Suncor leads attack over Kinder Morgan pipeline prices

Author
NATHAN VANDERKLIPPE
A corporate spat has erupted in the race to carry oil to the British Columbia coast, as energy producers accuse a U.S. pipeline company of trying to charge exorbitant prices to ship crude.

The attack is being led by Suncor Energy Inc., the country’s largest oil company, and is aimed at the Canadian unit of Houston-based Kinder Morgan Inc., which is seeking approval for a $5.4-billion expansion of its Trans Mountain pipeline. The Kinder project would allow for the shipment of another 890,000 barrels a day between Edmonton and Burnaby, B.C., where it connects to a dock that stands to be an important outlet for Canadian oil to find new buyers in California and Asia.

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Major oil companies are eager to ship to the coast to take advantage of higher prices on world markets than they can get by shipping to refineries in the U.S. Midwest and Southeast. But some of them are balking at the price – known in the industry as tolls – which they argue would allow Kinder Morgan to earn returns on the project that are far above its historical 7 to 12 per cent.

“The average projected [return on equity] would be approximately 28.3 per cent,” wrote Greg Matwichuk, an Alberta chartered accountant who provided evidence on behalf of Suncor to the National Energy Board. That, he added, “is significantly greater than returns earned by other pipelines in Canada.”

The dispute about tolls, which is set to burst into greater view when a public hearing begins Feb. 13, is a window into the high-stakes game under way for Canadian companies fighting to get oil to Pacific Coast as quickly as possible.

Building new outlets has taken on major new importance in recent months, with existing export pipelines effectively full and Canadian heavy oil selling at a discount as high as $42 (U.S.) a barrel to the North American benchmark, West Texas intermediate.

But oil companies’ pain stands to be a gain for pipeline companies. Once boring utilities, pipeline firms in Canada have in recent years moved farther away from a model that largely assured them returns, albeit modest ones, irrespective of operating costs or how much oil they pump. Today, they are seeking higher returns while at the same time accepting more risk, in the belief that the fast-rising oil sands will provide plenty of crude for years to come.

Kinder Morgan says that it is not looking for anything like a 28.3 per cent return on Trans Mountain – and that it is taking additional risk to build the pipeline.

Instead of passing along the cost of power or some construction overruns to customers, for example, Kinder Morgan is proposing to largely shoulder any rise in those costs – save several exceptions, including changes in the cost of steel or large first nations financial considerations.

The company also points out, in documents before the National Energy Board, that the intense public scrutiny of pipelines today could impose additional safety measures and development delays. “These risks and resulting costs are not immaterial,” the company says. In a statement, spokesman Andy Galarnyk added: “The return is not excessive. … The toll principles have been agreed to by 13 very large sophisticated parties (including BP PLC, Imperial Oil Ltd.) representing 708,000 b/d – which in itself is sufficient.”

In Canada, pipeline tolls are typically negotiated with oil companies then reviewed by the National Energy Board. Total SA joined Suncor in questioning the proposed tolls. Most other companies signed contracts that obligated then to support Kinder Morgan.

There is no doubt, however, that Kinder Morgan is looking for solid Trans Mountain profits. In the documents, it says it targets unlevered internal rates of return of 12 to 15 per cent. But those returns would rise substantially with the borrowing typical of pipeline projects. They are also well above the 9 to 11 per cent levered returns typical in the Canadian pipeline industry. U.S. profits have, however, historically been higher, and Houston-based Kinder Morgan warns it won’t build the expansion if it can’t meet targets.

Suncor, in response, say it is “critical” for the NEB to make sure there is a “just and reasonable” cost to shipping oil to the West Coast at a time when companies are desperate for new pipelines. The company says it is “disturbed” by how pipeline firms are “exerting market power that flows from the infrastructure shortage and need and necessity of take away capacity.”

Yet Suncor – through two subsidiaries – has already signed long-term contracts to ship oil through the expanded Trans Mountain system, whose tolls pale in comparison to the potential gains of accessing Pacific markets. Suncor has projected Trans Mountain tolls of between $4.15 and $5.48 (Canadian) a barrel. On Tuesday, the price difference between Canadian heavy oil and Maya, an international heavy blend, stood at just over $40 (U.S.).

The startling size of the price gap is weighing heavily on the province of Alberta, which through the National Energy Board posed Suncor a pointed question. It asked the company “to provide an estimate of the impact on Canadian oil producers if Trans Mountain decided not to proceed with the expansion.”

New Report: Financial Liability for Kinder Morgan

Author
Gwen Barlee
New Report: Financial Liability for Kinder Morgan

Today we’re excited to announce the release of a brand new report, co-authored by the Wilderness Committee with our allies at the Living Oceans Society, Georgia Strait Alliance and West Coast Environmental Law.

