Natural Resources Minister Jim Carr has reiterated the federal government’s pledge to overhaul the National Energy Board in order to restore public confidence in Canada’s pipeline review process. But the promised legislative changes will not come quickly.

"You don't rush your way into decisions that affect not only today, but generationally in Canada in the new world of sustainably moving resources to market," Carr said Monday while attending the federal cabinet’s retreat in New Brunswick.

Over the last month, the Union of B.C. Indian Chiefs and Burnaby Mayor Derek Corrigan requested Carr and Prime Minister Justin Trudeau suspend the review of Kinder Morgan’s Trans Mountain pipeline to avoid a decision being pushed through a process they claim is “deeply flawed.” Trans Mountain’s final hearings began as scheduled on January 19 in Burnaby, British Columbia.

"The minister is correct, we shouldn’t rush the creation of a new process,” Andrea Harden-Donahue, energy and climate justice campaigner with the Council of Canadians, said. “But continuing with the flawed Kinder Morgan and Energy East reviews is entirely inconsistent with Liberal promises. How can a 'transition strategy' rectify the failings around public participation and Indigenous consultation for these projects. I don't see how this can happen."

“We are not saying pipeline companies have to go back to square one,” Harden-Donahue told DeSmog Canada. “All evidence submitted goes on hold and this can be supplemented with additional evidence after the changes are made.”

Trudeau’s government has been clear on several occasions pipeline projects currently under National Energy Board review will not be forced to go back to “square one,” that is, begin their application process completely from scratch.

The legislative changes during the Harper government’s 2012 omnibus bill frenzy severely weakened key pieces of environmental protection legislative like the Navigable Waters Protection Act and the Species At Risk Act. The National Energy Board Act and the Canadian Environmental Assessment Act were also altered to ensure proposed pipelines made it through the regulatory process within 15-months, no matter how complex those projects may be.

“Some pipeline reviews may fall into that time limit. On the other hand, large projects with clear risks like Energy East or Kinder Morgan may not and this is problematic,” Harden-Donahue told DeSmog Canada.

There is little doubt the massive surge of public participation in the Northern Gateway pipeline hearings in B.C. served as the impetus for the Harper government to slap time limits on project reviews. With the exception of the Mackenzie Gas Project, the Board took less than 15 months to make its decisions on project applications between 2004 and 2012.

The controversial Northern Gateway proposal to pipe oilsands (also called tar sands) bitumen to B.C.’s northern coast drew records numbers of public participants for regulatory hearings and took four years to complete. The Board approved the project, albeit with over 200 conditions, in 2014.

By allowing pipeline reviews to proceed under the previous federal government’s rules, the Liberal government may be condemning projects to go back to ‘square one’ regardless. First Nations, and environmental organizations over the last four years have not been hesitant to take pipeline reviews to court over violations of ‘aboriginal’ rights or the freedom of expression.

In some cases, pipeline opponents are winning these legal battles, particularly those launched by First Nations.

Last week, the B.C. Supreme Court ruled in favour of coastal First Nations who argued in their case against Northern Gateway that the B.C. government fail to consult them about the pipeline proposal. The provincial government is now required to meaningfully consult coastal First Nations on the project, which many believe to be dead already.

Similar scenarios could play out for other pipeline projects.

The Board’s review of Trans Mountain faces a legal challenge by Tsleil-Waututh First Nation. Energy East has not come up against a legal case yet, but Treaty 3 First Nations in Ontario have vowed not to allow the pipeline to go through their territory without their free, prior and informed consent.

Line 9 pipeline, one of the first pipelines to be approved by the Board in the post-2012 omnibus bill era, is also being challenge by Deshkaan Ziibing (Chippewas of the Thames). The Ontario First Nation plans on taking their case all the way to the Supreme Court of Canada.

Image Credit: Shannon Ramos via Flickr

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A panel of leading environmental groups expressed concern last week over findings in an Ontario Energy Board commissioned report that suggest oil tanker trains could replace TransCanada's proposed Energy East pipeline if the project isn't approved. 

“We believe the report makes a number of flawed assumptions on rail capacity, and actually goes beyond the oil industry’s own projections,” Ben Powless, a panel presenter at the province's Energy East stakeholder meeting and pipeline community organizer for Ecology Ottawa, said.

The energy board's report, written by Navius Research, estimates the greenhouse gas (GHG) impact of the pipeline — which is project to carry 1.1 million barrels of oil per day — will be "modest" since the oil could could just as easily be brought to market by rail.

“It is highly unlikely that 1.1 million barrels of oil or even half of that could be shipped by rail,” Adam Scott, climate and energy program manager at Environmental Defence Canada, countered. Scott and Powless joined panel members from the Council of Canadians and the Ottawa chapter of 350.org to argue against the report's findings at a stakeholders meeting on Energy East in Ottawa last week.

