Not For Sale by Stand.earth

NotForSale

An analysis of the potential cost to B.C. of allowing tar sands pipelines through the province

A D V O C A C Y

Copyright January 2013 by ForestEthics Advocacy. Founded in April 2012, ForestEthics Advocacy is a non-profit society in Canada deÂvoted to public engagement, outreach, and environmental advocacy - including political advocacy. We secure large-scale protection of endangered forests and wild places and transform environmentally destructive resourceextraction industries. Cover photo: Neil Ever Osbourne Report prepared by: Nikki Skuce Senior Energy Campaigner nikki@forestethicsadvocacy.org ForestEthics Advocacy

Introduction In the push to open up new markets for tar sands exports, two proposed pipelines are currently under review that would move bitumen from Alberta’s tar sands to shipping terminals in British Columbia: Enbridge’s Northern Gateway pipeline and Kinder Morgan’s Trans Mountain pipeline expansion. The B.C. government is critically assessing its support for these proposals, which offer little benefit while presenting considerable costs to British Columbia and its residents. As such, the B.C. government has demanded better revenue-sharing opportunities as the price for its support. But the question remains: at what cost to B.C. and to British Columbians would these pipelines come? If B.C. is looking at selling its acceptance for heavy-oil pipelines, what exactly would be up for sale? To better inform the consideration and discussion of the provincial government’s revenue-sharing proposal, this paper summarizes the risks and costs British Columbians could incur as a consequence of these pipelines. These include: • the substantial costs from potentially devastating pipeline and tanker spills of diluted bitumen (such as recent pipeline spills involving both Kinder Morgan and Enbridge), particularly considering the significance of natural and ecological resources to B.C.’s economy and way of life; • increased costs to consumers resulting from a higher oil price imposed on B.C. residents and companies; and • impacts of climate change pollution, including increasing carbon emissions from tar sands production that undermine B.C.’s efforts to reduce climate pollution without contributing to B.C.’s provincial revenues. A detailed review of various case studies, including the Exxon Valdez, Deepwater Horizon and Kalamazoo River oil spills, helps to establish the scale of economic risk British Columbians would incur if the proposed pipeline projects went ahead. Analysis of the recent history of spills in North America and other costs indicates that the potential costs to British Columbia over the operational lives of the proposed pipelines are much larger than the benefits any revenue sharing option would bring to the province. The provincial government’s best option for securing net benefits to British Columbians is to oppose these pipelines’ construction.

THE NORTHERN GATEWAY MARINE TERMINAL IS PROPOSED TO INTRODUCE AROUND 220 OIL SUPERTANKERS PER YEAR, WITH CAPACITIES AS HIGH AS 2.2 MILLION BARRELS OF OIL. THE KINDER MORGAN CAPACITY INCREASE WOULD DRAMATICALLY EXPAND TANKER TRAFFIC THROUGH BURRARD INLET – FROM AROUND 50 TANKERS PER YEAR TO OVER 400 PER YEAR

Context Proposed pipelines under review The proposed Northern Gateway pipeline project is actually a pair of two parallel pipelines running 1,170 kilometres between Bruderheim, Alberta, and a proposed marine terminal near Kitimat, British Columbia. These proposed pipelines would traverse 670 kilometres of British Columbia and cross nearly 700 fish-bearing waterways through rugged mountain terrain.1 Enbridge would ship an average of 525,000 barrels of diluted bitumen to Kitimat each day through its proposed crude pipeline, although it’s worth noting that Enbridge has outlined in their application that they are hoping to eventually transport 944,000 barrels/day using additional pump stations. The reverse pipeline is proposed to carry 193,000 barrels of condensate per day in the opposite direction. The marine terminal is proposed to service around 220 oil supertankers per year, with capacities as high as 2.2 million barrels of oil. The tankers will traverse 185 kilometres of inner coastal water to reach the Hecate Strait, then exit to open ocean through Queen Charlotte Sound or the Dixon Entrance.2 The existing Kinder Morgan Trans Mountain pipeline is 1,156 kilometres long and connects Edmonton and Burnaby. It currently carries up to 300,000 barrels of oil per day. The expansion would twin the pipeline and increase this amount to 890,000 barrels of oil, including proportionally more diluted bitumen, with a planned operational date of 2017.3 The increase in capacity would also dramatically increase the tanker traffic through Vancouver’s Burrard Inlet: from around 50 tankers per year to around 34 tankers per month (or over 400 per year).4

Nikki Skuce

B.C. government’s position On July 23, 2012, the B.C. Liberal government outlined “five minimum requirements that must be met for the province to consider the construction and operation of heavy oil pipelines within its borders.”5 Among these requirements is that B.C. receive a “fair share” of the benefits of the pipeline, in light of the risks placed on it.6 As the government noted, 100 per cent of the marine environmental risk and 58 per cent (based on pipeline length) of the pipeline risk of the Northern Gateway pipeline falls on British Columbia.7 The B.C. government quickly applied its demands also to the Trans Mountain expansion.8 B.C.’s concern around fiscal benefits is borne in part out of analysis that shows that, with respect to the Northern Gateway pipeline, only $6.7 billion (8.2 per cent) of $81 billion in government revenue in Canada would go to British Columbia.9 In the B.C. government’s words, the pipeline proposals would only be considered if:

British Columbia receives a fair share of the fiscal and economic benefits of a proposed heavy oil project that reflects the level, degree and nature of the risk borne by the province, the environment and taxpayers.10 [Emphasis added]

To properly assess whether B.C. will obtain the benefits necessary to meet this requirement, it is important to quantify these economic and environmental risks to British Columbians.

Costs of pipeline spills Like it or not, pipelines break. Spills and ruptures are an unfortunate but guaranteed part of the pipeline business. Pipeline operators are required to have integrity management systems and a host of spill prevention technologies in place; however, even the best systems can fail, resulting in significant harm to human health, the environment and the local economy. Alberta saw more than 6,400 liquid hydrogen pipeline failures in the 20 years ending in 2010, with 261 such failures in 2010 alone, including 20 crude oil pipeline failures.11 Between 2006 and 2010, more than 174,000 barrels of oil were spilled in Alberta from pipeline failures — nearly nine times the volume of bitumen spilled in the Kalamazoo River when an Enbridge pipeline ruptured in 2010.12 Enbridge and its subsidiaries alone have reported 175 pipeline leaks and spills in in the United States in the last decade.13 The following case studies highlight three recent spills. This includes one involving an Enbridge pipeline and one involving a Kinder Morgan pipeline, both of which resulted in part from emergency management errors. This section also describes what is at risk in British Columbia from a pipeline spill and outlines the potential for the public to be left footing the cleanup and damages bills of a catastrophic spill.

Case studies: Oil pipeline spills Regardless of where pipelines break, the impact is felt most by those living close to the spill and by those relying on a healthy environment for their livelihoods. These three recent spills underscore the risks of allowing a pipeline to traverse a jurisdiction’s territory.