The report, Financial Liability for Kinder Morgan, takes a deeper look at the price tag for a potential oil tanker spill in the Salish Sea resulting from the proposed Kinder Morgan Trans Mountain pipeline and tanker route. This proposal represents a massive increase in the risk of a major oil spill—one that could have severe impacts on coastal industries and highly-populated communities including Vancouver, Victoria and the Southern Gulf Islands. But shockingly, the limited amount of insurance available to pay for the response and damages associated with such a spill would leave taxpayers on the hook for up to 90% of the cost.

Even though the BC government has been talking about asking polluters to pay for land-based oil spill cleanup, the province’s new spill response plan would not address marine-based spills from tankers like the ones being serviced at the Kinder Morgan terminal. And experience has shown us that spills in water are much more damaging, and more difficult and costly to clean up than spills on land.

Just this month, Kinder Morgan announced that they would be increasing the planned capacity of their proposed Trans Mountain pipeline from 750,000 barrels per day to 890,000 barrels per day; that means even more tar sands diluted bitumen flowing underneath our communities and into tankers on the Salish Sea. Instead of 300 tankers per year coming into the Vancouver harbour as originally planned, the proposal would now see more than 400 oil tankers travelling through these waters every year.

British Columbia’s coastal communities—and their local economies—rely on a clean, productive and beautiful ocean. An oil spill here would have long-lasting impacts and economic repercussions, especially for key industries like tourism, fishing and recreation.

I encourage you to read this report to learn more about the international agreements and funds in place to deal with marine-based oil spills, and about the potential economic losses that would be faced by the Salish Sea region in the event of a spill. Click here to visit our website and download the full report.

You can also help out by sharing this report with your friends, family and colleagues. Being informed about the risks and consequences is essential if we’re going to stop this pipeline and protect the coast from an oil spill!

Thanks,

Gwen Barlee | Policy Director
Wilderness Committee

http://wildernesscommittee.org/sites/all/files/publications/kindermorgan2012-english-2.pdf

Trans Mountain: The other Pacific pipeline

It is a sunny Sunday and Vancouver is doing what it does best: looking pretty and post-industrial. Morning lights up the downtown’s glass horizon. A half-dozen scooters rip down the road in a platoon. Cyclists swish past Zipcar lots, kayakers and stand-up paddle surfers ply the waters.

But just a few kilometres away, an oil tanker is preparing to raise anchor and slide into port. Soon, it will open its holds, with a total capacity of 650,000-barrels, to a flush of Alberta oil. After 30 hours of pumping, it will slip away to Long Beach, Calif. Oil tankers are, for now, relatively rare here. A tanker sails into the Vancouver harbour about once a week, docking at the Kinder Morgan-owned Westridge Terminal to accept Alberta crude flowing across the Rockies in the Trans Mountain pipeline.

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On this day, it is the 250-metre long Aqualegend that glides into place, smoothly manoeuvring alongside the Kinder Morgan dock. Its deck is spotless enough to eat off. The waters alongside the dock are clear and blue; a harbour patrol vessel has to ask crabbers to make way so the tanker can dock. Under blue skies and sunshine, exporting oil seems safe – even easy.

For Canada’s energy industry, however, the tanker route through the North Pacific is likely to be anything but.

The Aqualegend is a glimpse of what is to come: a future that could see a tanker sail past downtown Vancouver almost every day, to pick up oil from a newly expanded Trans Mountain. Kinder Morgan intends to twin the line, allowing 750,000 barrels a day – more than double the current 300,000 – to flow west. Most of the new barrels will be loaded on tankers. The project stands to change Alberta, making it an important global oil player. By placing crude on tankers that can deliver product anywhere a ship can sail, the oil industry can grab hold of global prices rather than selling its product on the cheap to its principal export market, the over-supplied U.S. Midwest. Expanding Trans Mountain stands to change Canada as well, enabling an expansion of the oil sands that will allow years of growth.

And Trans Mountain would change British Columbia’s Lower Mainland as well. Vancouver – home of the Prius taxi – could one day become Canada’s Rotterdam, a major oil tanker hub.

Yet the $4.1-billion project’s tremendous economic potential comes against a question mark nearly as big: is it even possible to build the expansion against rising anxiety that oil shipments will stain the shores of one of Canada’s biggest metropolitan areas?

Much rides on that question for Alberta’s energy industry. Take just one company: by 2020, Cenovus Energy Inc. intends to sell nearly 1 million barrels a day, most of them from projects not yet operating. It needs to find a home for those barrels, and the Kinder Morgan project is central to its plans. Already, the company is seeing a substantial lift in price for the barrels it is pumping through the existing Trans Mountain pipe and selling on the international market.

The Kinder Morgan project, in part because of its location, will likely send most of its crude to California, although some may also flow to Asia. For oil companies such as Cenovus, the destination doesn’t matter. Oil is often sold at the dock, and the price there is the international price, no matter where the crude ends up. To “unlock the value” of Canada’s crude oil, that product has to touch tidewater, says Paul Reimer, senior vice-president of marketing, transportation and power at Cenovus.

