Pipeline Politics
/ Author: Donald Mundy 2479 Rate this article:
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Pipeline Politics

Few construction projects in Canadian history have provoked more controversy than Kinder Morgan's $7.4 billion Trans Mountain pipeline expansion project. And for more than a year, over 4,000 CLAC members have been caught in the middle of it

By Don Mundy, CLAC Representative

SOME ARE FOR THEM. Some are against them. But one thing’s for sure: everyone has an opinion about pipelines.

The controversy over the Trans Mountain pipeline expansion project, which would nearly triple the amount of oil flowing through the existing pipeline from Alberta’s oilsands to BC’s coast for export to oversees markets, has pitted the governments of British Columbia and Alberta against each other. It has pitted those in favour of resource development against staunch environmentalists determined to lock down the oilsands. It has forced the federal government to intervene in unprecedented ways and stirred up grassroot emotions in average citizens across the country.

But lost in the rhetoric is the fate of the thousands of workers who are depending on the pipeline being built so they can support their families and thrive in their communities. Of the estimated 9,000 construction jobs that would be created from building the pipeline, over 4,000 are slated to go to Local 68 and Local 63 members in BC and Alberta. This coming at a time when thousands of workers have been displaced due to the downturn in Alberta’s oil patch.

It seems that Kinder Morgan’s project to twin an existing pipeline couldn’t have come at a better time. But will politics get in the way of these desperately needed jobs?

HOW DID WE GET TO where we are today with the project?

It all started with the unprecedented growth in development of Alberta’s oilsands in and around Fort McMurray, which began ramping up more than a decade ago. Those projects are nearing completion and have added millions of barrels per day (bpd) of oil production.

The need to move the oil to market has become acute. Currently, the vast majority of Alberta oil is shipped to the southern US where it is refined into usable products. Due to the pipeline bottleneck that exists, Alberta oil is sold at a considerable discount. The loss of tax revenue to Alberta and Canada as a whole because of this discount amounts to billions of dollars annually.

Over the years, numerous pipeline projects have been proposed to deal with the bottleneck and get Alberta’s oil to market.

In 2006, Enbridge applied to the National Energy Board (NEB) to build its Northern Gateway pipeline from Edmonton across the middle of BC to Kitimat. That project faced unprecedented opposition from environmentalists, First Nations, and government agencies. It was finally scuttled when, shortly after taking office in 2015, the Trudeau government implemented a ban on tanker traffic on the north coast of British Columbia.

Soon afterward, TransCanada’s Energy East project, a proposed pipeline to eastern Canada, faced a similar fate. It died on the floor of Parliament when the federal government imposed a requirement to include indirect greenhouse gas emissions.

As well, the Keystone XL pipeline project, running from Alberta into the US, has faced considerable hurdles getting environmental approval through American government agencies. Delayed in 2015 by the Obama administration, it was given final regulatory approval in early 2017 by the Trump administration. Construction is currently underway but is significantly delayed.

WITH ALL EYES ON OTHER projects, few thought Kinder Morgan’s request to the NEB in 2013 to twin its existing pipeline from Edmonton to Burrard Inlet near Vancouver would attract much attention. The NEB approved the project in May 2016 with 157 conditions, which included the most stringent proactive spill management and response ever imposed on a pipeline anywhere in the world.

One year after the NEB approved the Trans Mountain pipeline expansion project, the BC NDP formed a coalition government with the Green Party and took power in Victoria. One of the first items on the new government’s agenda was to “immediately employ every tool available” to stop the Kinder Morgan project. Premier John Horgan’s rallying cry was, “BC assumes most of the risk but gets few of the benefits.”

The fight was on.

Opposition to the pipeline quickly began to mount. To date, over 200 individuals have been arrested—including federal Green Party leader Elizabeth May—for illegally holding up construction.

The BC government has launched numerous lawsuits in an attempt to hold up the project in the courts. Kinder Morgan, which by early 2018 had pumped over $1 billion into the project, announced on April 8 that it was suspending all nonessential work on the Trans Mountain pipeline until it could be assured the protests would be halted. It issued a deadline of May 31 for the government to respond.

The business case for continuing the pipeline was beginning to look shaky.

A week later, the federal government entered negotiations with Kinder Morgan. In a stunning announcement, on May 29, 2018—exactly one year to the day after the NDP and Green Party announced that they had agreed to a coalition to govern BC—Finance Minister Bill Morneau announced that the federal government had reached agreement with Kinder Morgan to purchase the pipeline for $4.5 billion.

In effect, the federal government had nationalized the project. Morneau said that expansion would continue once the sale was finalized.

CLAC MEMBERS AND SIGNATORY contractors have been involved with the Trans Mountain expansion project since before construction of the pipeline even began.

