills would be 100% fully cleaned-up and adjacent land remediated to its pre-oil spill state.
Rail companies don’t need such a tax as rail oil spills are infinitesimally smaller and easier to clean-up than pipeline spills.
How Justin Trudeau Could Score an Even Better Win
Every federal regulator in North America should create legislation to streamline new energy infrastructure approvals in exchange for higher environmental standards.
Any pipeline company (for example) that wants to build a new pipeline (of say, 1000 kilometres in length) should submit with their application to the relevant energy regulator, a plan to decommission and remediate 1000 kilometres of land where their obsolete pipelines (some with ‘abandoned oil’ still in them) are leaking or pose a risk to leak with only a few more years of rust eating away at the steel pipe or the gaskets and seals at junctions along the length of the pipeline.
A new ‘Mile for Mile New Build/Old Pipeline Decommissioning Programme’ would solve at least half of all the small oil spills in Canada when measured over the next 22-years.
Everyone in the oil business knows that the best years in a pipeline’s life are the first 15-years. New pipelines are hundreds of times safer than the pipelines of old and are built with sophisticated technology to monitor oil pressure and to detect spills that may be in progress.
North America’s hundreds of thousands of miles of oil and gas pipelines are more than 40-years old on average! That’s a stat that should terrify environmentalists, yet because it isn’t a ‘sexy’ topic for them those abandoned pipelines don’t get the negative attention they deserve. Which is a shame.
If legislation requiring dismantlement of unused or abandoned pipelines and land remediation on a ‘mile for mile’ basis were created, pipeline companies would become ‘part of the solution instead of part of the problem’ and would be perceived more positively by environmentalists and non-environmentalists alike.
According to the National Resources Canada website, at present there are 840,000 kilometres of oil pipeline in use in Canada, not including branch or service lines. (This number does not include ‘abandoned’ pipelines, nor pipelines that aren’t in active use)
Let’s Look at the Score
Prime Minister Justin Trudeau +.5 (for solving a problem inherited from a previous government)
Premier Rachel Notley +1.0 (for successfully fighting for one of Alberta’s main industries)
Premier John Horgan +.5 (for standing up for BC’ers interests as he sees it)
Kinder Morgan +1.0 (for not overreacting during the entire fiasco)
Canadian media +2.0 (for staying on top of it)
Rail companies +1.0 (for staying out of it — but they lost a point for not enthusiastically offering their better solution to the media)
Environmentalists +.5 (for fighting for what they think is right — but points-off for not recognizing that new pipelines are infinitely safer than old pipelines and for not shining more light on the dismantlement of, and land remediation around, leaky old abandoned pipelines)
Prime Minister Justin Trudeau has the ability to dramatically improve his score by regulating a 6-cents per barrel tax on pipelines, and a separate regulation requiring new pipeline applications to offer a ‘Mile for Mile New Build/Old Pipeline Decommissioning Programme’.
Environmentalists could eventually score a +1.0 by supporting a 6-cents per barrel tax on pipelines, and a separate regulation requiring new pipeline applications to offer a ‘Mile for Mile New Build/Old Pipeline Decommissioning Programme’.
Is Canada’s TMX Pipeline Purchase a Winner?
Canada should have no problem selling-off the TMX acquisition once it is completed and moving oil. Practically every pension fund and every other institutional investor will buy shares in the pipeline as they tend to be rock-solid investments with a low-ish, but predictable rate of return.
Within reasonable limits, the longer Canada holds the asset the better the potential return, and as oil prices rise Canada’s return on its investment is likely to improve.
Out of all the bad choices presented to Canadian Prime Minister Justin Trudeau he has made the least-bad choice.
Sometimes, that’s all you can do.
For more information on the TMX Expansion project, please visit the government’s informative National Resources Canada webpage here.