The stakes, then, are high for Kinder Morgan. In some ways, Canada’s global industrial position depends on this pipeline.

“More market connections increase our global competitiveness and position us to better receive full market value for our growing production,” says Patti Lewis, spokeswoman for Nexen Inc., which has been a supporter of the Kinder Morgan expansion. Ms. Lewis spoke before Nexen agreed to be bought out by China’s state-controlled CNOOC Ltd. for $15.1-billion, a deal that underscores the growing connections between Canadian crude reserves and Chinese energy ambitions.

First, though, Kinder Morgan must find a way to sail huge new volumes of oil beneath Vancouver’s Lions Gate Bridge and past Stanley Park, a jewel not just for B.C., but the entire country. And the anger that has met Enbridge Inc.’s plans to build the Northern Gateway export pipeline to Kitimat, on the B.C. north coast, is already beginning to simmer against Kinder Morgan. The company has yet to formally apply for the project – that should happen next year – and to publish a map of exactly where the new pipe would run.

Already, the mayors of Vancouver and Burnaby have spoken out against it, as have local first nations. The B.C. government has published a lengthy technical document demanding substantial upgrades to tanker safety along its coast.

Neither the ruling B.C. Liberals nor the opposition NDP, who appear headed to take over in Victoria next year, have declared a public position on the Trans Mountain expansion, but the tiff between the Alberta and B.C. premiers over Northern Gateway seems poised to envelop Trans Mountain as well.

In case of accident

Before the Aqualegend, now loaded with Canadian crude, can so much as untie from the Kinder Morgan dock, it must meet an extraordinary set of demands. Loaded tankers are treated unlike any other vessel in Vancouver, starting with the two specially trained marine pilots they must have aboard, double the normal requirement. They can sail only during daylight, at high slack water, a window that on some days allows just 25 minutes for them to move. They must travel through a clear channel, meaning other ships must wait. Each tanker is first vetted for admissibility by Transport Canada, pre-screened by Kinder Morgan – which denies entry to ships that don’t meet its standards, including one that they must be less than 20 years old – and then inspected after entry by Transport Canada. Where other large vessels must only be accompanied by an untethered tug, a loaded tanker must sail with three tugs connected to it by thick metal cables.

Some of the requirements are new, intended to build on a nearly unblemished record of oil moving through these waters.

“We have never had an accident with a tanker. Not in 60 years,” says Kevin Obermeyer, chief executive officer of Pacific Pilotage Authority Canada.

But spills do happen. Since 2001 – the only period for which it could provide records – Transport Canada has recorded some 13 incidents with oil and chemical tankers in waters near Vancouver. The worst, in 2002, saw 2,300 litres of canola oil spill. In total, over the past decade, 31 litres of petroleum has spilled in the area. But those are minor, and nothing like the Exxon Valdez spill whose memory, and ongoing environmental damage, haunts any new attempts to carry oil along the West Coast. Kinder Morgan is eager to make clear how much has changed since that 1989 disaster.

With the “Exxon Valdez, there were no escort tugs, a single-hull ship, no pilots on board,” Kinder Morgan Canada director of engineering Mike Davies says. Tankers today do not suffer those weaknesses, and the changes “make quite a difference,” Mr. Davies says.

When critics accuse Kinder Morgan of pursuing a risky expansion, the company details the long list of safeguards in place – enough, the company says, that a reasonable person should have little reason for worry.

Oil shipping, Mr. Davies says, is “a highly regulated industry, the people are well-trained and there’s lots of scrutiny of everything that goes on.”

That’s not to mention the cleanup capability on the West Coast if disaster strikes. Barely a kilometre from the Kinder Morgan dock is the headquarters for the industry-funded Western Canada Marine Response Corp., which has equipment scattered up and down the coast and a video library showing every single kilometre of B.C. shoreline, which can be used to focus a spill response. WCMRC must, by federal mandate, be prepared to clean up a 10,000-tonne, or 63,000-barrel, spill. It has 2.5 times the capacity it needs, with resources across B.C. that include 118 fishermen and barge operators trained to help.

Around Vancouver alone, it has more than five times the skimming capacity it needs for a 63,000 barrel spill.

“This coast is, I would say, in pretty good shape right now,” says Kevin Gardner, president of the response organization.

Living with the line

Derek Corrigan, mayor of the Vancouver suburb of Burnaby, does not like the oil industry. He doesn’t like how its big multinational players seem unusually capable of profit. He doesn’t like how its sweeping size and importance gives it influence with government. And he doesn’t like how it is looking to build a pipeline through his hometown, where he has served as mayor for a decade.

“Not for a moment do I trust this industry,” he says. “Early on, the promises are wonderful and the infrastructure is new.” But give it a few years and companies, he says, begin to “slack off.”