ALBERTA SAW MORE THAN 6,400 LIQUID HYDROGEN PIPELINE FAILURES IN THE 20 YEARS ENDING IN 2010, WITH 261 SUCH FAILURES IN 2010 ALONE, INCLUDING 20 CRUDE OIL PIPELINE FAILURES.14 BETWEEN 2006 AND 2010, MORE THAN 174,000 BARRELS OF OIL WERE SPILLED IN ALBERTA FROM PIPELINE FAILURES — NEARLY NINE TIMES THE VOLUME OF BITUMEN SPILLED IN THE KALAMAZOO RIVER WHEN AN ENBRIDGE PIPELINE RUPTURED IN 2010.15

Enbridge’s Line 6B: Kalamazoo River, Marshall, Michigan On July 25, 2010 Enbridge’s Line 6B ruptured near Marshall, Michigan, and released 20,000 barrels of diluted bitumen into a wetland and then into the Kalamazoo River. While Enbridge tries to convey that the Michigan spill was an outlier, they spilled over 23,000 barrels in Hardisty, Alberta in 2001, and just over 20,000 barrels of heavy crude on farmland near Regina, Saskatchewan in 200216. The Kalamazoo spill cleanup has cost more than $800 million, has taken more than two years and has forced 150 families permanently

ENBRIDGE SPILLED OVER 20,000 BARRELS OF DILUTED BITUMEN INTO A WETLAND AND THEN INTO THE KALAMAZOO RIVER IN 2010. WHILE ENBRIDGE TRIES TO CONVEY THE MICHIGAN SPILL AS AN OUTLIER, THEY SPILLED OVER 23,000 BARRELS IN HARDISTY, AB IN 2001, AND OVER 20,000 BARRELS OF HEAVY CRUDE ON FARMLAND NEAR REGINA, SK IN 2002.

out of their homes.17 Nearly 60 per cent of individuals living near the spill experienced respiratory, gastrointestinal and neurological symptoms indicative of acute exposure to benzene and other petroleum-related chemicals.18 The cost associated with cleaning up this diluted bitumen spill is approximately $40,000 per barrel, compared with conventional light crude oil, which costs approximately $2,000 per barrel.19 The U.S. National Transportation Safety Board concluded that the rupture was the result of an inadequate integrity management program that had identified defects in the pipeline in 2005, but had failed to ensure the company made the necessary repairs.20 The impact of the spill was exacerbated by “pervasive organizational failures at Enbridge,”21 which allowed the rupture to go unaddressed for more than 17 hours. During that time, the pipeline operators failed to shut down the pipeline despite repeated alarm signals and twice injected additional diluted bitumen into the ruptured line.22

Kinder Morgan’s Westridge Dock Transfer Line: Burnaby, B.C. On July 24, 2007, Kinder Morgan’s Westridge Dock Transfer Line, part of the existing Trans Mountain system, ruptured and released 1471 barrels of crude oil into a residential area, spraying 11 properties and forcing 250 residents from their homes.23 The released oil moved through storm drains and eventually ended up in the Burrard Inlet. Approximately 1200 metres of shoreline were polluted by the spill.24 Poor communication between Kinder Morgan and a construction company on the surface led to the puncture of the pipeline by an excavator. The spill’s impact was exacerbated by an improper pipeline shutdown that was “not in conformity with standard emergency shutdown procedures.”25

Plains Midstream Canada Ltd.’s Rainbow Pipeline: Little Buffalo, Alberta

IN 2007, PART OF KINDER MORGAN’S TRANS MOUNTAIN PIPELINE SYSTEM RUPTURED AND RELEASED 1,471 BARRELS OF CRUDE OIL INTO A RESIDENTIAL AREA, SPRAYING 11 PROPERTIES AND FORCING 250 RESIDENTS FROM THEIR HOMES.26

On April 29, 2011, Plains Midstream Canada’s Rainbow Pipeline leaked 28,000 barrels of crude oil into a wetland in northern Alberta.27 The leak, which took eight hours to detect, was attributed to corrosion of the 44-year-old pipeline; in the nearby town of Little Buffalo, residents reported nausea and illness from the air fumes.28 More than 15 months later, substantial amounts of oil remain in the wetland,29 despite the pipeline company’s claims that oil contamination has been removed.30

“REVIEWING THE SITE A YEAR LATER AFTER THE COMPANY CALLED THE OIL SPILL CLEAN-UP COMPLETE, MELINA LABOUCAN-MASSIMO, AN ACTIVIST AND A MEMBER OF THE IMPACTED LUBICON CREE NATION, FOUND LARGE GLOBS OF OIL AND OILY SHEENS ON THE WATER. ‘IT HAD A REALLY PUNGENT SMELL AND WAS HARD TO BE AROUND,’ SHE SAID. ‘PEOPLE WHO HAVE HUNTED THIS AREA FOR GENERATIONS NO LONGER GO THERE.’” FROM HTTP://WWW. HUFFINGTONPOST. CA/2012/07/20/RAINBOWPIPELINE-SPILL_N_1690256. HTML

Potential costs of spills from proposed B.C. pipelines Much of British Columbia’s economy relies on a healthy environment. Fishing and tourism generate significant revenue and employment for local communities, not to mention taxes for the provincial government. In 2010, for example, British Columbia’s commercial seafood industry sold $1.4 billion worth of seafood into local and international markets.31 The wild and farmed salmon fishery in particular processed more than $986 million worth of salmon in 2010.32 In 2005, the B.C. fisheries and aquaculture sector employed around 15,500 people and generated an estimated $126 million in tax revenue.33 In 2010, tourism in British Columbia generated $13.4 billion in revenue, $1.02 billion in provincial tax revenue and directly employed 127,400 people.34 Of this, 2,000 wilderness-based tour operators provide $1.6 billion in revenue and around 25,000 jobs in British Columbia.35 Unlike revenue from tar sands pipelines, revenue from tourism and fisheries is a renewable resource that can, if managed responsibly, be generated indefinitely without significant risks to B.C’s broader economy and environment. The 1,172 kilometre-long Northern Gateway pipelines will cross nearly 700 fish-bearing waterways and travel through rugged, mountainous terrain, ending at B.C.’s northern coast.36 The Kinder Morgan Trans Mountain Pipeline is 1,156 kilometres long and will also traverse challenging topography and important ecosystems. Spills along these routes are virtual certainties — only the amount of spillage is unknown. In Alberta, the Canadian province with the most experience in pipeline management, there were 687 recorded pipeline failures in 2010, spilling a total of 3.4 million litres of hydrocarbons.37 This amounts to 1.74 spills per day or 1.6 spills per 1000 kilometres per year.38 If the same spill rate would be applied to the length of the proposed Northern Gateway pipelines and Trans Mountain expansion, there would be 3.75 and 1.85 spills respectively each year;39 or 150 and 74 spills respectively over the pipelines’ 40-year operational lives, with well over half of the risk in British Columbia. The potential for economic harm to B.C.’s thriving natural resource and tourism industries is substantial.

Financial risks for British Columbians Because of the ownership structure of the Northern Gateway project and limited insurance coverage that Northern Gateway has agreed to carry, the costs of a large pipeline spill — like Enbridge’s Kalamazoo spill — could fall largely on British Columbians. The Northern Gateway project is owned by a limited partnership — an ownership structure that protects the “limited partner” owners, including Enbridge (and potentially Nexen, Suncor, Sinopec, etc.), from large liabilities due to costly pipeline spills. The legal construct allows for barriers between the project and these owners so that only the owners’ actual investments in the project are at risk for paying spill liabilities, not other assets41. During questioning at the Joint Review Panel hearings in Edmonton, Northern Gateway Pipelines Ltd admitted that the financial resources of Enbridge Inc. could not be accessed in the event of a spill beyond their portion of investment into Northern Gateway42. This is an effective way for a corporation, like Enbridge, to avoid responsibility and accountability. In the event of a spill, only the financial resources of the specific project are available which are limited to the actual assets of the project — such as the pipelines and marine facilities, and their earning potential — assets whose value could be substantially reduced if a spill occurred.43 Again during the Joint Review Panel hearings, Northern Gateway Ltd. President John Carruthers rejected suggestions that Enbridge backstop the pipeline partnership by serving as a guarantor or guaranteeing a loan in the event of a large spill, stating instead that this limited liability structure is “set to properly allocate the risk among the owners”.44

IF ALBERTA’S SPILL RATE WERE APPLIED TO THE LENGTH OF THE PROPOSED NORTHERN GATEWAY PIPELINES AND TRANS MOUNTAIN EXPANSION, THERE WOULD BE 3.75 AND 1.85 SPILLS RESPECTIVELY EACH YEAR;40 OVER THE PIPELINES’ 40YEAR OPERATIONAL LIVES, THIS WOULD MEAN AROUND 150 AND 74 SPILLS, RESPECTIVELY

Somehow Northern Gateway believes that they will only face a $60 million exposure to potential clean-up costs every 250 years or so45, and admitted to looking at an insurance policy that would have a ceiling of $250 million in damages annually (a third of the cleanup costs incurred so far in the Kalamazoo spill.46) Further, if a spill from the Gateway pipeline occurred in the same year as another spill similar to the Kalamazoo incident, the coverage could be fully expended before even addressing the B.C. spill. If insurance doesn’t cover costs, nor cash flow from existing operations, then the public will end up paying.

