Northern Gateway has been a political minefield from the start, because of geography. Its proposed route snakes 1,177 kilometres westward from Edmonton, Alta., to Kitimat, B.C., passing through traditional aboriginal territories. From Kitimat, Asiabound bitumen is to be shipped down the Douglas channel by tanker, to the ocean. The proposed volume is 525,000 barrels a day. That’s a lot of tankers – 220 per year – with a lot of moving pieces, conferring a risk profile different from that of any other North American pipeline plan currently on the books, that I know of. In the post Exxon Valdez era, selling this was never going to be easy. In the post-Lac-Mégantic era it looks nigh impossible.
The economic case in favour of a new pipeline to the Pacific has always been compelling. For starters, demand from Asian nations is soaring. Between now and 2035, the International Energy Agency predicts, emerging economies will account for 90 per cent of net energy demand growth, with China, India and Southeast Asia leading the way. Meantime, U.S. requirements for energy imports are on the wane. As early as 2020, due to new extraction technologies such as fracking, the United States may be energy-self-sufficient.
Moreover, market need for new pipeline capacity is immediate and pressing. Alberta crude already trades at a steep discount to the global price, simply because its product is bottlenecked to the west, east and south. Crude is moving, but not in sufficient quantities to ease a growing glut east of the Rockies. That discount – up to $25 off the price of a $100 barrel of oil – doesn’t just hit Big Oil’s bottom line; it hits the federal treasury. Over the next roughly two decades, the Conference Board has estimated, total tax proceeds from the oilsands and related industries will total $80 billion. Of that, more than half is federal.
As well, Northern Gateway opponents have undermined their own argument by citing climate change as a reason to nix the project. For, as with Keystone XL, the ultimate net effect on carbon emissions, whether crude moves one way or another, through this pipeline or that, or by ship or rail, is nil. If we assume the 173 billion barrels of crude in the oilsands will be extracted, one way or another – which is a safe assumption, given the projected skyrocketing of global demand for all forms of energy over the next 25 years – the carbon footprint doesn’t change. That’s because the primary energy cost is in the extraction. A heavy investment in new nuclear power plants in Northern Alberta could dramatically cut the oilpatch’s carbon footprint; killing the Northern Gateway pipeline won’t.
And, as a final argument in its favour, Northern Gateway has proposed environmental safeguards that would make it a standout in pipeline and tanker safety. These include land-based radar, new beacons, buoys and the like; provisions requiring that every tanker be escorted by two tugs, one tethered, to lessen the risk of a tanker running aground; requirements that each tanker be double-hulled, and less than 20 years old, and a two-pilot rule, to mitigate the risk of human error.
But set against all that is this single, powerful, incontrovertible fact: There is no way to reduce the risk of a tanker spill in the Douglas Channel to zero. Human error or equipment malfunction can always be a factor, as they have been in so many recent industrial tragedies. Such a spill would be beyond catastrophic; the Exxon Valdez disaster in 1989, which spilled 210,000 cubic metres of oil into Prince William Sound, established this.
Together with strong aboriginal opposition (exacerbated, it must be said, by the federal government’s refusal to entertain a separate First Nations consultation), this guarantees that, whatever the NEB says, and whatever the cabinet eventually says, there will be intense, prolonged opposition on the ground, and in the courts. That is a project-killer. It is not the case with Kinder Morgan’s Trans Mountain pipeline expansion, which has the virtue of being an expansion to something already built. Nor is it the case with Keystone XL, which has passed its local hurdles and now merely awaits approval from the Obama administration.
All of which leaves one with the sense that this NEB judgment, and the hue and cry to follow, are flash and fire, after the battle. This green light looks more like amber, on an indefinite clock.
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