Through pristine Jasper Park, Kinder Morgan goes full-speed on Trans Mountain pipeline expansion

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Jeff Lews

JASPER, Alta. • The smell of crude oil lingers as Rob Scott eases his pickup truck into a pump station and stops next to a tangle of white pipelines and valves jutting from the ground.

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On the eastern edge of Jasper National Park in Hinton, Alta., the aroma serves as a pungent reminder of the hidden pipeline network that cuts through the surrounding evergreen forest here, under glacier-fed rivers, around wetlands and over two mountain ranges en route to Canada’s West Coast.

The pump station, located about 300 kilometres west of Edmonton, offers a final glimpse of a 36-inch jumbo pipeline — the same diameter as TransCanada Corp.’s controversial Keystone XL project — that passes unseen through Jasper, a UNESCO World Heritage site, and Mount Robson Provincial Park to Rearguard, B.C. Built over a two-year window beginning in 2006, the so-called Anchor Loop is now the linchpin of a $5.4-billion expansion proposed by Kinder Morgan Canada Inc. to its half-century-old Trans Mountain pipeline system, Canada’s lone oil outlet to the Pacific.

“Most people don’t even know there’s a pipeline there,” said Mr. Scott, an operations liaison with Kinder Morgan, pointing out of his truck window to a grassy ditch beside the highway. “In fact, when we were originally looking to expand, lots of people didn’t even realize there was an existing pipeline running through the park to the coast.”

Houston-based Kinder Morgan Energy Partners LP wants to increase capacity on the Edmonton-to-Vancouver oil pipeline to 890,000 barrels per day, from 300,000 barrels today.

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Much of the work through Jasper, save for spot digs and pressure tests to ensure the existing 24-inch pipeline is not damaged, is done, thanks to a $527-million expansion completed in 2008 that boosted capacity on the system by 40,000 barrels a day but left room for additional growth in incremental phases.

That gives Kinder Morgan “a huge advantage” over Enbridge Inc.’s rival Northern Gateway project, Lanny Pendill, a senior energy analyst at Edward Jones & Co., said in a telephone interview from St. Louis.

The $6.6-billion Gateway scheme, which would carry up to 525,000 barrels a day to a new marine terminal proposed for Kitimat, B.C., must forge a new path across two mountain ranges and hundreds of rivers farther north.

“If you’ve already got the right-of-way, right off the bat you’ve got less impact on the environment versus trying to cut a new route from Alberta all the way to the West Coast,” Mr. Pendill said.

“So it is absolutely helpful, but you’re still going to have, in my view, some pretty tremendous environmental opposition, simply because you are carrying more crude through a very pristine environment, and then you are talking about additional tanker traffic” on the coast.

A detailed facilities application for the Kinder Morgan expansion has yet to be filed with Canada’s National Energy Board.

But the supersized pipeline is in high demand to transport growing volumes of Alberta’s oil sands and related products to markets in California and Asia — away from the U.S. Midwest, which has been overrun by a fountain of tight oil unleashed from North Dakota’s Bakken formation and others like it.

Thirteen oil sands companies, including Canadian Natural Resources Ltd., Canadian Oil Sands Ltd., Cenovus Energy Inc., Imperial Oil Ltd., Suncor Energy Marketing Inc. and China’s Cnooc Ltd. (via its purchase of Nexen Inc.), have signed 15- or 20-year transportation agreements for capacity on the line, expected to be in service by 2017.

You’re still going to have some pretty tremendous environmental opposition, simply because you are carrying more crude through a very pristine environment
In all, Kinder Morgan says it has secured shipping commitments for 708,000 barrels per day of production. Another 180,000 barrels is set aside for spot market sales, according to a project fact sheet.

Whether the company can mollify critics, environmental groups and municipal leaders concerned about the impact of such an expansion — from competing land uses in the densely populated B.C. Lower Mainland to increased tanker traffic in Vancouver’s Burrard Inlet — is an open question.

In interviews, company executives highlighted the Anchor Loop expansion through Jasper as a model for development that could apply elsewhere on the route. The Trans Mountain system owes its current configuration to piecemeal expansions completed since it was first commissioned in 1953.

From Edmonton, the existing 24-inch pipeline cuts a swath 18 metres wide through sparsely populated west-central Alberta to the industrial town of Edson. The right-of-way then doubles in size for about eight km to accommodate a 30-inch diameter pipeline that parallels its 1950s-era twin, before eventually yielding to the 36-inch jumbo oil pipe at Hinton.

By the time it reaches Jasper, a town of about 4,000, the route has shrunk to a path no wider than seven metres, suitable at some points for cross-country skiers, Mr. Scott said.

Handout/Kinder MorganKinder Morgan’s Anchor Loop Project, in Jasper B.C.
More than half of it, or 56%, follows the existing right-of-way carved from the forest in the 1950s to make way for the original pipeline, which today lies dormant in the park but would be reactivated under current expansion plans.

According to Calgary-based Tera Environmental Consultants, which led environmental assessments of the 2006 expansion, all but 1% of the rest abuts the highway, roads, power lines and abandoned railway grades in the park — an approach Kinder Morgan officials said could also be used in the Lower Mainland to allay routing concerns.

“Linear disturbances have a pretty negative impact generally speaking on wildlife corridors,” said Éric Hébert-Daly, national executive director of the Canadian Parks and Wilderness Society.

But rights to expand in the park, in a sign of the legal advantages that underpin the current proposal to more than double capacity on the rest of the pipeline, were grandfathered into the order-in-council approving the original construction in 1951, he added.

“The twinning was kind of a fait accompli going in,” he said, referring to the 2006 approval. “It’s not like the creation of a new pipeline or new linear disturbances altogether, so that makes a big difference to us.”

The pipeline’s footprint through Jasper is also an example of the commercial advantage Suncor Energy Inc. alleges Kinder Morgan is wielding over captive shippers seeking alternative markets from the West Coast.

Suncor, in filings with the NEB, has argued the Houston-based pipeline company is using its status as the only Pacific outlet for Alberta’s landlocked crude to raise shipping fees on the expanded system. A ruling on the project’s proposed tolls is expected by June.

Kinder Morgan disputes the claim, putting the company in the unusual position of extolling the commercial and environmental benefits of an existing asset while also highlighting the challenges of laying fresh pipe through the Fraser Valley and B.C.’s Lower Mainland to justify a projected return-on-equity described by Suncor as “excessive.”

“There are lots of different concerns along the pipeline. When we built it in 1952-53, you go through places [and] it was just bush. And now there are subdivisions,” said Mr. Scott, the operations liaison in Jasper. “I think it will help us in that the way it was done through the park is the way we want to do it again.”

This is the first in a three-part series.