In response to a question at the JRP hearings by BC lawyer Elisabeth Graff on whether or not Enbridge would consider a different structure to take on more of the liability for Northern Gateway, President John Carruthers replied: “No, I think the proper way to allocate risk and benefits would be to look at -you know -- making sure that the pipeline is planned, designed and built to the satisfaction of the standards that are needed.” (JRP Transcript para 18571) 7

BC’S ECONOMY RELIES ON A HEALTHY COASTAL ENVIRONMENT. IN 2010, BRITISH COLUMBIA’S COMMERCIAL SEAFOOD INDUSTRY SOLD $1.4 BILLION WORTH OF SEAFOOD INTO LOCAL AND INTERNATIONAL MARKETS, AND TOURISM IN BC GENERATED $13.4 BILLION IN REVENUE. 8 ILCP

Priceless risks to health, quality of life and ecosystems Because of the unique hazards of diluted bitumen, a dollar amount could never be enough to value some damages from a pipeline spill. Because compensation is generally not available for such losses, the cost will rest with British Columbians.

Andy Wright

Exposure to chemicals from diluted bitumen can cause irrevocable harm to a person’s health. The health impacts Michigan residents reported immediately following Enbridge’s Kalamazoo spill are described above. Longer-term effects of exposure to diluted bitumen include damage to the nervous system and cancer. As well, heavy metals such as arsenic are found in diluted bitumen.47 While these results can be costly to the provincial taxpayer through the increased burden on the health care system, the loss of healthy years for individual British Columbians would be priceless.

ILCP

Such spills may also cause evacuations. 150 families were permanently forced from their homes due to Enbridge’s Kalamazoo spill. Kinder Morgan’s Burnaby spill forced 250 residents to leave their homes. If the new pipelines were to rupture in, for example, Burns Lake, Kitimat, or the Fraser Valley, many more people could be affected. The Northern Gateway Pipeline will pass over the McKenzie, Skeena and Fraser watersheds.48 A spill into any of these waterways could cause the evacuation of numerous British Columbians who live downstream. Those forced to flee their homes and communities would face tremendous burdens and the disruption of their livelihoods. Those who stay risk health impacts and local economies can be devastated by lost business when small businesses lose local or tourist customers, or are more directly impacted by the spill, as seen with Enbridge’s Kalamazoo spill. In particular, the lands, rivers and coastline vulnerable to diluted bitumen spills due to these projects are critical for the culture, community health and livelihoods of First Nations in the regions. The regular operation of the pipelines and port, as well as the threat of spills, will impact on the Aboriginal rights and title to these lands and waters, which are constitutionally protected.49 First Nations have documented the potential impacts to critical natural resources on which they depend and the risk to their ways of life engendered by these projects.50 Finally, the natural landscape of British Columbia is a treasured asset. Both pipeline routes threaten the habitats of many species of salmon, trout and sturgeon. Given how difficult it is to clean up bitumen compared to conventional oil, a tar sands pipeline spill would be more harmful per barrel to wildlife and ecosystems than crude oil spills such as the BP Deepwater Horizon or the Exxon Valdez disasters that contaminated vast areas of the Gulf of Mexico and Alaska coasts, discussed further in the next section. B.C.’s diverse and delicate ecosystems that are home to fish, whales, sea otters, birds and the rare Spirit Bear could all be threatened by a spill. The costs to British Columbians and Canadians of losing such natural and cultural capital cannot be calculated.

Costs of offshore spills There is little doubt that new pipelines will bring spills from oil tankers. More pipelines transporting tar sands to the Pacific means more tanker activity off B.C.’s coast. And more tanker activity — particularly in difficult-to-navigate waterways — means higher rates of regular small spills and a higher risk of Exxon Valdez-sized crises. This section looks at two offshore oil spills to illustrate the sort of economic and environmental damage that can result, as well as the range of related cleanup costs. It also looks to assess the risk of these spills associated with the proposed pipelines.

Case studies: Offshore oil spills The history of large offshore oil spills involves astronomic cleanup costs, economic devastation for coastal industries, long-term severe ecological damage, and distress for individual animals. These coastal spills offer a sense of how such incidents have affected North American shores — the Exxon Valdez experience speaks to the unique challenges of long-term oil spill longevity and temperate coastal impacts, while the more recent Deepwater Horizon blowout provides a benchmark for cleanup costs and other economic impacts.

Wikimedia

CASE STUDY 1: Exxon Valdez tanker spill On March 24, 1989, the Exxon Valdez oil tanker struck a reef in Prince William Sound, Alaska, while trying to navigate icebergs blocking a narrow shipping lane.51 (At 986 feet, the Exxon Valdez measures roughly 140 feet smaller than the largest vessels expected to enter Kitimat through a treacherous channel to service the proposed Northern Gateway pipeline.52) The vessel was carrying nearly 1.3 million barrels of crude oil and leaving the Trans Alaska Pipeline terminal.53 Official reports pegged the spill at around 260,000 barrels based on Exxon estimates.54 Oil washed ashore across more than 2000 kilometres of Alaska coastline. It is impossible to determine exactly how many marine animals were killed — though most carcasses sink, 35,000 birds and 1,000 sea otters washed ashore, dead.55 Estimates indicate that as many as 250,000 seabirds, 2,800 otters, 300 seals, 250 bald eagles, and up to 22 orcas were killed immediately as a result of oil contamination from the spill.56 While Exxon promised to compensate communities for damage and economic losses, and were eventually ordered to pay $5 billion in damages, they fought the decision for years in the courts, appealing almost two dozen times until 20 years after the spill ultimately to cut its liability to one tenth of the original damages assessment.57 In cleanup and economic damage claims, Exxon paid around $3.8 billion US.58 Adjusted for inflation, estimates of the cost of the spill to Exxon in today’s money surpass $6 billion US.59

Cleanup costs alone were around $2.1 billion US over four summers. However, some beaches remain oiled, now 23 years after the spill — and a considerable amount of the beach cleanup was due to natural winterstorm wave action that pulled the oil back to sea.60 As of 2010, a variety of marine resources in the area remained injured by “residual impacts of the spill” or exposure to “lingering oil” and are still recovering, including: three bird species, orcas, clams, mussels and sea otters.61 Two species are observed not to be recovering, including Pacific herring, which forms the basis of a commercial fishery and regional ecological food web. Estimates indicate that over 600 barrels of oil remained in 2007, 18 years after the accident, and with a slow rate of decline will take many decades to disappear entirely.62

On April 20, 2010, the Deepwater Horizon oil platform exploded. The mobile offshore drilling unit drilled on the Macondo Prospect off the coast of Louisiana in the Gulf of Mexico, and the explosion resulted in a sea-floor oil gusher that continued for almost three months. Flowing at between 53,000 and 62,000 barrels per day, it released 4.9 million barrels of crude oil before it was capped on July 15.63 Over 1,700 kilometres of coastline was oiled and nearly 800 was still contaminated a year after the gusher was capped.64 The spilled oil that remained at the ocean surface dissipated relatively quickly, owing to the Gulf of Mexico’s “immense natural capacity to break down oil”.65 However, considerable controversy ensued over reports of dissolved oil in the ocean and oil that settled on the sea floor, and their extent and respective ecological consequences remain largely unknown.66 The costs of the spill are wide-ranging and varied, including: extensive wildlife deaths and ecological damage,67 considerable economic damage from impacted and closed fisheries (early estimates indicated $2.5 billion US lost in Louisiana alone),68 estimates of up to $23 billion US in lost tourism including long-term brand damage,69 and early estimates of more than $4.6 billion US in containment and cleanup expenses.70 It is very difficult to measure such extensive costs with precision, but BP has estimated its overall costs — including cleanup, private claims for personal and economic damage, and fines — at close to $40 billion.71

Tanker spill risks from proposed B.C. pipelines

Exxon Valdez Oil Spill Trustee Council

CASE STUDY 2: Deepwater Horizon offshore oil platform spill

MARINE OIL SPILL CLEAN UP COSTS: EXXON VALDEZ, ADJUSTED FOR INFLATION: $6 BILLION US. BP’S DEEPWATER HORIZON, ESTIMATED OVERALL COSTS AT CLOSE TO $40 BILLION US.

