By Derrick Penner, Vancouver Sun, March 19, 2011
Environmentalists oppose moves to make British Columbia a gateway for oilsands barrels
Enbridge Inc. may be weathering fierce opposition to its proposal to establish its Northern Gateway pipeline route for oil exports to Asia, but Canada's Pacific trade in oil has been inching upwards on the existing pipeline to the West Coast.
That is Kinder Morgan Canada's Trans Mountain Pipeline, and its expanded trade on the route is providing some impetus for the company's plans for its expansion, which is one of the options emerging for moving Canadian oil across the Rocky Mountains to new markets on the Pacific.
Production from Alberta's oilsands is expected to swell over the next 15 years, bringing Canada's oil production to some 4.3 million barrels per day by 2025, from 2.8 million barrels per day in 2010, according to the Canadian Association of Petroleum Producers.
And the options being explored to carry that oil west are increasing to include not only the Northern Gateway route and Kinder Morgan's plan to twin the Trans Mountain pipeline, but possible proposals to move oil by rail to pacific ports.
Environmentalists, however, promise to make none of those options easy.
"Our pipe is full and over the past eight or nine months we've been having to turn away [customers] because shippers have been [requesting] more space than what we can provide," Andrew Galarnyk, Kinder Morgan's director of external relations said in an interview.
While Enbridge wants to build a new, 1,100-kilometre, $5-billion pipeline from a spot near Edmonton to carry 500,000 barrels per day of oilsands bitumen to Kitimat on B.C.'s north coast, Kinder Morgan is already moving 300,000 barrels per day of petroleum products, including an increasing amount of oil being shipped out of Port Metro Vancouver.
The Lower Mainland and oil refineries in Washington state are Kinder Morgan's big markets for the Trans Mountain pipeline, Galarnyk said, but the company usually allocates about 50,000 barrels per day of the line's capacity for tanker shipments from its Westridge dock in Burnaby.
In 2010, however, customers took an average of about 80,000 barrels per day from the port facility, filling 71 tanker-ships over the year. According to Port Metro Vancouver, that is an increase from 65 tankers in 2009 and just 22 in 2005.
And when Kinder Morgan sought to sign up shippers on long-term contracts rather than its usual practice of giving customers first-come, first-served nominations for capacity each month, Galarnyk said their offering was oversubscribed.
Later this year Kinder Morgan will solicit interest from shippers for a possible expansion of the Trans Mountain pipeline, which could see its twinning, which would raise its capacity anywhere from 80,000 barrels per day to 400,000 barrels per day.
"Once we see the outcome of that, we'd be in a position to decide if and how and when we'd proceed with our next phase of expansion, and how big the expansion would be," Galarnyk added.
Kinder Morgan's last expansion, completed in 2008, saw the company twin a section of the 1,150-kilometre pipeline through Jasper National Park and B.C.'s Mount Robson Provincial Park, which increased its throughput by 75,000 barrels per day. Galarnyk said future additions could be similarly phased.
"It's always been our approach to expansion that when the market demand [for pipeline capacity] is there, then we will be there to address those demands," he added.
Canada's railways have also become more bullish about moving oil by rail with at least one, CN Rail, scoping out the possibility of hauling tanker cars to the West Coast.
"In response to demand from our customers we've been testing the concept of moving crude oil, and that includes heavy crude to pure bitumen, by rail," Kelli Svendsen, a CN spokeswoman said in an interview.
To date, Svendsen said CN has shipped pure bitumen, the sticky raw oil product that comes from Alberta's oilsands, from Fort McMurray to markets in the United States. And CN has run trains carrying crude oil out of Saskatchewan from the Bakken oil reserve that straddles the Saskatchewan and North Dakota border. Svendsen added that CN hasn't shipped any bitumen to the West Coast, "although we are in discussion with customers who are interested in the concept."
Canadian Pacific Rail is also shipping oil out of the Bakken reserve from North Dakota to destinations in Louisiana on the Gulf of Mexico and the U.S. East Coast.
CP Rail spokesman Mike LoVecchio said railways have been shipping petroleum by rail for decades. The only new part is using trains to create a virtual pipeline on rails.
"What's attractive about shipping oil by rail is that rail cars are more flexible, and you can transport oil virtually in North America," LoVecchio said in an interview.
And LoVecchio added that the idea of shipping crude to the West Coast is "currently identified as an opportunity."
None of these ideas, however, has gone unnoticed by environmentalists.
Opposition to Enbridge's Northern Gateway proposal has been in the news most recently.
Kinder Morgan's expansion plans are under scrutiny from, among others, famous British Columbian Pamela Anderson, who has been enlisted by a group calling itself the No Tanks Coalition to appear in a video opposing increasing oil tanker traffic out of Metro Vancouver.
Galarnyk said Kinder Morgan is hopeful that the Trans Mountain system's safety record for operations out of the port, and the good relationships it has had with landowners along the Trans Mountain pipeline's existing right of way, will help it win approval if and when it submits an application to the National Energy Board for expansion.
"We certainly are aware of some of the issues and concerns out there," Galarnyk said. "I think our ability to address those issues is what we have to do as we [proceed]."
However, Greenpeace campaigner Stephanie Goodwin said she expects opposition would heat up as soon as any application is made to increase oil shipments from the West Coast.
"I think it's fair to say that we don't really want British Columbia to be a gateway for oilsands oil," Goodwin said in an interview.
And while Port Metro Vancouver has never experienced a tanker spill, Goodwin said Greenpeace opposes any increase.
"What we'd likely be seeing is the same kind of opposition that Enbridge is experiencing," she added. "Greenpeace is working to stop oil tankers down here on the Lower Mainland, and we would expect that to increase."
depenner@vancouversun.com
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