“Very early on, we were in contact with our signatory companies that build pipelines to see if they were planning to bid on the segments Kinder Morgan was putting out for tender,” says Kevin Kohut, CLAC BC director. “Our members have decades of experience building pipelines in Alberta and BC, and we wanted to make sure our people got a shot at the work.”

High level meetings between representatives of CLAC and Kinder Morgan began well over a year ago. Significant manpower would be needed to build the 980 kilometres of new pipeline. Highly trained, skilled workers were needed, and only companies with the highest safety records would be allowed to bid the work.

“We talked a lot about our model of cooperative labour relations and won them over to a better way of doing business,” says Kohut.

In the end, Kinder Morgan awarded seven of the nine segments to CLAC signatory contractors. This was a huge win for the union and for CLAC members.

Currently, work is underway along the pipeline and at the Westridge Marine Terminal in Burnaby. Local 68 members are busy expanding the facility to handle the increase in oil storage capacity and the extra tanker traffic.

WHEN THE NEW BC GOVERNMENT began agitating against the Trans Mountain pipeline project, CLAC stepped forward and began advocating on behalf of its members.

“Our original stance was to not go public with our support of the project,” says Ryan Bruce, CLAC BC government relations director. “Despite the fact that a majority of people in BC and in Canada want Trans Mountain to go ahead, it seems those who were against it were getting all the press.”

CLAC joined with the Confidence in Canada coalition, a group comprising various local chambers of commerce, business groups, and ordinary citizens across the country. Together, they penned a letter to the federal government urging it to act. At stake, they said, is not only the Trans Mountain project itself, but the global reputation of Canada as a good place to invest. If the project gets derailed, the coalition said it would send a dire signal to the international investment community.

On April 12, 2018, CLAC representatives were on stage representing labour at a rally in Vancouver in support of the Trans Mountain pipeline expansion project. In mid-May, Ryan Bruce joined in on the “Federation Flight,” a delegation of over 100 British Columbians who flew from Vancouver to Edmonton to help bridge the rift between the Alberta and BC governments.

“On board were representatives from 10 different First Nations in BC, labour groups, and business leaders from all over the province,” says Bruce. “We went to Alberta to show them that there is a lot of support in BC for Trans Mountain.”

AFTER SIGNIFICANT, COSTLY DELAY, shovels are finally expected to hit the ground in August, as of the time of publication. Any additional delay threatens to increase costs further—and add to the uncertainty CLAC members face working on the project.

Estimates of how much Trans Mountain will ultimately cost to build have now come in well north of the original $7.4 billion. But economists seem to agree that the federal government’s investment in the pipeline faces minimal downside risk. They say that the government will have little problem selling the project down the road. There is even the potential of significant profit from the sale. Similar to the multibillion dollar bailout of the auto industry during the Great Recession in 2009, the federal government should get all its money back—and then some.

Meanwhile, CLAC will continue to stand behind its members and signatory contractors working on the project. Alberta’s oil needs to get to international markets so the hugely discounted price on Canada’s oil comes to an end. That will increase revenues and taxes for all governments to fund healthcare, education, and many other social programs.

The pipeline expansion creates many employment and other opportunities for Canadians. Along with increased revenues, studies show it will create 37,000 direct, indirect, and induced jobs per year of operation.

“This project creates significant opportunities for skilled tradespeople—locals, Indigenous peoples, youth, and women,” says Wayne Prins, CLAC executive director. “The jobs it will create today and career development for tomorrow will support families and communities for years to come.”

Given the enormous economic and social benefits, and the extensive work done to minimize the environmental risks, getting the pipeline built is clearly in BC’s interest and our nation’s interest. But will Kinder Morgan and the federal government have the courage to stand up to the protests and ensure construction of this vital project? Many lives, communities, and benefits for all Canadians are at stake.

It’s time to stop holding Canada’s oil industry hostage. It’s time to get politics out of our pipelines and get the Trans Mountain pipeline expansion project built.

NOTE: This article was published in the September 2018 issue of the Guide, CLAC’s national magazine. After publication, the Federal Court of Appeal ruled that the government had “failed to engage dialogue meaningfully and grapple with the real concerns of the Indigenous applicants” and failed to study the impact of increased tanker traffic on marine ecology.

The court decision has far-reaching repercussions for workers and the broader economy. Following the ruling, CLAC members working on the project were sent home. While the federal government has indicated that it is committed to getting the pipeline built, CLAC members and others working on the project face yet another setback.