The Canadian Association of Petroleum Producers (CAPP) projects oil-by-rail in Canada will only hit 700,000 barrels per day by 2016. Even if sufficient additional rail capacity were proposed, the panel found it “overly optimistic” to assume public support in light of recent oil tank car explosions, such as the tragedy in Lac-Mégantic.

“We have trouble believing more oil-by-rail won’t cause public opposition,” Powless said.  

Climate impacts of Energy East debated

Navius’ report is one of only two studies assessing the GHG emissions from a fully operational Energy East pipeline. By assuming Energy East’s 1.1 million barrels will be extracted regardless of the pipeline's approval, the report sees only a 1.2 and 10.2 megatonnes-of-carbon increase in Canada’s carbon footprint due to Energy East. 

“Energy East will likely increase emissions from 'well-to-tank' (extraction to refineries) in the rest of Canada, but the impact is likely to be relatively modest,” the report concludes.

Navius’s findings differ greatly from the first study on Energy East’s potential GHG emissions by the Pembina Institute, an Alberta-based energy think tank:

“The crude production needed to fill the Energy East pipeline would generate an additional 30 to 32 million tonnes of carbon emissions each year — the equivalent of adding more than seven million cars to Canada’s roads.” 

The Pembina study does not assume oil-by-rail will replace Energy East if the pipeline is not constructed, leading to constraints on production in the oil patch.

Ontario’s environmental leadership on the line with Energy East

“Energy East is Premier Kathleen Wynne’s Keystone," Muthanna Subbaiah of the Ottawa chapter of 350.org said at the meeting. 

"President Obama said he will veto Keystone XL. Wynne needs to reject Energy East.” 

The province has talked much about being a climate leader and is hosting an international climate summit this summer, but attracted criticism over its position on Energy East. Ontario Premier Wynne recently stated her government will only consider the GHG emissions from Energy East that occur within Ontario, meaning the climate impacts from developing oil in the Alberta oilsands will be excluded from consideration.

Navius’ report for the Ontario Energy Board finds the pipeline will cause an 0.4 per cent increase in GHG emissions in Ontario. These emissions will be almost exclusively from pipeline pumping stations running on either natural gas or Ontario's relatively clean electricity.

“The Ontario government needs to step up and protect us,” Andrea Harden-Donahue, energy and climate justice campaigner with the Council of Canadians, told the audience attending the public meeting.

The panel also voiced concerns about TransCanada’s safety record, the effects of a oil spill on the province’s natural environment and the fact TransCanada’s application for the pipeline is incomplete.

“I don’t know of a clearer warning than the Kalamazoo spill,” Harden-Donahue stated.

The Kalamazoo spill in Michigan in 2010 remains the largest inland pipeline oil spill in U.S. history, and cost well over one billion dollars in cleanup costs. The Enbridge pipeline ruptured when the pipeline's external polyethylene tape coating became unglued, allowing moisture to corrode the pipe.

Ninety-nine kilometers of the existing natural gas pipeline TransCanada plans on converting for the Energy East project in Ontario is coated with polyethylene tape.

Image Credit: Ecology Ottawa

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TransCanada’s proposed Energy East pipeline is more likely to be an export pipeline than supplier of western Canadian oil to eastern Canadian refineries. A new report released this week revealed as much as 90 per cent of Energy East’s oil and bitumen from the Alberta oilsands will be shipped out of Canada.

“Publicly available information from TransCanada, as well as sources from industry, government reports and legal documents show that most of the pipeline’s oil would be exported unrefined, with little benefit to Canadians,” reads the report, released by Environmental Defence, the Council of Canadians, Ecology Action Centre, and Equiterre.

The report finds eastern Canadian refineries – two in Quebec and one in New Brunswick – will be nearly fully supplied with oil from Atlantic Canada, rail and tanker shipments from the United States and the recently approved Line 9 pipeline by the time Energy East begins pumping in 2018. Eastern Canada can refine 672,000 barrels of oil per day (bpd). TransCanada wants to ship 1.1 million barrels via Energy East every day.

“250,000 bpd of eastern Canada’s capacity will be served by Line 9. Take away another 100,000 bpd of Canadian offshore crude from Newfoundland, and 200,000 bpd of US crude and you're left with a pretty small gap to fill, of 122,000 bpd,” says Shelley Kath, energy consultant and lead researcher of the report.

“That means the rest, some 978,000 bpd is likely export bound,” Kath told DeSmog Canada.