Mr. Corrigan has first-hand experience. He was mayor when a city contractor hit Kinder Morgan’s pipeline, resulting in a geyser that sprayed out nearly 1,500 barrels of oil, some of which made it into Burrard Inlet. A report by the Transportation Safety Board of Canada found that the pipe had not been properly located for the city and, while the blame did not fall entirely on Kinder Morgan, the company compounded the resulting rupture by shutting the wrong valve when it tried to halt the leaking.

In 2009, oil also spilled from a Kinder Morgan oil terminal in Burnaby; Environment Canada said the government does not know how much leaked.

For those who live along the pipeline, those accidents provide a glimpse into a possible future that terrifies them. Local groups have pointed to studies questioning Canada’s spill response – a Canadian cleanup fund has half the money contained in its U.S. counterpart, for example, and though the Canadian Coast Guard is supposed to be the lead federal agency in responding to spills, many of its vessels aren’t equipped with spill gear. While the tug requirements are strict in Vancouver harbour, they are less strict outside of the harbour than in U.S. waters just to the south. Recent government changes haven’t helped, either: a Vancouver-based Environment Canada emergency response office was closed and its responsibilities shifted to Montreal, fact that concerns spill responders.

And both Canadian and international laws place strict limits on financial liability for spills from tankers, whose owners – usually headquartered in distant countries – are held responsible. Those limits vary by product and vessel, but top out at just over $1.3-billion, far below the cost of cleaning up major accidents like the Exxon Valdez or the BP Macondo well – and even a smaller accident could prove immensely costly to clean alongside densely populated Vancouver.

That concern has driven an increasingly concerted effort by first nations to thwart the project. The final stretches of Trans Mountain cross particularly tricky territory, claimed by four first nations. Three have already publicly opposed the expansion, including, the Tsleil-Waututh Nation, whose land lies across Burrard Inlet from the Kinder Morgan dock and whose front yards look out on the water where tankers anchor. It is not a nation opposed to development: it has profited from hundreds of condominium units built on its one-mile-square reserve. But the last two Kinder Morgan spills have sent a pungent smell over Tsleil-Waututh land – and the nation, which stands to see no benefits from the expansion, is firmly against it.

If a spill happens, it could devastate “the coastline from Washington to the top of Vancouver Island,” says Ernie George, director of Treaty Lands and Resources. He points to dozens of projects undertaken by the nation to restore ecosystem function and marine life populations to the area.

“We’re trying to bring this inlet back to life,” he says. More oil “won’t help.”

Beyond the water, the pipeline itself is controversial. The Trans Mountain pipeline was built in the early 1950s, entering operation in 1954. A half-century has dramatically changed the land it crosses: Burnaby alone has quadrupled in size since then. To make the point, Kennedy Stewart, the NDP MP for the Burnaby region home to the pipeline, tank terminal and marine dock, directs a weaving route on roads that follow the yellow signs marking the pipeline’s underground path. It crosses beneath sidewalks, beside roads, past schools, through a golf course and beneath landscaped gardens. At an apartment co-op, Mr. Stewart gets out to walk, showing where it runs mere feet from backyard play sets.

Kinder Morgan has said it “will look at alternatives” in areas where buildings have cropped up close to the route. But Mr. Kennedy calls the pipeline right-of-way a “potential expropriation zone,” since people might be forced out of their homes if they stand in the way. It is, he acknowledges, an inflammatory description, but the rhetoric is intended to echo in Ottawa, as West Coast pipelines take on national importance.

That’s true for the environmental groups, too. Kinder Morgan has split its application into several parts, first working to establish tolls for the expansion. That application would normally concern only oil companies and refineries. But Vancouver’s Ecojustice, an environmental law firm, has drafted a letter it hopes municipalities, first nations and landowners will submit to the National Energy Board, in hopes they can argue for higher tolls to cover the cost of cleaning spills.

“It’s a bit novel and it’s not been tried before,” says Karen Campbell, a staff lawyer with the firm. “But we’re trying to figure out how to shine a brighter spotlight on this entire issue – and, frankly, how to slow it all down.”

Yet for all the concern, fighting this pipeline may prove difficult. Burnaby, for one, acknowledges there is little it can do, outside of helping stir up opposition. Kinder Morgan already has its dock, and substantial legal rights to the land where its pipe lies.

“It’s a 60-year pipeline on an existing right of way. They’ve had tankers there for years,” Ms. Campbell says. Compared to the battle over Northern Gateway, an entirely new pipe that would introduce tankers to waters that see very little oil movement today, fighting Kinder Morgan “is way harder.”

___________________________________

THE ART AND SCIENCE OF PILOTAGE

They are a rare bunch: the 100 men tasked with guiding ships safely through the coastal waters of British Columbia. In many ways, the safety of the vessels that sail on Canada’s Pacific coast lies in their hands.

So it’s small wonder becoming a pilot isn’t easy. It involves writing what Kevin Obermeyer, who oversees the pilots as chief executive officer of Pacific Pilotage Authority Canada, calls “one of the hardest exams in the world.”

