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Analysis – All this talk about Canada’s energy strategy

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Due to recent high profile spotlight on the Canadian energy sector, more discussions have been carried out about what is going to come out of Canada’s energy sector – if anything at all. Alberta Premier Alison Redford has called for a “Canadian Energy Strategy”. But what is this…strategy? Is it big oil and gas conglomerates pushing forward or “positively asserting” good business opportunities for Canada’s burdening deficit? It’s gotten to a point where even Stephen Harper doesn’t know what he expects from a national energy strategy. When questioned on such a strategy, on a local radio station in Calgary, Harper confessed, “the honest truth is I don’t know precisely what it means. I’m looking forward to having some discussions with some provinces to find out what they have in mind.”

Well, atleast he’s honest, right?

In Andrew Coyne’s column for the National Post he mentions “Why a strategy, rather than a policy?” To that I say, well a policy can change after a different government is elected. A strategy lasts much longer, and is capable of withstanding generations. It’s well known that Canada has enough oil in its belly to hoard for decades if not centuries. However the issue right now is the sacrifices that will have to be made to transport the oil.

As Coyne says well, “When industry and business groups talk about a national energy strategy, they mean a concerted push to expand sales of Canadian oil abroad, together with the regulatory approvals needed to make it happen at home: a big broom to sweep away local objections to energy infrastructure projects, such as Enbridge’s Northern Gateway pipeline…but when labour and environmental groups talk about a national energy strategy, they mean policies to reduce Canada’s use of fossil fuels, whether through conservation or alternative energy sources.” So which side would you rather be on?

To pay back and service our deficit, energy plays an instrumental role  since it is a key export of ours. So let’s go over the options Canada really has.

1) Initiate stronger trade deals with the US through the Keystone Pipeline XL.

2) Initiate trade deals with China and other Asian powers through the Northern Gateway Pipeline.

3) Be forced to take some other channel or route to get the oil across.

Option 1 has been placed on hold at the moment, since Obama passed a bill where he would have to make a direct decision by February 21st. The countdown to the decision can be found here.

Option 2 has also been put on temporary hiatus. The Northern Gateway dual pipeline has been proposed to be built across Alberta and into British Columbia so that oil tankers have easy access to the oil from the coast which they can then transfer across the Pacific to Asia.

You can rest easy knowing that the government has full intention to initiate both options and they cannot wait to get started. The roadblock comes from environmentalists and other green revolution non state actors that are standing up in the name of environmental justice. These groups seemed to have learned the powerful lesson that the BP Oil spill taught back in 2010. The issue with option 2, is the *risk* that can very quickly become a full blown threat to the ocean and wildlife if a leak or oil spill were to occur. These environmental activists would be right to protest against the new pipeline because the added additional risk is one that does not need to be taken. Harry Swain of the G&M had a great alternative to the one proposed. Instead of  the potentially risky journey towards the Kitimat, an alternative route could be maintained through the industrial port at Prince Rupert. As Swain writes, “the journey may be 200km longer but the sea journey would be comparably shorter. The western end of the route would travel down the Skeena valley, where existing road and rail facilities would lower the costs of construction. Since Enbridge swears its pipeline will be safe, there would presumably be little threat to the huge Skeena salmon run. Most importantly, Prince Rupert gives fairly directly onto Dixon Entrance and the great world ocean, which would considerably lessen the probability of a tanker disaster.”

This would fit in perfectly with option 3 because this alternative could be accomplished with minimal risks. So why isn’t the Prince Rupert option being considered? Let’s try and reflect on that for a moment. And then Swain comes in with the whammy:

As you follow the unfolding controversy, ask yourself why Enbridge chose the less safe route, and whether we as taxpayers have to pay the premium for the risks the company has created.

Now we seem to be getting somewhere. On this train of thought, we should travel back towards 2010 during the BP oil spill disaster. Back then,  Neil Duncan-Jordan, of the National Pensioners Convention stated, “Most ordinary people would not have thought that BP would have an impact on their retirement but if BP’s share price goes down then their pension pot goes down. Most of those pension funds are invested in the default option, which is stocks and shares, and so if BP goes down the pan then their pension pot goes down the pan.” This is the type of problem that could pan out if a spill *were* to occur here on Canada’s coast. BP Oil walked away without any kind of judicial process, on the basis that they already “suffered” enough due to a lower share price. And the scapegoat for the entire crisis was that if the US imposed any kind of judicial action, then British savers and pensioners would suffer since they are heavily invested in the corporation. The prices of the past have been understood, and the risks inherent in the Enbridge pipelines remain the same.