Trans Mountain Fast Facts

Key Dates

  • March 21, 1951 – Trans Mountain Pipeline Company is created by a special act of Parliament.
  • February 1952 – Pipeline construction begins.
  • October 17, 1953 – First oil flows through the pipeline.
  • 1957 – A 160-kilometre pipeline loop is added, and the Westridge Marine Terminal is built in Burnaby, BC.
  • 2006-2008 – The Anchor Loop project adds 160 kilometres of new pipeline between Hinton, Alberta, and Hargreaves, BC, increasing capacity from 260,000 bpd to 300,000 bpd.
  • Dec. 16, 2013 – Kinder Morgan files an application with the National Energy Board (NEB) to expand the Trans Mountain pipeline.
  • May 19, 2016 – The NEB recommends approval with 157 conditions following a 29-month environmental assessment.
  • November 29, 2016 – The Canadian government grants approval.
  • January 10, 2017 – The British Columbia Environmental Assessment Office issues an environmental assessment certificate with an additional 37 conditions.
  • April 8, 2018 – Due to political uncertainty, Kinder Morgan announces that it is suspending all nonessential activities on the pipeline.
  • May 29, 2018 – The Canadian government agrees to purchase the pipeline from Kinder Morgan for $4.5 billion.
  • August 30, 2018 – A Federal Court of Appeal ruling halts construction of the pipeline.

Key Figures

  • $7.4 billion – Cost of the Trans Mountain pipeline expansion project
  • 300,000 bpd – Current pipeline capacity
  • 890,000 bpd – Pipeline capacity upon project completion
  • 1,150 km – Length of existing pipeline from Strathcona County, Alberta (near Edmonton), to Burnaby, BC
  • 980 km – Length of new pipeline to be installed

 73% along existing right of way

– 16% along other existing infrastructure (telecommunications, hydro, highways)

– 11% along new right of way

  • 12 – New pump stations to be built
  • 19 – New storage tanks to be built
  • 3 – New berths to be built at Westridge Marine Terminal in Burnaby, BC
  • 34 – Increase in the number of tankers per month
  • 4,158 – Tanker trucks needed to transport 890,000 bpd of oil
  • 1,309 – Rail cars needed to transport 890,000 bpd of oil

Sources: Business Vancouver, Conference Board of Canada, transmountain.com

Pipeline Benefits

Taxes and Revenues

  • $46.7 billion – Total estimated tax and royalty revenue to Canada over 20 years

– $5.7 billion to BC provincial government

– $19.4 billion to Alberta government

– $21.6 billion to federal government

  • $922 million – Estimated tax revenue to BC municipalities over 20 years
  • $23.2 million – Annual property taxes collected in BC
  • $3.4 million – Annual property taxes collected in Alberta
  • $127 million – Port of Vancouver annual tanker revenue
  • $73.5 billion – Increase in oil company revenue over 20 years
  • $23.7 billion – Total fiscal benefits to federal and provincial governments
  • $1 billion – Revenue sharing agreement with BC

Investment

  • $1.5 billion – Federal government funding for the Oceans Protection Plan
  • $150 million – Investment in marine spill response

Spending

  • $366,000 – Spending that results in the Port of Vancouver for each tanker that comes to the Westridge Marine Terminal
  • $479.6 million – Estimated spending by workers on accommodations, meals, and personal items in pipeline communities during construction (79.6% in BC, 20.4% in Alberta)

Benefits Agreements

  • $400 million – Value of project benefits agreements for 51 First Nations
  • $7 million – Value of community benefits agreements for 11 BC communities

Jobs

  • 9,000 – Construction jobs created over four years of the pipeline’s construction
  • 4,000 – CLAC members expected to be working on the pipeline
  • 37,000 – Direct, indirect, and induced jobs per year of operation

Sources: Business Vancouver, Conference Board of Canada, transmountain.com

Creating Uncertainty

On April 12, 2018, the Confidence in Canada coalition, representing 75 organizations including CLAC, sent the following letter to Prime Minister Trudeau and the governments of Alberta and BC.

Dear Prime Minister Trudeau and Cabinet,

Earlier this week Kinder Morgan announced its intention to suspend all non-essential spending on the federally and provincially approved Trans Mountain Pipeline project citing “unquantifiable risk” as a result of the continuing uncertainty created by the B.C. government. In response we are taking the unusual step to come together and call upon you to convene a meeting without delay with the Premiers of British Columbia and Alberta to resolve the impasse on the Trans Mountain Pipeline project and to clear the way for this project to proceed in the national interest.

Regrettably, this may not be enough. The continued obstructionist position of the current Government of British Columbia calls into question whether an agreement can be reached where the rule of law will prevail and commercial enterprise can, with confidence, build and operate a business in our country.

Should you and the Premier of British Columbia be unable to cooperatively resolve the current impasse within days, we then call upon you to utilize all appropriate federal powers at your disposal, including expand, if required, the Oceans Protection Plan, to ensure the Trans Mountain pipeline project proceeds without further delay.

At stake is more than a pipeline project. The global reputation of our country as a safe and secure place to invest and do business is at serious risk.