It is impossible to calculate accurately and precisely the probability of disastrous oil spills on the scale of the above case studies. But it is clear that the routes between the proposed B.C. pipeline terminals and the open ocean pose special risks. The resulting probability is too high for any potential B.C. revenue-sharing arrangement to justify assuming the risk. For the Northern Gateway project, 220 oil supertankers would have to traverse 185 kilometres of intricate, island-choked inner-coastal waters each year.72 Known as Very Large Crude Carriers, which can carry as much

Nikki Skuce

as 2.2 million barrels (two-thirds more than the Exxon Valdez carried) and can take over two kilometres to come to a complete stop,73 these supertankers are nearly three times the size of the only oil tankers that currently operate in B.C.74 After leaving the shipping terminal in Kitimat, these supertankers would reach “open” ocean in the unpredictable and dangerous Hecate Strait — considered the fourth most dangerous body of water in the world because of weather challenges75 — before passing through Queen Charlotte Sound or the Dixon Entrance.76

“KITIMAT IS A POOR CHOICE FOR A MAJOR NEW GATEWAY PORT FOR THE SHIPMENT OF CRUDE OIL. THE QUESTIONS ABOUT TANKER TRANSITS IN CONFINED WATERS AND IN SEVERE WEST COAST WINTER WEATHER CONDITIONS ARE TOO MANY AND THE RISKS TO THE MARINE ENVIRONMENT TOO GREAT.” CAPTAIN MAL WALSH OF COMOX, BC QUOTED IN THE VANCOUVER OBSERVER

Tankers of this size have never before navigated these waters, which have unique topography and poor weather conditions contributing to precarious navigational situations.77 Indeed, independent analysis indicates that, given increasing vessel traffic from other activities in the region, there may be a 78 per cent probability of a supertanker collision or grounding over a 50-year operating life.78 It is not clear what proportion of such incidents would lead to large oil spills, but using Enbridge’s own optimistic ratio, the risk of a spill over 31,500 barrels is still 30 per cent.79 Less analysis is available for the proposed Trans Mountain expansion. At present, only tankers with capacities up to 800,000 barrels can enter the Port of Vancouver and they are forbidden from carrying a full load due to shallow parts of the waterway.80 However, planned changes to the waterway would allow supertankers with capacities up to 1,000,000 barrels, and estimates indicate over 400 more tankers in the Burrard Inlet will be needed per year to accommodate the expansion — increasing from around one tanker per week to seven or eight.81 In addition to these significant risks from tanker collisions or groundings, bitumen also has higher sulphur and acid levels than conventional crude oil. As a result, it is more corrosive to ships’ cargo tanks and poses a higher risk of spills due to corrosion, which is a major cause of notable tanker spills.82 B.C.’s coastline, particularly the North Coast, poses particular challenges to spill maintenance and cleanup. Unlike the Gulf of Mexico’s unique natural ability to break down oil, the break down of oil from tanker spills in these circumstances would more closely resemble the slow rate of disappearance seen with the Exxon Valdez spill. Response organizations, meanwhile, are required only to have the capacity to respond to a 73,300-barrel oil spill, a fraction of the 2.2 million barrels carried by these supertankers. The more difficult nature of diluted bitumen cleanups (because the heavier bitumen is more likely to sink) would aggravate cleanup challenges, which are significant in these remote areas with frequently harsh weather events.83 This is worsened by the inadequacy of Canada’s current response regime, as demonstrated by the Canadian Commission of Environment and Sustainable Development’s 2010 finding that the Coast Guard’s and Environment Canada’s emergency management plans do not provide adequate national preparedness.84 This can only be worsened by recent cuts to the Canadian Coast Guard, including the closure of a search and rescue station near Vancouver.85

British Columbians would be on the hook for large spills In Canadian waters, tanker owners are solely responsible for pollution damages from oil tanker spills. Unlike the Exxon Valdez in the 1980s, tankers today are often owned by one-ship companies and many are registered in foreign waters. Pipeline and terminal owners are not liable for tanker spill cleanup costs or economic compensation for lost livelihoods or natural resource damages.86 To cover the accident costs of tankers with little or no assets in the country where the spill takes place, Canada participates in an international compensation regime of tanker insurance requirements and compensation funds. However, recent analysis indicates that the maximum compensation available under this regime is around $1.33 billion.87 This would cover somewhere between one-fifth and one-quarter of today’s costs of an Exxon Valdez-sized spill — a fraction of the amount of oil carried in some of today’s supertankers. This leaves nearly $5 billion in uncompensated liability for Canadian taxpayers. Of course, economic, ecological and nonpecuniary losses that cannot be sufficiently proven for legal claims or are not recognized in law will rest with coastal British Columbians.

Increased consumer costs Beyond the direct economic impacts from pipeline spills, another cost is the increasing gas and other consumer prices that will likely result from a tar sands pipeline to the Pacific Coast. Based on the economic analysis for the Northern Gateway pipeline, Enbridge acknowledges that tar sands producers will be able to get an additional $2 to $3 USD per barrel for every year the project is operational from accessing Asian markets.88 Enbridge makes it clear that the price increase will then apply to all oil produced in Western Canada. This will allow Canadian oil producers to raise the bar on what can be charged to Canadian consumers for Canadian oil. What Enbridge hasn’t done, is evaluate, investigate or include the negative impact on the Canadian economy when Canadians are faced with higher oil prices. According to Robyn Allan, former CEO of the Insurance Corporation of British Columbia and Senior Economist for B.C. Central Credit Union, if the pipeline goes ahead it is likely that British Columbians will pay $2 to $3 more per barrel for crude oil purchased in Canada, and the overall economic impact of the project will be zero or negative.89 This oil price increase will affect all facets of the Canadian economy. It will increase costs for industries that rely on oil in their supply chain, raise unemployment in non-oil industry sectors as these sectors will be forced to cut jobs to pay for higher-priced goods. Historically, as Ms. Allan records, higher oil prices also reduce Canada’s real GDP, shrink government revenues, raise inflation and interest rates and further appreciate the Canadian dollar.90 As witnessed in past oil price increases

in Canada, it will be consumers — including British Columbians — who will bear the additional costs in, for example, increased gas prices, higher transit fees and higher food prices. Oil producers typically pass along cost increases to refiners who, in turn, pass them along to consumers via a variety of products from gasoline, to groceries to plane tickets. Oil price increases will erode the economy-wide benefits of an Asianbound pipeline for all of Canada, including the small revenue benefits to British Columbia. It would increase the cost of living and the cost of doing business in British Columbia. For a pipeline that is heralded by proponents as an economic goldmine, it stands to take money out of the hands of Canadians and Canadian businesses and drop it in the pockets of oil companies and their majority-foreign shareholders.91