Don’t believe him? Take a look and see for yourself. Those winding black lines show coastal features and islands. But it is intentionally blank. The test: first determine which of the 27,000 kilometres of B.C. coast the blank map depicts. Then label it, with the names of islands and points and inlets, showing where navigational aids are located, marking hazards, noting minimum depths and pencilling in safe routes. That’s just one part. Another involves starting with a completely blank page. Would-be pilots have to draw from memory whichever stretch of coast the examiner asks for.

Just getting in to write the exam is tough: only those with more than 700 12-hour days as captains on the B.C. coast can start the process, which begins with a familiarization program, where candidates must ride along on at least 10, and sometimes 30, trips.

Even then, fully 83 per cent fail the written test, where they need a 70-per-cent grade to pass.

Mr. Obermeyer points to those entry requirements as part of the reason why last year, with 12,400 vessel movements that had pilots on board, “we had four minor fender benders.”

“I’m supremely confident in their knowledge and their ability,” he says.

Nathan VanderKlippe

SUPPORT FOR KINDER MORGAN’S PROMOTIONAL TOUR FROM THE MOST UNLIKELY PACES

For Immediate Release – December 5, 2012

SUPPORT FOR KINDER MORGAN’S PROMOTIONAL TOUR
FROM THE MOST UNLIKELY PACES

BURNABY, BC — BROKE objects to the Port of Vancouver, a Crown corporation, participating in Kinder Morgan’s promotional tour of the Lower Mainland. Kinder Morgan, a US based oil pipeline giant, is conducting a promotion tour in Alberta and British Columbia to sell a controversial plan to expand its shipments of diluted tar sands to Burarrd Inlet where it will be transported by tankers to China and other offshore locations.

Shipments of diluted tar sands would increase to 750,000 barrel a day. To ship tar sands by pipeline requires mixing it with a range of toxic chemicals, heating it and putting it under high pressure so that it becomes more fluid. Kinder Morgan cannot guarantee that leaks and spills of oil from pipelines, sub-stations and and oil tank will not happen and have reported almost one accident per year over the past 10 years with evacuations in Burnaby in 2007 and again in 2009 and also in Sumas in 2012. Transport Canada found in an investigation of the Sumas spill that Kinder Morgan did not adequately respond to the spill and that compounded the problem.

The Port of Vancouver contributed to Kinder Morgan’s promotional tour of the controversial oil pipeline and oil tank farm expansion on October 24, 2012 at Stoney Creek Community School in Burnaby. Personnel with the Port reportedly answered questions about the plan to build a new crude oil pipeline and denied the need to dredge Second Narrows to make way for super sized oil tankers. A Port of Vancouver spokesperson is reported to have assured concerned visitors that no dredging would occur and that there was no greater danger of oil tankers passing through the narrows despite the need for more frequent shipments.

According to Elsie Dean of BROKE, “The Port of Vancouver’s participation in Kinder Morgan’s public relations work to sell their plan to build a new bigger pipeline to ship diluted bitumen gives the appearance of a serious conflict of interest. The Port of Vancouver is a Crown Corporation and is supposed to be an independent body. The Port should not be participating in Kinder Morgan’s, or any other, private promotional event. The participation of the Port gives, at the very least, the appearance of a serious conflict of interest. We demand the Port cease promoting Kinder Morgan’s planned expansion. It is incumbent on the Port Authority to maintain an independent position as a Crown corporation.”

Karl Perrin, also of BROKE, said that: “If the participation of the Port of Vancouver in Kinder Morgan’s promotional tour is not a direct conflict of interest, then it represents at the very least an apparent conflict of interest. The Port should cease all participation as it clearly undermines trust in a public institutions.”
Karl noted, “The Port of Vancouver, which oversees and regulates Kinder Morgan activities, should not be using its resources to promote, or be seen to support, Kinder Morgan’s pipeline proposal or any private interest.”

—————- 30 ————–

For more information, please contact:

Elsie Dean – (604) 294-5834 E-mail: ewdean@telus.net

Karl Perrin – (604) E-mail: perrink@shaw.ca

Burnaby Resident Opposing KinderMorgan’s Expansion
www.brokepipelinewatch.ca
E-mail: info.brokepipelinewatch.ca
Twitter @NoPipelines

Trans Mountain Pipeline operators ignored alarms warning of Abbotsford oil spill: report

By Gordon Hamilton, Vancouver Sun

Kinder Morgan’s Sumas terminal or tank farm sits across from the intersection of McKee Road and Sumas Mountain Road in Abbotsford. Residents who smell vapours report to the emergency number.
Kinder Morgan’s Sumas terminal or tank farm sits across from the intersection of McKee Road and Sumas Mountain Road in Abbotsford. Residents who smell vapours report to the emergency number.

