Pipeline costs climbing, hearings told
If the proposed Northern Gateway pipeline is approved, the pipe itself likely won't be built in Canada.
Enbridge senior manager, strategic safety and construction management ,Tom Fiddler said during National Energy Board (NEB) hearings in Prince George on Tuesday that there's not a mill in Canada currently capable of building a pipe with the wall thickness required for the project to carry crude from the Alberta oilsands to Kitimat.
"Enbridge Northern Gateway prefers to buy our pipes here in Canada," Enbridge spokesman Ivan Giesbrecht said after the hearings wrapped up. "Northern Gateway is doing everything we can to source our pipes in Canada. However, at this time in the process, it is premature to specify any one particular vendor."
Fiddler said that although that doesn't preclude a Canadian mill from making the required upgrades, Northern Gateway does have a strategic alliance with a facility in Portland, Ore., which is expected to be capable of making the pipe. However even the Oregon mill will need to undertake changes before it can produce the proper thickness of pipe, something Northern Gateway engineering manager Ray Doering said will happen.
Fiddler and Doering were responding to questions from Andrew Hudson, a lawyer representing the Joint Review Panel (JRP) . The panel, chaired by Sheila Leggett, will make recommendations to the federal government on the environmental assessment proposal Enbridge has filed for the project.
Hudson's questioning also revealed that the projected cost line is higher than previously reported. Doering said before financing costs are factored in, the pipeline is projected to cost about $6.5 billion, half a billion more than previous media reports. Including financing, the final cost jumps to more than $7.8 billion.
Originally, Enbridge had estimated the pipeline would cost about $5.5 billion, but since then the company has made two changes, which have each added an estimated half a billion dollars to the cost. First, changes were made to marine spill response and just this summer the company said it would make safety enhancements along the route, such as thicker pipe and more manned pumping stations.
Doering said the current cost estimates are preliminary and are considered unclassified based on accepted estimating principles. Northern Gateway is planning to conduct a more formal cost estimate as part of the front end engineering and design (FEED) phase of the project, which isn't expected to be completed until 2014.
During the FEED process, Doering estimated 30 to 40 per cent of the detailed engineering will be completed.
The detailed engineering has been a point of contention during the hearings so far as the company has deferred many answers to specific design questions until it's completed. Various interveners, including the provincial government, have expressed frustration about this, noting that it will be impossible for them to ask Northern Gateway the relevant questions because the NEB hearings will be completed by the time the detailed engineering is finished.
Also under questioning by Hudson, Enbridge director of pipeline control systems and leak detection Barry Callele talked about another type of leak sensor which hadn't been previously discussed. He said the technology, which allows for 24/7 monitoring of the project's right of way, would make it easier for the company to react to the right spot on the pipeline route in the case of a natural disaster like a landslide or avalanche.
Callele also admitted to having "a few sleepless nights" over the past two years as he researched the various leak detection systems.
"When you do that research, you find their benefits to the pipeline, but also their limitations," he explained.
The members of the Joint Review Panel also got the chance to ask questions. Hans Matthews zeroed in on how sulfite-bearing rock will be disposed of during the tunneling phase. Kenneth Bateman asked about what engineering activities have been suspended during the hearing process as well as why Northern Gateway is reticent to use category two steel. Chairwoman Sheila Leggett wanted more information on some of the modern in-line inspection tools Northern Gateway is considering as well as where micro-tunneling is being considered.
Hudson's questions also give some insight into the thought process of the Joint Review Panel as they work through the process.
He broke his questioning, which took three hours over two days, into seven categories:
* tunneling methods
* expansion of the tanker farm in Kitimat and its safety in the case of an earthquake
* the maximum pressure the pipeline could be under in given circumstances
* the construction and operational timeline for the pipeline
* the inspection plans for the pipeline, when it's operational
* the type of steel that will be used and the sensors that will be deployed
* the cost estimate
The hearings continue with the second witness panel for the rest of this week. The JRP will take a week off next week and reconvene in Prince George on Oct. 29.