Kinder Morgan: Canada Shows Short-Term Thinking On Energy

Late Thursday, Canada’s National Energy Board (NEB) told Kinder Morgan that they could proceed with construction work on the Trans Mountain oil pipeline project without needing to comply with local bylaws. The $7.4-billion project passes through the city of Burnaby, British Columbia, whose bylaws required Kinder Morgan to have city approval for preliminary plans and tree-cutting permits for project-related work. As a result, early Friday morning, Kinder Morgan shares rose 9.5% to a four-month high.

Trans Mountain had raised constitutional questions about the bylaws, claiming they don’t apply to work that the company planned to undertake at its Burnaby Terminal, Westridge Marine Terminal, and another temporary worksite. Kinder Morgan asked a regulator to intervene after complaining about delays obtaining local permits needed for construction. It said the city’s refusal to issue permits quickly raised “serious issues of jurisdiction.” With NEB’s decision, work can start almost immediately. 

The decision is a small victory, although the NEB has yet to decide whether to establish a special panel to resolve future issues quickly as requested by Kinder Morgan. The company welcomed the decision though, as the delays in the 590,000-barrel-a-day expansion project has already faced numerous delays.

“It reinforces the view that this federally approved project is in the national interest,” Kinder Morgan president Ian Anderson said.

“We believe that this is an abuse of federal powers,” Burnaby Mayor Derek Corrigan said in response. “City staff are shocked by the NEB’s decision. [They] have been reviewing Kinder Morgan’s construction applications in good faith, focusing both on citizen safety and mitigation of environmental damage.”

Corrigan and many Burnaby citizens have been vocal opponents of the pipeline, and have joined a separate legal challenge in the Federal Court of Appeal that involves not only environmental groups, but other municipalities and First Nations representatives. However, Corrigan insists city staff have been following normal permitting process, and expressed frustration with the NEB.

“It’s been apparent that the National Energy Board is dedicated to ensuring that these projects go ahead and are prepared to eliminate any obstacle that gets in their way,” Corrigan said, adding that he’s concerned this won’t be the last instance of the NEB overriding local laws. However, the NEB’s order specified that this recent decision did not absolve Trans Mountain from complying with all City of Burnaby bylaws. Corrigan is still unsatisfied though, pointing out that the NEB did not state why Kinder Morgan did not need to comply with their bylaws. 

“Until we know what those reasons are, our lawyer can’t advise us as to what we should do next,” Corrigan said. “You know, whether this is a very limited or whether it’s a broad decision that will apply in other cases. So it’s a difficult situation to make any judgement about what we’ll do next, if in fact we don’t know what the reasons are behind it...We’re still fighting hard and trying to gain control, at least control over what’s happening in this project so that we can minimize the environmental damage. Hopefully [we can] get some mitigation and compensation for some of the trees that will be removed, and try to protect our creeks and streams.” 

And he can say that with some commitment behind his words, given the almost 800,000 litres or 210,000 gallons of crude oil that leaked from the Keystone pipeline into South Dakota farmland just a few weeks ago. The animosity towards pipelines and oil hasn’t slowed down Alberta Premier Rachel Notley though, who has been crisscrossing the country on a pipeline promotional tour.

“We are, of course, very pleased to see this decision,” said Notley. Notley, whose government has intervened in both the NEB hearings as well as the Federal Court of Appeals case, is at odds with her NDP counterparts in BC, who came into power earlier this year on a promise to do what they can to block the project. Despite this, Notley told reporters in Edmonton that: “We see this as a good step forward and we are excited to see that it probably means the NEB has accepted our argument that this is a project that is in the national interest and as a result we can’t have individual jurisdictions interfering with it.” 

Fair enough. Kinder Morgan had received all requisite approvals from both the federal government and the NEB. But I find myself questioning op-eds touting the seemingly endless list of benefits of pipelines. Considering the amount of natural resources Canada sells to the highest bidder, I’m not sure that Canada really needs to align itself as a “supplier of energy.” 

The energy industry is changing. Oil pipelines are no longer synonymous with advanced industrial economy. Believe it or not, the Keystone XL pipeline was proposed in 2008. Yes, it’s been almost a decade. George W. Bush was president, and oil prices were peaking at nearly $150 a barrel that summer; things are not the same now. This doesn’t even take into account how fracking has flooded the market with cheaper oil and natural gas, making oil sands and pipeline projects much less financially attractive. Don’t get me wrong, fracking carries its own slew of environmental and health issues, but I’m just pointing out that perhaps a serious reevaluation needs to be done. The world is not solely relying on oil anymore, and it seems everyone but the Canadian federal government knows it. As the public becomes more aware of the long-term effects crude oil spills have on the environment and population, less and less are voicing their support. 

Not to get all kumbaya-save-the-whales on everyone, but there is no such thing as a leakproof pipeline. There are around 200,000 miles of pipe carrying fossil fuels in the United States, and spills like last month from the Keystone pipeline are commonplace. To put it in perspective: almost 210,000 gallons of oils sounds like a lot, but that Keystone leak was only the 13th largest crude oil spill in the US since 2010. If that’s not unsettling, then maybe we need to reintroduce you to the repercussions of crude oil spills. And considering the Trans Mountain pipeline will carry heavier oil, known as bitumen, diluted with a chemical condensate, environmental concerns should be at the forefront of discussion alongside economic issues. Prime Minister Justin Trudeau has come home from China with no deals and little interest in our wood, oil and water. There was some coverage of China’s interest in our renewable technologies, but trying to dig deeper for details has yielded little. China is arguably leading the way in renewables, and therefore slowly reducing their interest in the oil pie. 

I can tell from media coverage that there is some ongoing discussion on the overlap between federal and municipal law, but those talks are just silly debates - a distraction from the reality that Kinder Morgan is a bad business idea. The constant rhetoric with these pipeline projects is always about how they will bring jobs, but they only provide shallow points on whether these pipelines will actually benefit us in the market. I’m far from an oil and energy expert, but I have yet to see how they will. There is money being made in the sales of shares and commissions, but none in the actual sale of oil. There is a glut that is growing and while we hear nonsense OPEC will re-balance, there is little, if any, proper discussion about how Venezuela, China, Russia and Iran are trading outside of it.

The truth? We actually don’t really know what is going on. But it seems as though the federal government and NEB are content to power through in a desperate attempt to create jobs without any regard for long-term effects. 

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