NEB Northern Gateway Pipeline Report: What you need to know
The long-awaited National Energy Board Joint Panel Report has shocked many Canadians by concluding that the Northern Gateway Pipeline is in the public interest. There were more than 1,000 submissions against and only a handful in favour during hearings in 21 communities.
The NEB panel claims that overall total benefits exceed the overall total costs of the proposed $6 billion Northern Gateway pipelines. To understand the report, one must wade through two volumes (the first, “Connections,” is 76 pages; the second, “Considerations,” has 417 pages). There is no executive summary, but there are many pictures of beautiful landscapes, wild animals and sleepy coastal communities!
The NEB claims its views are “science based” or unbiased, but most readers would disagree. For example, the first page includes, “All maps, illustrations and graphs are based on evidence provided by Northern Gateway (Enbridge).” In other words: no independent research, graphs, tables, figures or charts.
Enbridge and other energy companies have spent about $450 million to get this pipeline approved – powerful motivation to omit, obscure and cast doubt on any data that doesn’t support its case. In fact, the majority of the report reads as if it were written by Enbridge itself. Many paragraphs begin with the phrases: “Northern Gateway (Enbridge) says… “ Ultimately, the NEB panel agrees with every statement. None of the material provided by Enbridge was peer-reviewed. The few times that an outside study is mentioned, there are no footnotes or references to check on allegations made.
Regarding environmental costs, the NEB panel insists its mandate is restricted to looking only at those associated with the pipelines. It claims to have no mandate to look at the ‘upstream cost’ – the environmental cost of producing extra dilbit (diluted bitumen), the cost of cleaning up the additional wastewater lagoons and additional contamination of the Athabasca river, etc. Nor does it have a mandate to look at the downstream environmental cost – the extra green house gases generated by refining and burning the dilbit in China, global warming, rising ocean levels, etc.
This, of course, makes this entire environmental analysis a very biased affair. On what rational grounds can it be justified that the benefits of the pipeline and of shipping all that extra dilbit over the next 30 years are included, but that the upstream costs over the next 30 years are excluded?
How could the three members of the NEB panel accept this restricted mandate and still maintain scientific integrity, when such a powerful bias is built right into the study’s design?
The NEB panel accepted the following Enbridge arguments with no back-up or explanation as to how the numbers were obtained that small spills are unlikely and could easily be mitigated, doing no serious damage; that large spills would be extremely unlikely – probability of a tanker spill would be about 0.4% in any given year; the average interval between spills: 250 years; that the probability of a full bore rupture on the pipeline would be 0.2% % in a given year – expected every 464 years (“Connections,” page 60); that research from past spills shows that environmental, societal and economic burdens from large spills would likely be reduced by effective spill response, financial compensation and natural recovery processes within weeks to months, with no explanation as to what kind of research, where, when and how.
Quoting from the report: “Scientific studies after the Exxon Valdez spill indicated that the vast majority of species recovered and that functioning ecosystems similar to those before the spill were established.” [Source not provided, “Considerations,” chapter 7] The panel finds that “Natural spill recovery after an oil spill is likely to be the primary mechanism particularly after a marine spill and environmental damage is further mitigated where clean up is possible, effective and beneficial.
“Drinking water, clams, herring, seaweed and fish recover rapidly within two to five years. Exxon Valdez food safety closures for mussels, urchins and crabs were lifted within one to two years following the spill. [chapter 7] Enbridge claims that recovery of the natural environment from oil spills could range from days to weeks, all the way up to two to 20 years.”
All of these above allegations of modest environmental damage are made in unnamed studies by unknown authors and can’t be checked as they were not footnoted or referenced.
Will dilbit sink to the bottom after a spill? According to Enbridge, that depends on water temperature, wave action and the presence of particulates. Enbridge is obfuscating – if dilbit sinks, it could invalidate Enbridge’s claim that nature will clean up a spill in a few short years.
Enbridge has had years to conduct studies yet it claims more are required. Give a group of grade 10 science students some dilbit, a swimming pool that has wave action, fill it with water from Douglas channel and they could provide the answer within one year.
In the case of the Kalamazoo river spill, so much dilbit sank to the bottom that the US Environmental Protection Agency has mandated further dredging. That spill – into a small river, in an easily accessible location – has cost Enbridge over $800 million dollars and counting.
Kitimat, located at the end of the 160 kilometre-long Douglas Channel, has been designated the western terminal. This Sound is well known for dense fog, powerful tides and storms. Imagine giant tankers, some more 300 meters long, travelling only a few hundred meters from shore and tankers loaded with dilbit going one way and empty (or loaded with condensate) tankers going in the other direction. Now consider that within a few years, vessels loaded with liquified natural gas are expected to also move up and down this same narrow, treacherous channel.