It’s deeply concerning that a project that has gone through rigorous review, including four years of consultation and numerous federal and provincial conditions is now in this situation after being given a green-light to proceed. This threatens to provoke a crisis of confidence in Canada’s regulatory processes with far reaching implications which go well beyond this project. It threatens to send a message to investors that Canada cannot be trusted. It puts billions of dollars of government revenue at risk—billions that pay for things that Canadians need, from teachers to MRI machines to affordable housing and further investments in protecting the environment.

Many small and medium-sized business owners, construction workers, people who support their families in manufacturing, and Indigenous Nations are now unfairly caught in the crossfire as a result of the uncertainty surrounding the project’s future and, collaterally, our country’s growing uncertain investment climate.

We appreciate your government’s support of this federally and provincially approved project. In the interest of all Canadians, your government must now make this issue its top priority. Creating certainty is of the utmost importance not just for the Trans Mountain pipeline project, but also to uphold the rule of law and Canada’s reputation as a place in which to invest, build and operate businesses. As you are well aware, investor confidence is essential to creating jobs, supporting healthy communities, and funding health, education and social programs.

Trans Mountain Spills

Environmentalists and residents worry that spills from the Trans Mountain pipeline will adversely impact Burrard Inlet and the surrounding coastline as well as the lands of Indigenous peoples. Because of the potential damage, all spills greater than 1.5 cubic metres must be reported to the National Energy Board (NEB), the independent federal regulator of Canada’s pipelines since 1961. The NEB’s stringent spill reporting criteria are as follows:

  • Release of low vapour pressure hydrocarbons greater than 1.5 square metres
  • Release of gas or high vapour pressure hydrocarbons
  • Release resulting in significant adverse effect
  • Release of oil greater than 1.5 square metres (equivalent to approximately 9.4 barrels of oil)
  • Release of gas or high vapour
  • Release resulting in the discharge of toxic substances in land or into a body of water
  • Any leak, break, fire, or explosion in, or failure or malfunction of, a pipeline

The Trans Mountain pipeline has experienced 82 spills reported to the NEB since 1961, including many incidents below the NEB’s minimum reporting standards. The spills break down as follows:

  • 69.5% occurred at pump stations or terminals.
  • 30.5% occurred along the pipeline.
  • 21 released crude oil, but only 9 released crude greater than 1.5 cubic metres.
  • 3 occurred in the last 35 years, including

Abbotsford 2005 – 1,550 barrels of crude oil leaked from a 20-inch transfer pipeline due to unauthorized piling of soil, which caused the soil underneath to shift and resulted in the pipeline buckling. Oil spilled into a creek affecting 14,300 square metres of wetlands, streams, and banks. The affected area was successfully restored and long term monitoring completed in 2012.

Burnaby 2007 – 1,459 barrels of crude oil leaked at the Westridge Marine Terminal following a rupture caused by a contractor working on a sewage project. The pipeline’s location was not accurately represented on the contractor’s drawings, which were based on information from 1957.Approximately 250 residents had to leave their homes, and 11 houses were sprayed with oil. Some oil escaped into Burrard Inlet affecting 17 kilometres of shoreline, but the vast majority was recovered using vacuum trucks and water skimmers.

  • 0 spills have resulted from tankers operating from the Westridge Marine Terminal.

Sources: transmountain.com, cbc.com, burnabynow.com

The Birth of Pipelines

John D. Rockefeller wasn’t the only one with a near monopoly on oil during the industry’s early years. Following the discovery of oil in northwestern Pennsylvania in 1859, drillers hired teams of horses to pull wagons carrying up to eight 42-gallon barrels of oil, each weighing 300 pounds, on primitive dirt roads over rugged, muddy terrain to rivers, refineries, and railroad stations. The work was daunting enough during good weather and nearly impossible during the rainy season when the wagons often sank up to their axles in mud.

The drivers, called teamsters, quickly realized how dependent the drillers were for their services and charged more to move oil five miles than the entire cost to transport the barrels 350 miles by rail to New York City. The teamsters earned a reputation as a hard, ruthless lot who vigorously protected their turf and prevented outsiders from entering the transportation business.

But their monopoly ended when Samuel Van Syckel built a five-mile, two-inch iron pipeline—the first major US pipeline—from a new oilfield to a nearby rail station. The pipeline had a capacity of 2,000 barrels of oil per day—or 0.23 percent the capacity of the Trans Mountain pipeline expansion. It replaced the equivalent of 250 wagon loads per day.

Not surprisingly, like Trans Mountain, Van Syckel’s pipeline was met by fierce protest—although for entirely different reasons. To guard against armed attack, arson, and sabotage by the teamsters, he posted armed guards along the entire route, and eventually the harassment stopped. Pipelines soon replaced the teamsters as a safer, more cost-effective way of transporting oil.

Sources: American Oil & Gas Historical Society, caseyresearch.com, pipeline101.org, Routes of Power by Christopher F. Jones

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