Gauging the risk versus the financial reward with Enbridge’s Northern Gateway project
Special to The Globe and Mail
Published Sunday, Jun. 29 2014, 5:47 PM EDT
The proposed Northern Gateway project has become a flashpoint for the growing debate about the safety of oil pipelines. Yet despite the arguments put forward by its proponents and opponents, many Canadians lack a broader perspective from which to measure the risks and rewards of what would be a vital oil-export conduit. Enbridge Inc. says the advanced technology for its Northern Gateway pipeline would make it among the safest in the world. At tidewater in Kitimat, B.C., the crude would be transferred into tankers for shipment to Asian markets. Opponents are working to persuade wary British Columbians that a tanker disaster off the B.C. coast would be inevitable. But oil tanker safety has improved dramatically since the infamous Exxon Valdez disaster of 1989.
Every day, around the world, more than 2,000 tankers transport 60 million barrels to market. While global oil shipments have almost doubled since the 1980s, the number of significant spills has dropped from an average of nine a year in the 1980s to only two a year in 2010-13 , according to the International Tanker Owners Pollution Federation.
The average size of spills has also decreased dramatically, to less than 25,000 barrels compared with the Exxon Valdez spill of ten times that amount.
This improved record comes even though the global fleet still includes large numbers of single-hulled tankers, many of which are decades old. In contrast, Northern Gateway tankers would be double-hulled, and would use the latest safety technology. A 2011 study by researchers at Hong Kong Polytechnic University found that spillage volume from accidents involving double-hulled tankers averaged 60 per cent less than single-hulled tankers of the same size. Northern Gateway’s tankers would be among the safest in the global fleet, and having them tethered to tugboats while traversing B.C.’s Douglas Channel would further cut the risk of spillage.
After a dozen years of planning, consultation and regulatory hearings, Northern Gateway has finally received conditional approval from the federal government. Opponents are determined to stop it, but Canadians should consider the full financial impact of the project. For example, energy exports contributed $64-billion to Canada’s balance of payments in 2013. And the four oil- and gas-producing provinces (Alberta, B.C., Saskatchewan, and Newfoundland and Labrador) are now the only contributors to the country’s equalization payments, which provide vital support to social programs in provinces representing more than 70 per cent of Canada’s population.
In addition, the oil and gas industry pays more $20-billion a year in taxes and other levies to federal and provincial coffers. Annual capital investment of $55-billion flows to manufacturers and contractors from coast to coast, making the industry a major job creator, employing more than 500,000 people.
These substantial economic benefits are threatened by a lack of access to growing Asian markets hungry for energy resources. And the politicization of TransCanada’s proposed Keystone XL pipeline in the United States makes it clear that Canada can no longer depend on the U.S. as its main oil customer.
Given all this, you would think that the new infrastructure needed to export oil to Asia would garner support. Yet even if Enbridge convinces the National Energy Board that it has satisfied the board’s 209 conditions for final approval, there’s a very real chance that Gateway opponents will stop the pipeline. This would not only be an economic tragedy, but also a signal that Canadian resource companies can’t count on due process under the laws of the land. The implications of that to Canada’s national prosperity would be even more destructive than the loss of Northern Gateway.
CPE response to Globe and Mail’s Article: “Gauging the risk versus the Financial Reward with Enbridge’s Northern Gateway Project”
Submitted Monday, July 7, 2014. Not yet published.
This article leads one to think that the Northern Gateway Proposal is as safe as it can be and ranks up in the top of the world. This is not true.
- The product being shipped is not proven to float long enough to clean any of it up in the event of a spill. This will result in severe damage with pipeline breaks or tanker collisions. If the spills sink it would be out of sight and out of mind.
- The project is many times less safe than it can be because the probability of collisions and spillages are a function of the time spent in the exposed waterways. The Kitimat access requires 160 nautical miles of navigating difficult waters in 16 hours of duration. Whereas it is 2 hours in Prince Rupert and 1- 1½ hours in Port Simpson. We believe the decision to go to Kitimat is based on saving 2 billion instead of extending the pipeline from Terrace to Prince Rupert. The risk analysis of Northern Gateway presented at the JRP hearings ignored the increased LNG traffic, double counted the use of tugs, and they used a database that underreported the incidences that actually took place. None of these charges made by ourselves and others at National Energy Board-Joint Review Panel (NEB-JRP) have been properly addressed.
- Evidence is that the tanker fund set aside of 1.3 billion is nowhere near enough to pay for historical clean up costs.
- We do not agree with the basic premise of this article which states that the Northern Gateway is safe and the benefits outweigh the risks. We believe it is a project done on the cheap and could be so much better. This could be done by considering ports closer to the open ocean, by refining the product so that if spilled it would float and could be cleaned up and finally by making the tankers who take the oil responsible for carrying adequate insurance for compensation for oil spilt.
Concerned Professional Engineer