The report punches a major hole in claims by TransCanada and the federal government that Energy East will be a “nation building” project strengthening regional energy security with western Canadian oil. The 4,600-kilometer proposed pipeline will begin in Alberta and end in Saint John, New Brunswick, crossing through every province in between.

Valero, operator of the refinery in Quebec City, announced this week it has “no firm interest” in the Energy East project because the oil company already has made commitments to receive oil from other sources.

Energy East Will Have A Larger Carbon Footprint than an Atlantic Province

“Energy East will be the largest pipeline in North America. It will increase production in the tar sands by 40 per cent at a time when First Nations living downstream are asking industry to slow down,” says Andrea Harden-Donahue, climate and energy campaigner with the Council of Canadians.

Energy East will carry more oil than TransCanada’s controversial and stalled proposed Keystone XL pipeline (830,000 bpd) and more than the Northern Gateway and Line 9 pipelines combined (525,000 and 300,000 bpd respectively). 

“The greenhouse gas emissions associated with this project alone will be more than the emissions of any Atlantic Canadian province,” Harden-Donahue told DeSmog Canada.

Last month the Pembina Institute released a report indicating Energy East would produce thirty-two million megatons of greenhouse gas emissions, similar to the output of Ontario's recently retired fleet of coal-fired power plants.

Marine Oil Tanker Export Terminals To Play a Big Role in Energy East Project

TransCanada recently submitted its project description for Energy East with the National Energy Board noting the project could serve 3.3 million barrels of oil tanker traffic.   

TransCanada has not denied that some of Energy East’s oil and bitumen would be exported. The pipeline company publicly stated part of the $12 billion pipeline project is to construct two marine oil tanker terminals – one in Quebec and one in Saint John – for the purpose of shipping oil by sea. A proposal for a third terminal has been floated for Nova Scotia as well.

Pipeline Companies Have Little Say On What Happens to Oil at End Destination

“TransCanada has not been forthcoming on how much of Energy East’s oil will be shipped overseas. The report confirms what we have suspected for a long time – Energy East is an export pipeline,” Harden-Donahue told DeSmog from Ottawa.

“It may sound strange to say, but pipeline companies like TransCanada aren't actually in business to supply refineries – they're in business to move crude from point A to point B. Once that delivery is done, their role is over,” says Kath.

Kath says pipeline companies make 'Transportation Service Agreements' with refineries or oil producers to deliver oil to a certain destination. The contracts are about selling space on the pipeline not about what happens to the crude when it reaches its destination via the pipeline. The product could be exported, stored or refined by the shipper.

Refining Oilsands Bitumen

It is unlikely crude shipments from Energy East will displace current and soon-to-be oil suppliers to eastern Canadian refineries, especially if Energy East is shipping oilsands bitumen. As DeSmog Canada reported last October only a specialized refinery can refine bitumen. Eastern Canadian refineries lack the necessary equipment – usually a coker unit – to process large volumes of bitumen.

“Ample supplies of light crude from growing U.S. and offshore production may also dissuade refiners from making costly investments aimed at converting refineries in order to process heavy crude,” concludes the report. Retrofitting a refinery to process bitumen can cost as much as $2 billion.

Jeff Rubin, former CIBC economist, argues the price for bitumen will only increase when oilsands producers can get their product to global markets. At the moment, bitumen is sold at a discount because there is a glut in production and oilsands producers can only sell in North America. Constructing Energy East means bitumen can finally fetch higher global prices, which may be another financial disincentive for refineries in eastern Canada to start refining bitumen.

The report concludes the vast majority of Energy East’s product will be shipped to the U.S. and overseas destinations such as Europe and India.

TransCanada is expected to submit its application for the Energy East project with the National Energy Board sometime this year. The project involves converting a 3,000-kilometre natural gas pipeline in Saskatchewan, Manitoba and Ontario and building an additional 1,600 kilometers of pipeline in Quebec, along the St. Lawrence River, to the pipeline’s proposed end destination in Saint John, New Brunswick.

Image Credit: TransCanada's Energy East: Export Pipeline, Not For Domestic Gain Report

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The Ontario Energy Board’s approval of three natural gas projects last week puts the province’s plans to significantly reduce Ontario’s carbon footprint in jeopardy.

The ruling also gives Ontario the green light to import controversial shale gas from the U.S. This type of gas is trapped in rock-like shale and is extracted using a process called hydraulic fracturing, known as fracking, which involves pumping a chemical mix underground at high temperatures to break apart the rock and free the gas. The practice has caused controversy worldwide due to fracking chemicals and methane contaminating drinking water.

“So often we see approvals given to pipeline and fossil fuel projects without a real understanding of the broader and long-term impacts on climate, water and public health,” says Emma Lui, a water campaigner with the Council of Canadians.