Costs of climate change pollution Increased tar sands emissions related to pipelines

Nikki Skuce

When assessing the impacts of tar sands pipelines, it’s important to take into account not only where the pipeline will be built, but also what it will be transporting. In the case of the proposed Northern Gateway pipeline, it is expected to convey high-carbon tar sands-derived products. The capacity of the pipeline (ave. 525,000 barrels per day) represents around 20 per cent of current tar sands production. Without adequate environmental management, filling this pipeline means a significant increase in tar sands production and a corresponding increase in greenhouse gas pollution. Based on the assumptions provided by Enbridge, the proposed Northern Gateway pipeline would result in an additional 16.9 million tonnes of CO2 emissions per year coming from the tar sands, or more than 675 million tonnes over the pipeline’s 40-year lifespan.92 This is the equivalent of putting 4.03 million cars on the road for 40 years. Kinder Morgan’s Trans Mountain expansion, which is slated to expand to bring an extra 590,000 barrels of tar sands per day into Burnaby, B.C., would add roughly 19.0 million tonnes of CO2 emissions per year, or another 4.52 million cars to the road for the operational life of the pipeline. Ironically, the expanded tar sands production that these pipelines would facilitate would undermine the climate leadership that British Columbia has shown. These amounts do not include the carbon emissions from the construction and operation of the pipeline, the marine transportation or downstream upgrading, refining and combustion of the oil. They include only the “upstream” emissions from tar sands operations in Alberta, the source of the pipeline bitumen, right next door to B.C. but outside the grasp of B.C.’s emissions reduction efforts. 14

Costs of increased emissions Even limiting the analysis to these upstream emissions, the increase in greenhouse gas pollution is an important consequence of the proposed pipelines. Canada’s fastest growing source of climate change pollution is the tar sands, and the rapid expansion of this sector is the major reason why Canada is not on track to meet its climate obligations. Tar sands greenhouse gas (GHG) emissions are expected to triple between 2005 and 2020, from 30 million tonnes to 92 million tonnes — a 62-milliontonne increase.93 Canada’s overall emissions are only expected to grow by 54 million tonnes in that same period.94 In other words, the rest of Canada’s emissions are expected to fall, while emissions from the tar sands continue to rise. The increase in tar sands emissions is expected to cause more than 100 per cent of Canada’s total expected emissions growth and 388 per cent of the increase in industrial emissions. Tar sands increases will “single-handedly undo greenhouse gas gains” made in other sectors.95

THE NORTHERN GATEWAY PIPELINE WOULD RESULT IN AN ADDITIONAL 16.9 MILLION TONNES OF CO2 EMISSIONS PER YEAR FROM THE TAR SANDS. THE KINDER MORGAN EXPANSION PIPELINE WOULD ADD ROUGHLY 19.0 MILLION TONNES OF CO2 EMISSIONS PER YEAR.

Nikki Skuce

They are also detrimental to Canada’s international emissions commitments. Canada needs to shed about 100 million tonnes of emissions between now and 2020 — but we expect, instead, to increase by 54 million tonnes, because of tar sands emissions increases.96 The emissions represented by the production of the proposed pipelines’ transported oil, 16.9 million tonnes and 19 million tonnes, are significant contributors to the increase that is taking us further from living up to our international commitments. Failing to meet these commitments will further tarnish our international reputation on cooperation and environmental action. If the Government of Canada is serious about meeting Canada’s climate commitments despite the increase in tar sands production, it would have to require larger emissions reductions from other sectors — including, perhaps, B.C.’s industries, such as natural gas, agriculture and forestry — to compensate for this tar sands emissions growth. British Columbia, meanwhile, is taking action to tackle climate pollution within its borders, making efforts through its carbon tax to help Canada keep its promise to the world. But the upstream production emissions of the tar sands transported in these B.C. pipelines would fall outside of this B.C. revenue source and would counteract B.C.’s leading efforts to fight climate change. At the carbon tax’s current $30 per tonne value, the value of this leaked greenhouse gas pollution beyond B.C.’s revenue grasp would be: • Northern Gateway: $507 million per year, totaling $20.3 billion over 40 years of operation; and • Trans Mountain: $570 million per year, totaling $22.8 billion over 40 years of operation.

These values assume that the B.C. carbon tax will remain at $30 per tonne over the decades of pipeline operation. In reality, however, carbon pricing has to rise nationally if Canada is to meet its greenhouse gas reduction targets, to around $100 per tonne by 2020.97

Climate pollution costs in British Columbia Climate change pollution has a global impact. It does not respect borders — including the border between Alberta and British Columbia. The effects, therefore, of climate pollution will be felt by British Columbians, and these will come at a real cost. B.C. has already warmed by 1–1.5°C in the past half century, with another 1.5°C of warming projected by 2050. Precipitation is expected to continue to increase, on average, but with less rainfall in summer, especially in the southern interior. A 10–15 per cent increase in severe precipitation events is expected, and severe wildfires are likely to increase substantially over the coming decades.98 These impacts will impose significant economic costs on the province. The National Round Table on the Environment and the Economy has estimated that climate change could cost B.C.’s timber sector up to $3.1 billion per year by mid-century, representing a 0.44 per cent decrease in the province’s gross domestic product. Sea-level rise and precipitation changes could put 11,619 additional B.C. dwellings at risk of flooding by the 2050s, representing an extra $7.6 billion in annual costs.99 Those costs could escalate dramatically in the event that global emissions are not constrained and climate change impacts shift from manageable to catastrophic.100 Drier summers with more frequent severe wildfires present increased risk for British Columbians that have recently lost homes, livelihoods, and lives to forest fires in the interior. Increasing winter precipitation, meanwhile, is a very disconcerting trend in light of the flooding and mud slides seen through the B.C. interior in Summer 2012, marked most tragically by the deaths of four people in the Johnsons Landing mudslide101 in the Columbia Basin, where records show that rainfall increased 45 per cent between 1913 and 2002.102 Meanwhile, climate change has increased the range of the mountain pine beetle, which is expected to kill more than three-quarters of B.C.’s marketable pine forests by 2015, “affecting tens of billions of dollars worth of timber” and threatening the economies of many communities in B.C.’s interior.103 In recent years, Vancouver has reeled from weather-related damages that could worsen as climate change progresses, such as the 2006 windstorm that required $10 million of infrastructure repairs and the 2010 rainfall that flooded many Vancouver homes.104 Indeed, Vancouver expects 28 per cent more “extremely wet days” by 2050, more regular “extreme heat events”, and sea levels that could rise by one to two metres by 2100,

which would “cause havoc with drainage systems, wharfs, buildings, roads, waterfront facilities and low-lying residential areas.”105 Vancouver is gearing up to make significant expenditures on “climate adaptation” strategies — as much as $84 million in 2012-2014 alone — as a start to protect against much higher costs from climate change impacts over the next century.106 As described above, the growth in tar sands emissions are taking Canada’s overall emissions in the wrong direction. The production, transportation, and consumption of the oil in these proposed pipelines through B.C. will add considerably to the climate problem and the costly impacts for British Columbians and people around the globe while undermining B.C.’s efforts to cut greenhouse gas pollution. And though these emissions escape the B.C. carbon tax, nature levies a carbon tax of its own through the costs climate change imposes on British Columbians.