A National Energy Board report reveals that Trans Mountain Pipeline operators ignored warning alarms for three-and-a-half hours before responding to a gasket failure that resulted in a crude oil spill last January at its Sumas tank farm near Abbotsford.

It took six hours after the first warning sounded for Trans Mountain’s Sumas operator to arrive on the scene, where a spill was discovered. The crude oil did not escape from a containment area but noxious fumes were released into the atmosphere, affecting nearby residents.

The NEB estimates 90,000 litres of crude oil escaped.

This latest oil spill report comes at a time when pipeline owner Kinder Morgan is applying to expand the pipeline’s capacity from 300,000 barrels a year to 750,000 barrels to feed Asian markets. It has given the company a black eye, said Ben West, of the Wilderness Committee.

The report is critical of monitoring staff at Trans Mountain’s control centre at Edmonton, stating that the control centre operator failed to set an alarm within the required time limit of 15 minutes after an oil transfer had taken place at the Sumas tank farm the evening of Jan. 23, and then failed to respond to leak warning alarms that sounded every hour until the operator’s shift ended.

The NEB report finds that the leak was detected later than it should have been, the control centre operator did not follow procedures and there were improper alarm settings in a recently-installed data acquisition system. The board states Trans Mountain Pipeline has identified corrective actions to address the report’s findings.

“The board finds that these actions are appropriate to prevent the occurrence of similar incidents in the future.”

The report, which was released earlier this month, states that the operator assumed the alarms were being caused by high winds and did not send a field technician to investigate.

Further, the operator failed to understand that the volume in the tank was dropping.

“The night shift CCO (control centre operator) did notice the trend, but considering the initial volume change as relatively small, interpreted the cause as a weather event, not a possible leak,” states the report.

The spill happened at an undetermined time around midnight Jan. 23 as a result of a gasket failure on the roof of a tank caused by pressure from frozen water in the roof drain system.

The temperature was cold and a strong wind was blowing. There had been a transfer of warmer crude oil into the tank earlier in the evening; after the transfer, the control centre operator failed to set the warning alarm.

There were two alarm systems, a new system and a legacy system. The new alarm was set at 11:26 p.m., Jan. 23 but the one that the operator was to use for monitoring, the legacy system, was not set until 1:11 a.m., Jan. 24.

At 2:39 a.m., Jan. 24 the first alarm from the legacy system was received. The command centre operator decided it was a false alarm.

At 3:11 a second alarm was received, from the new system being installed on the pipeline, but the operator again assumed it was a false alarm.

At 4:11, a third alarm was received. The centre operator deemed it notable but did not see any change in the tank level so left a note on it for the day shift.

A new shift arrived at 5 a.m. The day operator reviewed tank levels but determined the one-cubic-metre change was within the accuracy level of the measuring device.

At 5:47 the fourth alarm was received and at 5:50, the operator called the Sumas terminal operator to investigate. The terminal operator arrived on the site at 6:50, discovered the leak and closed the roof drain, isolating the source.

The control centre received the first odour complaint at 7 a.m.

The fact that, similar to Enbridge’s 2010 spill on the Kalamazoo River in Michigan, Trans Mountain Pipeline staff ignored warning alarms raises concerns over Trans Mountain’s plans to twin its Edmonton-to-Burnaby pipeline, said Jay Ritchlin, director-general of the David Suzuki Foundation.

“Even with highly advanced systems you will have a spill. This case seems to be a really egregious case of human error. It’s tragic. What you have is the release of a chemical that does significant harm to human health and the environment during the peak period when you could actually hope to do something about it,” he said. “I think people are seeing more and more instances of spills … and are seeing difficulty in getting any realistic response. I think it will make people more suspicious that these kinds of things can be run safely.”

After the spill, Kinder Morgan spokesperson Lexa Hobenshield said the only threat to residents was from nuisance odours.

In an email Tuesday, she said: “We take all incidents at our facilities seriously. Kinder Morgan Canada completed a thorough investigation and learned lessons after oil from a storage tank was released into a fully contained area on KMC’s Sumas Terminal property on January 24, 2012.

“As a result of our investigation, we have established new prevention and community notification measures, which we have communicated to the Sumas Mountain community, and will continue to provide updates as needed.” (What are these?)

Abbotsford resident and pipeline opponent Michael Hale, who discovered the NEB report, said it reinforces his concerns.

“There seems to be a propensity on the company’s part to minimize the seriousness of what was involved,” he said.

ghamilton@vancouversun.com

© Copyright (c) The Vancouver Sun

Kinder Morgan ignored warnings in Sumas Mountain oil spill: report

As Kinder Morgan visits Fraser Valley communities holding open houses on its Trans Mountain oil pipeline twinning project, the National Energy Board (NEB) has issued a critical report into the company’s oil spill in Abbotsford earlier this year.

On Jan. 24, 110,000 litres of oil leaked from a holding tank at Kinder Morgan’s Sumas Mountain terminal site. The cause was pressure on a gasket caused by freezing water, according to the NEB.