If B.C. were to  house the pipelines moving forward, they should be receiving more in the form of some benefits accruing to their provincial economy. There should be a better plan in place that allows for:

  • Outlining the long-term economic benefits B.C. will receive from the project to address its own provincial debt loads
  • Planning finances around so B.C. collects operating royalties in the form of a type of toll, one placed upon the size of volume of liquids being shipped across.

Even an ex-enbridge supervisor has called in against the oil pipeline. Having previously worked as a pipeline superintendent with Enbridge, after the 1:00 minute mark in the video he says, “Even if you have a 5 gallon oil spill, it will affect all of the wildlife including ducks, geese, moose, fish, etc. And the people will be affected as well because you will not get [the oil] from the sand, river banks, rocks, etc. The oil will affect the water and will affect everyone’s lifestyles….I am totally against Enbridge putting a pipeline in this region…I am very familiar with oil spills, pipeline breaks, and clean up and it will be a disaster because one creek will flow into another creek into another one and it will eventually reach the ocean. It is a nightmare.”

 

 

Historical Fears

Let’s take a trip down memory lane and recall the incidents that took place in Valdez Alaska back in March of 1989. The Exxon Valdez oil tanker spilled hundreds of thousands of barrels of crude oil into the North Alaskan sea. The problems found were that Exxon failed to supervise the master mainly because they didn’t provide sufficient crew members for the tanker. Exxon has also equipped the tanker with “state of the art” technology, (as Enbridge claims today in their project), and back then Exxon failed to maintain the radar systems that would have depicted the obstacles in the tankers path. Exxon also stated they had a 24 hour emergency response team which turned out to be one man by himself. There was also a fund created for clean up and compensation standards grew lax and proper measures were not taken on the belief that they were not needed and were deemed to be unnecessary expenditures. This is a similar situation to what happened in the BP Oil Spill, they did not follow proper procedures and took unnecessary risks. And the legacy of the Valdez Alaska tragedy left Alaskan fishermen with remorse, and they still have cases in court seeking compensation.

 

—- Contingency Plans —

Enbridge’s claims might sound nice but there needs to be more substance there. The Enbridge spill response plan in the event of a spill is not sufficient enough. The Douglas Spill Channel stated last month that in volume 7A of its project proposal, Enbridge said it would burn wetlands,

to reduce hydrocarbon volume when other techniques are unsuitable or would cause more damage to an area.

It also stated setting fire to oil spills would be, “used in areas where heavy equipment would cause environmental damage.”

In volume 7B of its proposal, Enbridge admits there would be potential for a two million litre spill into the upper Kitimat River, which would be the largest oil spill into a Canadian river in history. And Enbridge estimates it would take responders and their equipment up to four hours to reach the spill site, and that the diluted bitumen would reach the Kitimat River estuary during flood conditions in those same four hours.

When Douglas Channel Watch asked Enbridge directly if it would burn the Kitimat River estuary after a full bore rupture, the company replied, “

If a controlled burn were appropriate in certain circumstances, the response team may recommend such an action.

 

Enbridge’s Previous Track Record:

Also, according to Enbridge’s own reports – between 2003 – 2007; its pipelines had an average of 67 oil spills each year – “despite our best efforts to prevent them.’ In 2007, an Enbridge pipeline leaked and released 990,000 litres of crude oil into a wetland near Glenavon, Saskatchewan before Enbridge could stop the flow. Even Enbridge’s own experience demonstrates that their promises of “technology” cannot prevent spills from happening and it cannot protect the environment.
In a solution put forward, a federally legislated crude oil tanker ban for British Columbia’s north coast would effectively put an end to the Northern Gateway pipeline project due to the economic costs.

 

Thus from the majority of the evidence being accumulated here, it is wise to err on the side of caution and to proceed further with a strong amount of prudence.

In the short term, the construction of the pipeline would lead you to believe that it is good for the economy, and for unemployment, however nothing could be further from the truth. The pipeline has a strategic benefit for Enbridge shareholders and the Albertan oil industry, but the greater benefits to Canada in the long term are negligible. This is largely due to our national economy already becoming dangerously dependent on oil as an export, and we should learn a lesson from countries in the Middle East with their previous cycles of oil booms and busts that are perpetrated by commodity speculators playing wreckless games in the financial markets. The Enbridge pipe project would be at the sacrifice of providing for economic diversity in other industries such as fisheries, farming, and tourism.

Many more articles will cover more on Canada’s energy sector.

Hope you enjoyed this tidbit for now.

 

Salman

To see a list of resources for and against the Northern Pipeline Project please see below:

 

All words with links above are links to sources and key documents.

 

Reports:

Enbridge Northern Gateways Pipeline: Executive Summary

Enbridge Corporate Responsibility Report

 

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