Conclusions The high probability of a major coastal accident, the certainty of spills along the pipelines’ risky routes and the leaked carbon value of greenhouse gas-intensive tar sands expansion indicate that the economic downsides of bitumen pipelines and tanker traffic would dwarf any financial inducement for British Columbia that could be achieved through revenue sharing. Here is a summary of the costs that British Columbians would be faced with if one or both of the proposed pipelines is approved:

Summary of costs related to the two pipeline proposals

Nikki Skuce

• Enbridge’s recent diluted bitumen pipeline spill in Michigan cost more than $800 million US in cleanup, forced 150 people permanently from their homes and caused severe health problems for individuals living nearby. • Pipeline spills, a regular part of doing business for pipeline companies, threaten B.C.’s $13.4 billion-per-year tourism industry, $1.4 billion seafood industry and over $900 million salmon fishery. • Given the ownership structure and limited insurance for the proposed pipeline projects, there is considerable risk that B.C. taxpayers will remain on the hook for cleanup costs associated with a spill. • In today’s value, the Exxon Valdez spill cost as much as $6 billion US. With tanker traffic expected to increase to 220 and 300 vessels per year for the Northern Gateway and Trans Mountain projects respectively, and at least a 30 per cent chance of a large tanker spill from Northern Gateway alone, there is a strong risk of billions of dollars in cleanup costs and damage to coastal B.C. well in excess of the maximum compensation available. • The increased cost of oil prices from competing demand due to the pipelines could cost Canadian consumers $2.3 billion per year for Northern Gateway alone. B.C.’s share, in hundreds of millions per year, could total more than $11 billion over the 40-year operational life of the Northern Gateway pipeline. • The costs associated with greenhouse gases from production of the oil in the pipelines — pollution that would not be captured in the B.C. carbon tax, yet still add to Canada’s rising emissions and block Canada’s ability to meet its international commitments — would measure in the tens of billions of dollars over the lives of each project. In weighing their “fair-share”, the BC government’s best option for securing net benefits to British Columbians is really to oppose these

pipelines’ construction, as they carry substantial risks and little benefits to British Columbians. It’s hard to imagine what dollar amount could compensate the province for the potential loss of its clean rivers, wildlife and local economies in the case of a spill, not to mention the human health and lifestyle cost. On a larger scale, the development of pipelines to transport diluted bitumen from the tar sands would have negative effects not just nationally, but also globally. Canadian consumers would see increased costs resulting from increased oil prices. On a global scale, the increased carbon emissions from tar sands expansion would contribute to climate change, undermining B.C.’s efforts to reduce climate pollution without contributing to B.C.’s provincial revenues. British Columbia’s wild spaces are valued by residents, visitors and wildlife. They play host to many local economies, lifestyles and cultures. No price is worth putting them at risk of a catastrophic oil spill.

Endnotes 1. Canadian Environmental Assessment Agency, “Northern Gateway Pipeline Project.” http://www.ceaa-acee.gc.ca/050/details-eng.cfm?evaluation=21799 (accessed Sept. 11, 2012); Andrew Nikiforuk, “Enbridge not positioned to pay for Gateway oil spill: report,” The Tyee, June 5, 2012. http://thetyee.ca/News/2012/06/05/GatewayOil-Spill-Insurance/; Government of British Columbia, “British Columbia outlines requirements for heavy oil pipeline consideration,” July 23, 2012. http://www. newsroom.gov.bc.ca/2012/07/british-columbia-outlines-requirements-for-heavy-oilpipeline-consideration.html 2. Enbridge Inc., Volume 8A: Overview and General Information—Marine Transportation Section 4: Considerations Due to Project-Related Additional Traffic (2010); Canada Department of Fisheries and Oceans, “Oceanography of the British Columbia Coast,” Canadian Special Publication of Fisheries and Aquatic Sciences (1981). http://dfompo.gc.ca/Library/487-19.pdf 3. Carrie Tait, “Kinder Morgan’s Trans Mountain expansion snags oil customers,” The Globe and Mail, June 29, 2012. http://www.theglobeandmail.com/globe-investor/ kinder-morgans-trans-mountain-expansion-snags-oil-customers/article4381586/ 4. Jeff Lewis, “Kinder Morgan ups stakes in pipeline fight with Trans Mountain expansion”, National Post, January 11, 2013. http://business.financialpost. com/2013/01/10/kinder-morgan-widens-scope-of-5-4-billion-trans-mountain-pipelineexpansion/?__lsa=5c4e-b3e6. 5. Government of British Columbia, “British Columbia outlines requirements for heavy oil pipeline consideration,” July 23, 2012. http://www.newsroom.gov.bc.ca/2012/07/ british-columbia-outlines-requirements-for-heavy-oil-pipeline-consideration.html 6. Alberta Premier Alison Redford and the federal government reacted negatively to Premier Clark’s demands. However, analysis by the Alberta Federation of Labour indicates that Alberta is also getting short-shifted on royalties and benefits from this project. See Alberta Federation of Labour, “Alberta Giving Up Billions in Royalties in Wake of Northern Gateway Pipeline”, Aug 9, 2012. http://www.afl.org/index.php/Viewdocument-details/723-2012-Backgrounder-v1-Aug-09.html. 7. Ibid. 8. Kelly Cryderman and Chris Varcoe, “B.C. extends demand for ‘fair share’ to expansion of existing Trans Mountain pipeline,” The Vancouver Sun, July 31, 2012. http://www. vancouversun.com/business/energy-resources/extends+demand+fair+share+expansion +existing/7020613/story.html 9. Government of British Columbia, “British Columbia outlines requirements for heavy oil pipeline consideration,” July 23, 2012. http://www.newsroom.gov.bc.ca/2012/07/ british-columbia-outlines-requirements-for-heavy-oil-pipeline-consideration.html 10. Ibid. 11. Stoney Creek Environment Committee, “Alberta’s atrocious record of thousands of pipeline leaks a strong warning to B.C.” http://scec.ca/drupal/comment/40 (accessed Sept. 12, 2012). 12. Ibid. 13. Glen McGregor, “Enbridge subsidiaries reported 175 pipeline leaks in U.S. since 2002: data”, The Vancouver Sun, Apr. 3, 2012. http://www. vancouversun.com/technology/Enbridge+subsidiaries+reported+pipeline +leaks+since+2002+data/5987526/story.html 14. Stoney Creek Environment Committee, “Alberta’s atrocious record of thousands of pipeline leaks a strong warning to B.C.” http://scec.ca/drupal/comment/40 (accessed Sept. 12, 2012). 15. Ibid. 16. Written evidence of ForestEthics. Attachment J:“Enbridge Infractions Table”. https://www.neb-one.gc.ca/ll-eng/livelink.exe/fet ch/2000/90464/90552/384192/620327/624910/695692/775718/D66-