The report issued earlier this month to interested parties and posted on the NEB site on Nov. 22 found “the leak was detected later than it should have been,” the company’s management of procedures was “inadequate” and that the operator “failed to recognize the leak situation” on two occasions.

Critics of the company and its Trans Mountain pipeline say the report reveals deficiencies in Kinder Morgan’s response to leaks.

“When I ask the company about the risk of spills they point to the spill at the tank farm in Abbotsford in January this year, which they claim was ‘quickly contained,'” Michael Hale, Chilliwack resident and member of the PIPE UP network said. “Over 110,000 litres of a noxious petroleum product were spilled. The more information I get, including this report from the National Energy Board, suggests that the containment was not that simple or quick.”

In material handed out at the Chilliwack open house on Tuesday, the company says: “Trans Mountain pump stations and terminals have monitoring and spill containment systems that are rigorously maintained and meet NEB standards.”

The comparison has been made to the huge oil spill into the Kalamazoo River in Michigan in 2010 that was not noticed by Enbridge’s monitoring system in Edmonton for 17 hours.

In the Abbotsford spill, the NEB report said that at 2:39 a.m. on Jan. 24, a “creep” alarm was received at Trans Mountain’s Edmonton control centre but it was determined to be a false alarm due to high winds.

A second alarm at 3:11 a.m. was also dismissed as false.

It took two more alarms and a shift change before a terminal operator was sent out at 5:50 a.m. to attend the Sumas site and investigate the cause of the alarm.

At 6:50 a.m.-four hours after the first alarm-the operator arrived on site, discovered the leak, closed the valve and isolated the source.

There were no injuries or environmental damage as the leak was contained to the site although noxious fumes were released that affected neighbours.

The NEB was notified of the leak at 8:16 a.m. after the Transportation Safety Board and before the nearby Auguston Traditional School, the Abbotsford Police, FVRD, Fraser Health and MLAs John van Dongen and Randy Hawes, among other agencies.

Since 1961, there have been 78 reported spills on the Trans Mountain pipeline some of which were below the reportable threshold of 1.5 cubic barrels.

More than 70 per cent of all spills have occurred at pump stations or terminals, according to Kinder Morgan.

The company is currently amid public consultation meetings on a $4.3-billion twinning of its 1,150-kilometre pipeline. This would more than double the capacity from 300,000 barrels per day (bpd) to 750,000 bpd.

For its part, Kinder Morgan representatives say they have learned from recommendations made after every spill.

Critics are quick to point to incidents such as the one in Abbotsford as a cause for concern.

“Including the spill 2012, there have been a total of four major spills since Kinder Morgan bought this line in 2005,” said Chilliwack resident and PIPE UP member Sheila Muxlow. “One in Abbotsford in 2005 spilled 210,000 litres into Kilgard Creek. A spill of 250,000 litres in Burnaby in 2007 caused people to be evacuated from their homes, a cleanup that took over a year and fines levied on Kinder Morgan. Another spill in Burnaby in 2009 resulted in 200,000 litres being spilled at the tank farm there.”

The Nov. 22 report concluded: “The NEB expects companies to demonstrate a commitment to continual improvement in safety, security, and environmental protection, and in promoting a positive safety culture and strong management systems. The Board is satisfied that TMPU’s corrective actions are appropriate to prevent the occurrence of similar incidents in the future.”

phenderson@chilliwacktimes.com

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Original source article: Kinder Morgan ignored warnings in Sumas Mountain oil spill: report

Read more: http://www.chilliwacktimes.com/business/Hoping+study+answers+grad+rate+question/7626511/story.html#ixzz2EEqTA3lv

Kinder Morgan to Pay $7.5 Million In Wrongful Death Case

A Clark County Nevada District Court jury has awarded the family of Nevada truck driver, Rick Lewis, $7.5 million in a case where the Lewis family accused Kinder Morgan Energy Partners L.P. of failing to monitor its operations for benzene exposure during routine operations, disregarding normal safety and industrial hygiene practices, and failing to warn its employees and contractors about the hazards associated with benzene exposure.

The lawsuit said that Lewis was exposed to benzene while working as a gasoline tanker-truck driver at a Kinder Morgan bulk loading facility, where he loaded gas on a daily bases and delivered it to various retail outlets. This exposure lead Lewis to develop Myelodysplastic Syndrome, a disease of the bone marrow which causes the abnormal production of blood cells and platelets. It is generally incurable and requires chemotherapy, transfusions, and bone marrow transplants. Benzene is a known carcinogen which can cause various forms blood and bone marrow diseases and leukemia. Mr. Lewis was diagnosed with MDS in March 2008 and died in May 2009 at the age of 58.