The interdependent projects — two by Union Gas and one from Enbridge Gas — will expand the natural gas supply and delivery network in southern Ontario. Consuming more natural gas, particularly a more polluting form of natural gas, are direct contradictions with the province’s strong greenhouse gas emissions reduction targets.

“Energy conservation is the lowest cost method to keep our homes warm. It creates jobs and reduces our greenhouse gas emissions and energy bills,” Jack Gibbons, director of the Ontario Clear Air Alliance, told DeSmog Canada in an interview.

Burning natural gas to heat homes and produce electricity accounts for 35 per cent of Ontario’s energy-related carbon footprint. Ontario plans to achieve a 15 per cent reduction in the province’s greenhouse gas emissions by 2020 and a reduction of 80 per cent by 2050 (based on 1990 levels).

“Buildings are the third largest source of greenhouse gas pollution in the province, making it important to save as much energy in heating them as possible,” Gillian McEachern, campaigns director of Environmental Defence, told DeSmog Canada. “Conservation needs to be a requirement before companies are given approval to expand infrastructure."

Environmental Defence, Council of Canadians and the Ontario Clean Air Alliance all found the Ontario Energy Boards’s decision a “disappointment.” They also disputed the need for the project because the alternatives were not properly considered.

The energy board criticized Enbridge Gas for only taking a “cursory” look at energy conservation as an alternative to its project, known as the GTA project. In the future, the board “expects applicants to provide a more rigorous examination of demand side alternatives, including rate options, in all gas leave to construct applications.”

Ontario Clean Air Alliance estimates Ontario could save $1.4 billion over 10 years if spending on energy conservation is increased. Installing more insulation and high-efficiency windows in homes, replacing aging furnaces with new models and switching to geothermal energy for space and water heating are just some of the ways of achieving these savings.

Ontario Needs To Increase Incentives For Energy Conservation

Ontario provides financial incentives for Enbridge Gas and Union Gas — Ontario’s main natural gas distributors — to invest in energy conservation, but only to a point.

The Ontario Energy Board has put a cap on gas companies surpassing their energy conservation targets — meaning the financial rewards stop once a company exceeds its conservation targets by more than 50 per cent.

The caps on financial rewards for energy conservation are “penny wise and pound foolish” and do not benefit Ontario according to Ontario Clean Air Alliance. The organization recommends the energy board remove the caps “subject to the constraint that this must not lead to undue rate increases” for Ontarians.

Pinning Ontario’s Energy Future on Fracked Gas Is Precarious At Best

During the public hearings on the gas projects, the Council of Canadians, one of Canada’s leading water advocacy groups, argued pinning Ontario’s energy future on U.S. shale gas was precarious at best.

Three reports from U.S. experts provided by the Council of Canadians indicated upcoming bans and moratoriums on fracking and gas wells nearing the end of their lives will make importing fracked gas less economical for Ontario in the future. This could increase energy costs for Ontarians in the end.

“While the image of tap water on fire has become iconic about the risks of fracking shale gas, the climate impacts are less understood,” says Andrea Harden-Donahue, a climate and energy campaigner with the Council of Canadians.

Fracking wells leak methane, a powerful greenhouse gas, into the atmosphere. The world’s leading scientific body on climate issues, the Intergovernmental Panel on Climate Change, estimates methane has 84 times the global warming potential of carbon dioxide.

The Ontario Energy Board appeared unmoved by the argument against using fracked shale gas:

“There are currently no regulations in Ontario or at the Canadian federal level which prohibit shale gas production or transportation.”

Quebec, Newfoundland and Nova Scotia have all placed moratoriums on fracking.

Ontario Energy Board Decision Clears A Hurdle for Energy East Oil Pipeline

TransCanada’s Energy East pipeline proposal could benefit from Ontario’s decision to import large quantities of U.S. shale gas.

Part of the pipeline project to ship western Canadian oil to New Brunswick involves converting a natural gas pipeline running from Alberta to Ontario. Ontario receives almost half its natural gas through this particular pipeline system at the moment.

The prospect of Ontario losing a source of natural gas prompted the Ontario government to announce an assessment of the Energy East project on its costs and benefits for Ontarians. 

Now that Ontario will be able to tap into the booming shale gas industry of the U.S. the provincial government’s scrutiny of Energy East may not be that severe.

“The OEB decision helps lay the groundwork for Energy East,” Harden-Donahue told DeSmog Canada. “This is bad news all around for the region which could have the biggest tarsands pipeline snacking through it and be increasingly reliant on socially and environmentally damaging fracked gas imports."

Image Credit: Allen York, OCAA, OEB, Fracking Resources

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