3-12_-_Living_Oceans_Society,_Raincoast_Conservation_Foundation_and_ ForestEthics_-_Attachment_J_-_Enbridge_Infractions_Table_-_A2K2D4. pdf?nodeid=775636&vernum=0 17. National Transportation Safety Board. “Enbridge Incorporation Hazardous Liquid Pipeline Rupture and Release: Marshall, Michigan: July 25, 2010”, Accident Report NTSB/PAR-12/01 PB2012-916501 (2012), xii. http://www.ntsb.gov/doclib/ reports/2012/PAR1201.pdf 18. Martha Stanbury et al., Acute Health Effects of the Enbridge Oil Spill, Lansing (Michigan Department of Community Health, November 2010). http:// www.michigan.gov/documents/mdch/enbridge_oil_spill_ epi_report_with_ cover_11_22_10_339101_7.pdf 19. Andrew Nikiforuk, “Spill crisis: ‘Whatever, we’re going home’,” The Tyee, June 22, 2012. http://m.thetyee.ca/News/2012/06/22/Enbridge-Oil-Spill/ 20. National Transportation Safety Board. “Enbridge Incorporation Hazardous Liquid Pipeline Rupture and Release: Marshall, Michigan: July 25, 2010”, Accident Report NTSB/PAR-12/01 PB2012-916501 (2012), xxi. http://www.ntsb.gov/doclib/ reports/2012/PAR1201.pdf 21. Ibid., xxi. 22. Ibid., xxi. 23. Transportation Safety Board of Canada, “Transmountain Pipeline L.P. 610-MillimeterDiameter Crude Oil Pipeline Kilometre Post 3.10, Westridge Dock Transfer Line, Burnaby, British Columbia, 24 July 2007,” Pipeline Investigation Report P07H0040 (2008), 9. http://www.tsb.gc.ca/eng/rapports-reports/pipeline/2007/p07h0040/ p07h0040.pdf 24. Ibid., 9. 25. Ibid., 12. 26. Transportation Safety Board of Canada, “Transmountain Pipeline L.P. 610-MillimeterDiameter Crude Oil Pipeline Kilometre Post 3.10, Westridge Dock Transfer Line, Burnaby, British Columbia, 24 July 2007,” Pipeline Investigation Report P07H0040 (2008), 9. http://www.tsb.gc.ca/eng/rapports-reports/pipeline/2007/p07h0040/ p07h0040.pdf 27. Energy Resources Conservation Board, “ERCB issues conditional approval for the resumption of pipeline operations to plains midstream Canada,” news release, August 16, 2011. http://www.ercb.ca/RSS/yp-starter/555.aspx 28. Ryan Ellis, Emily Mertz. “Alberta pipeline spill: Rainbow Pipeline spill near Peace River,” Global Edmonton, May 4, 2011. http://www.globaltvedmonton.com/alberta+pip eline+spill+rainbow+pipeline+spill+ near+peace+river/283498/story.html 29. Melina Laboucan-Massimo, “Is this really what an oil spill clean up looks like?” Greenpeace Canada, July 20, 2012. http://www.greenpeace.org/canada/en/Blog/isthis-really-what-an-oil-spill-clean-up-loo/blog/41481/ 30. Plains Midstream Canada, “Rainbow Pipeline Incident – Clean-up Updates,” August 3, 2012. http://www.plainsmidstream.com/CleanUpUpdates 31. British Columbia Ministry of Environment, “B.C. Seafood Production.” http://www.env. gov.bc.ca/omfd/fishstats/graphs-tables/seafood.html (accessed August 31, 2012) 32. British Columbia Ministry of Environment, “B.C. Seafood Production by Species Group.” http://www.env.gov.bc.ca/omfd/fishstats/graphs-tables/species-groups. html#wholesale (accessed August 31, 2012) 33. Includes personal, corporate and indirect taxes. British Columbia Ministry of Environment, British Columbia’s Fisheries and Aquaculture Sector (2007), 6, 23. http://www.bcstats.gov.bc.ca/Files/78a0bb0d-1025-486c-ae41-66ffaa035dbb/ BritishColumbiasFisheriesandAquacultureSector.pdf 34. British Columbia Ministry of Jobs, Tourism and Innovation, The Value of Tourism in British Columbia: Trends from 2000 to 2010 (2012). http://www.jti.gov.bc.ca/ research/IndustryPerformance/pdfs/tourism_ indicators/Value_of_Tourism_in_British_

Columbia_2012.pdf 35. Includes direct, indirect and induced economic benefits. British Columbia Wilderness Tourism Association, Written statement regarding the Enbridge Northern Gateway Project, August 30, 2012. https://www.neb-one.gc.ca/ll-eng/livelink.exe?func=ll&objId =853730&objAction=browse 36. Andrew Nikiforuk, “Enbridge not positioned to pay for Gateway oil spill: report,” The Tyee, June 5, 2012. http://thetyee.ca/News/2012/06/05/Gateway-Oil-Spill-Insurance/ 37. Energy Resources Conservation Board, ST57-2011 Field Surveillance and Operations Branch Provincial Summary 2010 (2011). http://www.ercb.ca/docs/products/STs/ ST57-2011.pdf 38. Ibid. 39. The crude oil and condensate pipeline for the Northern Gateway project are each 1,172 kilometres in length. 40. The crude oil and condensate pipeline for the Northern Gateway project are each 1,172 kilometres in length. 41. See Northern Gateway Pipelines Ltd partnership response to JRP Information Request 11 (A2Z7YO), Response 11.14 (Adobe page 74). https://www.neb-one.gc.ca/ll-eng/ livelink.exe?func=ll&objId=858330&objAction=Open 42. National Energy Board hearing transcript 12-09-07 - Volume 72 - A2Z9H9. Paragraphs 18552-18584. https://www.neb-one.gc.ca/ll-eng/livelink.exe/fe tch/2000/90464/90552/384192/620327/628981/859451/12-09-07_-_ Volume_72_-_A2Z9H9.pdf?nodeid=859369&vernum=0 43. Ibid., 15, 28. 44. Dean Bennett, “Enbridge feels heat from B.C. lawyer over split liability for pipeline spills,” The Vancouver Sun, September 7, 2012. http://www.vancouversun.com/ business/Enbridge+feels+heat+from+lawyer+over+split+liability/7208623/story.html 45. National Energy Board hearing transcript, September 7th, 2012, Volume 72 (A2Z9H9) at line 18277. Mr. Ruitenbeek, “…we’re looking at an exposure of about $60 million in immediate potential clean-up costs once every 250 years or so.” https://www.neb-one.gc.ca/ll-eng/livelink.exe/fet ch/2000/90464/90552/384192/620327/628981/859451/12-09-07_-_ Volume_72_-_A2Z9H9.pdf?nodeid=859369&vernum=0 46. Northern Gateway’s response to JRP IR Number 13 which is Exhibit B113-2, at Adobe page 5: “…Northern Gateway would consider a level of liability insurance no less than $250 million.” 47. Anthony Swift, Nathan Lemphers, Susan Casey-Lefkowitz, Katie Terhune and Danielle Droitsch, Pipeline and Tanker Trouble (2011), 7. http://www.pembina.org/pub/2289 48. Ibid., 5. 49. Anthony Swift, Nathan Lemphers, Susan Casey-Lefkowitz, Katie Terhune and Danielle Droitsch, Pipeline and Tanker Trouble (2011), 4, 18. http://www.pembina.org/ pub/2289 50. For an overview of First Nations positions and concerns, see Landkeepers, “Resources for First Nations: Pipeline Reports”, http://landkeepers.ca/resources/category/C20/ 51. Exxon Valdez Oil Spill Trustee Council, “Questions and Answers.” http://www.evostc. state.ak.us/facts/qanda.cfm (accessed Sept. 12, 2012) 52. Government of British Columbia, Requirements for British Columbia to Consider Support for Heavy Oil Pipelines (2012), 28. http://www.env.gov.bc.ca/main/ docs/2012/TechnicalAnalysis-HeavyOilPipeline_120723.pdf 53. Samuel K. Skinner, William K. Reilly, The Exxon Valdez Oil Spill: A Report to the President (The National Response Team: 1989), 3. http://www.akrrt.org/Archives/ Response_Reports/ExxonValdez_NRT_1989.pdf; Exxon Valdez Oil Spill Trustee Council, “Questions and Answers.” http://www.evostc.state.ak.us/facts/qanda.cfm (accessed Sept. 12, 2012)