The lead attorney for the Lewis family said “The jury’s verdict confirms that Kinder Morgan acted in a negligent manner in distributing benzene-containing gasoline without ever warning of the dangers associated with benzene exposure. The verdict underscores that corporations have a duty to workers to protect them from hazards associated with their facilities and products. Although we cannot bring Mr. Lewis back, we hope that this verdict will send a message that these inactions will not be tolerated.”

breakinglawsuitnews.com disclaimer: This article: Kinder Morgan to Pay $7.5 Million In Wrongful Death Case was posted on Wednesday, October 19th, 2011 at 7:02 pm at breakinglawsuitnews.com and is filed under Toxic Substances Lawsuits.

Kinder Morgan announces ‘info session’ in Chilliwack

Author
By Robert Freeman
Kinder Morgan is scheduled to hold an information session in Chilliwack later this month on the proposed pipeline expansion project.

A spokesperson for the company did not return a call for more details, but according to the Trans Mountain website, the Chilliwack session will be held Nov. 27 at the Best Western Rainbow Country Inn. The event is scheduled to start at 5 p.m., according to the website.

Meanwhile, earlier information sessions held in communities east of Chilliwack are drawing criticism from opponents of the plan to expand the pipeline that runs from the Alberta oil sands, through the Fraser Valley, and on to ocean ports in Vancouver.

Critics said the information sessions are not true community consultation, but a company spokesperson said the format allows individuals to ask representatives at the sessions questions they might feel too intimidated to ask in front of a crowd of opponents to the project.

PIPE UP Network spokesman Mike Hale said the group is “not optimistic” the information session in Chilliwack will shed much light on “the realities of tar sands exports.”

“Kinder Morgan seems to be on a ‘transmit’ rather than ‘receive’ in their communications these days,” he said, about the info session format, adding “this is not to be confused with consultation.”

PIPE UP members will attend the Chilliwack session to provide a different point of view on the expansion proposal.

rfreeman@theprogress.com

twitter.com/paperboy2

Kinder Morgan “Information” Sessions and Events

Kinder Morgan “Information” Sessions and Events Hosted or Recommended by BROKE

Date Event
13 November 2012 East Vancouver Info Session – Pacific National Exhibition (PNE), Hastings Room (2901 East Hastings Street) – 5pm-8pm
15 November 2012 Downtown Vancouver Info Session – Harbour Centre, Segal Hall (515 West Hastings Street) – 5pm-8pm
17 November 2012 West Point Grey Info Session – Aberthau Mansion (4397 West 2nd Ave) – 5pm-8pm
20 November 2012 Coquitlam Info Session – Centennial Secondary School, Courtyard (570 Poirier Street) – 5pm-8pm. Contact Sven Biggs at sven@tankerfreebc.org
21 November 2012 Surrey Info Session – Ellendale Elementary School (14525 110A Avenue) – 5pm-8pm
November 24  2012 Burnaby Info Session #1 – Stoney Creek Community School (2740 Beaverbrook Crescent) – drop in from 1pm-4pm. Contact Karl Perrin at perrink@shaw.ca
November 26  2012 Burnaby Info. Session #2 -Eagle Creek at Burnaby Mountain Golf Course, 7600 Halifax, 6:30-8. Contact Mary Hatch at maryhatch@shaw.ca

Tsleil-Waututh Nation Advisory

The Tsleil-Waututh Nation is encouraging the public to attend information sessions on the Kinder Morgan Trans Mountain pipeline expansion in hopes that most of those who attend will be critics of the project.

But Tsleil-Waututh members say they will keep their distance while the information sessions are under way. The Tsleil-Waututh has decided to keep its distance because it expects to be consulted by the federal government on the $4.1-billion project.

It deems itself a sovereign government with constitutionally protected rights and title. Participating with Kinder Morgan in anything that would be deemed as consultation with respect to the pipeline would be counter to that position, it says.

“We, as a nation, expect to have a meaningful consultation – government to government,” said Carleen Thomas, an elected council member of the Tsleil-Waututh.

“We are clear that the government cannot delegate this obligation to consult to third parties such as Kinder Morgan.”

Burnaby Residents Opposed to KinderMorgan Expansion Advisory

BROKE urges the public  to not Sign in at Kinder Morgan “information” sessions and to not fill out the Kinder Morgan consultation forms. These sessions are not public consultations or part of the government process.

After attending an info session Len Laycock said he found the public hearing to be more like a “sales centre for condos.” Except in this case they are trying to sell you a toxic pipeline.

Other Events Hosted or Recommended by BROKE

Date Event
21 November 2012 7:00 PM Chevron Advisory Committee Open House – Confederation Seniors Centre. The meeting is open to the public. We encourage people to to go and ask questions.
29 November 7-8:45pm “White Water Black Gold” Location TBA. See updates at http://brokepipelinewatch.ca/events. Contact person Ruth at ruth@cranberrycommons.ca
10 December, 2012 6:15 PM Kay Meek Theatre, West Vancouver, Ben West and Ruben George to speak