Describing economic benefits of oil spill not in the guidelines, energy board says

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Backlash builds over Kinder Morgan’s NEB application remarks

OTTAWA — A federal regulator has refuted Kinder Morgan Canada’s claim that its formal proposal to build a new pipeline to B.C. needed to include a description of the positive economic benefits of a major oil spill.

The statement, contained in a single 165-word paragraph in a 15,000-page submission, caused an immediate uproar and was featured in a mocking commentary on a U.S. prime-time news program Friday.

But the company, a subsidiary of Houston-based Kinder Morgan, insisted that it was simply meeting the National Energy Board’s expectations.

“I think taken out of context in 15,000 pages it might seem to be an eyebrow-raiser,” Michael Davies, the company’s senior director of marine development, said last week.

But “it’s part of what the NEB expects us to provide in the application.”

An energy board spokeswoman, as well as two major rivals in the pipeline business, said Monday this isn’t true.

A manual provided to all applicants asks them to assess the project’s expected overall beneficial and adverse socio-economic and environmental impacts, according to the NEB’s Sarah Kiley.

“It does not say that we expect to see an assessment of the positive benefits of a potential spill. In this case, (Kinder Morgan) has chosen to indicate that there will be economic benefits as the result of a spill or malfunction.”

Enbridge spokesman Ivan Giesbrecht confirmed that the company, a proponent of the $7.9 billion oilsands pipeline to Kitimat, does not believe NEB guidelines require such an analysis.

“There is not, as you say, a requirement to ‘dissect the positive and negative implications of every eventuality,’ ” Giesbrecht said in an email. “A number of possible scenarios are reviewed, including worst cases, and the ability to respond to those worst cases is examined.”

TransCanada Pipelines, proponent of the Keystone XL project to the U.S. Gulf Coast, also doesn’t submit government applications that outline the jobs and wealth that can be generated by spills, according to spokesman Shawn Howard.

Kinder Morgan, meanwhile, stresses that the overwhelming majority of its submission on spills refers to the damage they cause, and the company’s determination to avoid them.

“The important thing here is, no spill is acceptable to us, and that is reiterated throughout the document,” Davies said.

“In retrospect, had we anticipated this piece would be pulled apart and looked at on a stand-alone basis, we probably would have put another sentence or two to the effect that, ‘our view is that spills are unacceptable.’ ”

Davies, in a second interview, said Monday the NEB’s guidelines are “not definitive” and acknowledged that it’s up to companies to interpret what the board wants from applicants.

He said the Kinder Morgan Canada simply wanted to submit a thorough application.

Last week a researcher with the Broadbent Institute unearthed Kinder Morgan’s claim that spills have both short- and long-term economic benefits. Critics in the political and environmental movement expressed shock, calling the company insensitive.

And MSNBC commentator Rachel Maddow seized on the company’s assertion that positive financial benefits depend on “the willingness of local businesses and residents to pursue response opportunities.”

Maddow, who began her 23-minute segment with photographs of a major Kinder Morgan spill in Burnaby in 2009, dripped with sarcasm.

“Turn that frown upside down, oil-soaked neighbourhood! You can get a job cleaning it up if you just have the right attitude,” Maddow said while her audience was shown headlines from last week’s Vancouver Sun front page.

She added that such a public relations blunder reinforces the attitudes of residents in her home state of Massachusetts, where people are “losing their minds” over Kinder Morgan’s plans to expand its pipeline network in their state.

University of Alberta professor Andrew Leach, a frequent Canadian commentator on pipeline politics, said the comment was a public relations “disaster” for Kinder Morgan.

That view was seconded by Tzeporah Berman, a key figure in the B.C. environmental movement, which has had a relatively easy time rallying public opposition to Enbridge’s Northern Gateway project.

Opposition has been more muted for Kinder Morgan’s $5.4-billion plan to triple the capacity of its Trans Mountain Pipeline from 300,000 barrels a day to slightly under 900,000.

Outgoing provincial New Democrat Party leader Adrian Dix is widely seen to have killed his party’s chance at power by attacking the project during the 2013 election.

And at the federal level the NDP has been more guarded in its criticism, while Liberal leader Justin Trudeau, an opponent of Enbridge’s Northern Gateway project, gushed enthusiasm earlier this year for Kinder Morgan’s plans.

The public reaction to Kinder Morgan’s gaffe is “big and getting bigger,” Berman said.

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“We’ve had open houses and meetings from Edmonton to … the west coast of Vancouver Island and we’re aware that spills are a concern for our project, and we’ve tried to do a very thorough job in our application,” he said.

“It’s unfortunate that this one paragraph has been sort of pulled out of all of that, and used to construe a different message than what our approach is.”