Even a small human mistake or equipment failure will be critical, with absolutely no margin for error. There is no evidence that two escort tugs will be able to keep a fully loaded tanker, experiencing engine failure, off the rocks, in the face of unfavourable storms and tidal currents. But Enbridge isn’t responsible for marine spills. If one occurs, the tanker’s insurance providers, as well as several international marine funds and insurers, will be held responsible. Enbridge will activate its clean-up crews and be paid for it, as well. Extending the pipeline the extra hundreds of kilometres to Prince Rupert would be expensive and any spills along this stretch would be an Enbridge responsibility. So it’s obvious why they prefer Kitimat.
NEB estimates of economic benefits are in dire need of peer review with no ties to the energy industry. These estimates were obtained using input-output analysis, which can lead to massive exaggerations. For example, an unemployed welder is hired by Enbridge and paid $100,000 a year; that money is counted as economic benefit. If the welder then spends most of this money to build a home (increasing the builder’s income), that too is counted. What the homebuilder spends is added and on and on the chain of increases. On the other hand, if the welder was employed and earning $70,000 a year before being hired by Enbridge, economic benefits increase by only $30,000 and the ensuing chain is much smaller.
Input-output analysis assumes that the welder, and all the others constructing the pipeline and producing the extra dilbit running through the pipeline, are unemployed before working for Enbridge. This is an absurd assumption, since skilled labour is in short supply up north where contractors constantly lobby for permission to bring in foreign labour.
Much attention is paid to extra profits to be earned by Alberta energy companies selling to Asian markets and cashing in on higher prices. As most of these companies are foreign owned, their extra income should not be counted as benefits. Furthermore, Canadian refiners in western Canada will also have to pay higher prices for crude oil and will pass these increases on to Canadian consumers – higher prices for gasoline, diesel, furnace oil, etc. – all economic losses.
Why doesn’t the NEB panel mandate that the pipe and the 10 pumping stations be Canadian made or that only Canadian labour be used in construction? Why does the panel disregard the effects on the exchange rate of the Canadian dollar? This pipeline and the ensuing expansion of tar sand production would be financed by foreign money. This would lead to appreciation of our dollar.
Increases in dilbit export would lead to further appreciation of the Canadian dollar, encouraging even cross-border shopping. Currently, Canadians are spending 20 billion dollars shopping across the border, a cost to Canada of 80,000 to 100,000 jobs exported in this way to the US every year. Mr. Harper doesn’t mention this when he says his government’s mission is to create jobs, jobs, jobs. Instead he has increased duty-free allowances.
In addition, the rising Canadian dollar would be bad news for Canadian manufacturing, including the lumber, film and tourism industries. The panel states that since there is “disagreement among economists,” there’s no point examining these massive impacts. (In fact, there are at least two good studies available: “Does the Canadian Economy Suffer from the Dutch Disease?” (Michel Beine, Charles S. Bos and Serge Coulombe; Tinbergen Institute, 2009) and a second commissioned by the Harper government itself, authored by Serge Coulombe and others.
If the NEB panel had examined these studies, it would have found agreement that the “Dutch Disease” (where increased exports of natural resources and increased inflows of foreign investment appreciate a country’s currency, producing a decline in the manufacturing sector) is most definitely at work in the Canadian economy.
In summary, the NEB panel believes that benefits of the Northern Gateway exceed costs. However, estimated benefits are grossly overstated and costs grossly understated. The report’s analysis is based exclusively on evidence provided by Enbridge. None of the few studies quoted are footnoted, making them impossible to verify. And none of the figures, statistics, analysis etc., was submitted for peer review.
Enbridge will have to meet 209 conditions. Some are quite important. For example, thicker pipe must be used and additional check valves installed. Most of the conditions deal with basic building standards and minimizing environmental damage during construction. Unfortunately, many important conditions are not mandated, such as 1) Pipes and pumping stations must be Canadian made. 2) All construction labour must be Canadian and dilbit upgraded and refined in this country. This would create many more jobs and lessen the environmental damage of spills. As well, 1% of sales receipts of everything sold via this pipeline must be put into a contingency fund in case of a spill, to be utilized for quick clean up and compensation for third parties.
We must be fully aware that, from Enbridge’s point of view, the figures it provides need not be accurate, just favourable enough to convince the panel and Canadians to embrace this project. If once the project is built, these figures turn out to be wildly incorrect, there are no consequences to Enbridge. There will be no fines or penalties at all, although there may be immense consequences to other stakeholders.
Obviously, neither government appointed boards nor governments themselves can be trusted to protect Canadians from giant corporations ruthlessly maximizing profits. So citizens must stand up and say “Enough is enough!’ We want objective independent reports, not industry propaganda, in order to make up our minds, weighing the pros and cons of this massive project.
If ever there was a time for Canadians to “stand on guard for thee,” that time is now.