54. Elizabeth Bluemink, “Size of Exxon spill remains disputed,” Anchorage Daily News, June 10, 2010. http://www.adn.com/2010/06/05/1309722/size-of-exxon-spillremains-disputed.html 55. Exxon Valdez Oil Spill Trustee Council, “Questions and Answers.” http://www.evostc. state.ak.us/facts/qanda.cfm (accessed Sept. 12, 2012); Elizabeth Bluemink, “Size of Exxon spill remains disputed,” Anchorage Daily News, June 10, 2010. http://www. adn.com/2010/06/05/1309722/size-of-exxon-spill-remains-disputed.html 56. Exxon Valdez Oil Spill Trustee Council, “Questions and Answers.” http://www. evostc.state.ak.us/facts/qanda.cfm (accessed Sept. 12, 2012); Sarah Graham, “Environmental effects of Exxon Valdez spill still being felt,” Scientific American, Dec. 19, 2003. http://www.scientificamerican.com/article.cfm?id=environmentaleffects-of 57. Chris Welch, “Exxon Valdez lawyer still fighting for clients”, CNN, June 18, 2010. http://www.cnn.com/2010/CRIME/06/18/exxon.valdez.lawyer/index.html 58. Anne C. Mulkern, “BP’s oil spill bill could dwarf Exxon’s Valdez tab,” The New York Times, May 3, 2010. http://www.nytimes.com/gwire/2010/05/03/03greenwire-bps-oilspill-bill-could-dwarf-exxons-ivaldezi-91298.html?pagewanted=all 59. CNN Money, 6 big oil spills, and what they cost, May 19, 2010. http://money.cnn. com/galleries/2010/fortune/1005/gallery.expensive_oil_spills.fortune/2.html 60. Exxon Valdez Oil Spill Trustee Council, “Questions and Answers.” http://www.evostc. state.ak.us/facts/qanda.cfm (accessed Sept. 12, 2012) 61. Exxon Valdez Oil Spill Trustee Council, “Status of injured resources & services.” http:// www.evostc.state.ak.us/recovery/status.cfm (accessed Sept. 11, 2012); Exxon Valdez Oil Spill Trustee Council, “Questions and Answers.” http://www.evostc.state.ak.us/ facts/qanda.cfm (accessed Sept. 12, 2012); Sarah Graham, “Environmental effects of Exxon Valdez spill still being felt,” Scientific American, Dec. 19, 2003. http://www. scientificamerican.com/article.cfm?id=environmental-effects-of 62. Ewan MacAskill, “18 Years on, Exxon Valdez oil still pours into Alaskan waters,” The Guardian, Feb. 2, 2007. http://www.guardian.co.uk/business/2007/feb/02/oil. pollution; Exxon Valdez Oil Spill Trustee Council, “Lingering Oil.” http://www.evostc. state.ak.us/recovery/lingeringoil.cfm (accessed September 11, 2012). 63. Campbell Robertson and Clifford Krauss, “Gulf spill is the largest of its kind, scientists say,” The New York Times, August 2, 2010. http://www.nytimes. com/2010/08/03/us/03spill.html?_r=2&fta=y 64. Jim Polson, “BP oil still ashore one year after end of Gulf oil spill,” Bloomberg News, July 15, 2011. http://www.bloomberg.com/news/2011-07-15/bp-oil-still-washingashore-one-year-after-end-of-gulf-spill.html 65. Justin Gillis and Campbell Robertson, “On the surface, Gulf oil spill is vanishing fast; concerns stay,” The New York Times, July 27, 2010. http://www.nytimes. com/2010/07/28/us/28spill.html This natural capacity includes naturally present oileating bacteria, as well as warm surface-water temperatures and winds that may have helped to evaporate as much as 40 per cent of the surface oil. Ibid. 66. See, e.g., Associated Press, “Ga. Scientists: Gulf oil not gone, 80 pct remains,” Boston Globe, Aug. 16, 2010. http://www.boston.com/news/science/ articles/2010/08/16/ga_scientists_gulf_oil_not_gone_80_pct_remains/; Richard Camilli, Christopher M. Reddy, Dana R. Yoerger, Benjamin A. S. Van Mooy, Michael V. Jakuba, James C. Kinsey, Cameron P. McIntyre, Sean P. Sylva and James V. Maloney, “Tracking hydrocarbon plume transport and biodegradation at Deepwater Horizon,” 330 Science 6001, 201-204. 67. U.S. Fish and Wildlife Service, “Consolidated Fish and Wildlife Collection Report,” news release, Nov. 2., 2010. http://www.restorethegulf.gov/release/2010/11/02/ consolidated-fish-and-wildlife-collection-report-nov-2-2010; CBS News, “Gulf oil spill, by the numbers,” May 25, 2010. http://www.cbsnews.com/stories/2010/04/30/ national/main6447428.shtml 68. Bryan Walsh, “With oil spill (and blame) spreading, Obama will visit Gulf,” Time, May 1, 2010. http://www.time.com/time/health/article/0,8599,1986323,00.html

69. Oxford Economics, Potential Impact of the Gulf Oil Spill on Tourism (U.S. Travel Association: 2010). http://www.ustravel.org/sites/default/files/page/2009/11/Gulf_Oil_ Spill_Analysis_Oxford_Economics_710.pdf 70. Reuters, “Oil spill could cost BP over $4.6 billion: report.” May 2, 2010. http://www. reuters.com/article/2010/05/02/us-bp-idUSTRE64114M20100502?feedType=RSS& feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campa ign=Feed%3A+reuters%2FbusinessNews+%28News+%2F+US+%2F+Business+Ne ws%29 71. Associated Press, “8 months later, BP’s Gulf oil spill cleanup costs appear manageable,” Dec. 29, 2010. http://blog.al.com/wire/2010/12/bp_gulf_oil_spill_ costs.html; Dan Milmo, “BP’s Deepwater Horizon costs rise $847m,” The Guardian, July 31, 2012. http://www.guardian.co.uk/business/2012/jul/31/bp-deepwaterhorizon-costs 72. Enbridge Inc., Volume 8A: Overview and General Information—Marine Transportation Section 4: Considerations Due to Project-Related Additional Traffic (2010). 73. FORCE Technology, Maneuvering Study of Escorted Tankers to and from Kitimat, Part I: Executive Summary, 2011. ceaa.gc.ca/050/documents_staticpost/ cearref_21799/2559/exsummary_and_mainreport.pdf 74. Government of British Columbia, Requirements for British Columbia to Consider Support for Heavy Oil Pipelines (2012), 9. http://www.env.gov.bc.ca/main/docs/2012/ TechnicalAnalysis-HeavyOilPipeline_120723.pdf 75. Environment Canada, Marine Weather Hazards Manual: A Guide to Local Forecasts and Conditions, 2nd Ed., 1990. 76. Canada Department of Fisheries and Oceans, “Oceanography of the British Columbia Coast,” Canadian Special Publication of Fisheries and Aquatic Sciences (1981). dfo-mpo.gc.ca/Library/487-19.pdf; Enbridge Inc., Volume 8A: Overview and General Information—Marine Transportation Section 4: Considerations Due to Project-Related Additional Traffic (2010). 77. Anthony Swift, Nathan Lemphers, Susan Casey-Lefkowitz, Katie Terhune and Danielle Droitsch, Pipeline and Tanker Trouble (2011), 4, 18. http://www.pembina.org/ pub/2289 78. Ricardo Foschi, The Enbridge Submission to the National Energy Board for the Northern Gateway Pipeline Project: A Critique, Aug. 21, 2012, 23. www.ceaa. gc.ca/050/documents/p21799/81128E.pdf 79. Ibid. 80. Government of British Columbia, Requirements for British Columbia to Consider Support for Heavy Oil Pipelines (2012), 9. http://www.env.gov.bc.ca/main/docs/2012/ TechnicalAnalysis-HeavyOilPipeline_120723.pdf 81. Ibid. 82. Anthony Swift, Nathan Lemphers, Susan Casey-Lefkowitz, Katie Terhune and Danielle Droitsch, Pipeline and Tanker Trouble (2011), 19. http://www.pembina.org/pub/2289 83. Ibid., 14-15. Government of British Columbia, Requirements for British Columbia to Consider Support for Heavy Oil Pipelines (2012), 10. http://www.env.gov.bc.ca/main/ docs/2012/TechnicalAnalysis-HeavyOilPipeline_120723.pdf. 84. Commission of the Environment and Sustainable Development (CESD). Report to the House of Commons. Fall 2010, Chapter 1. 85. Anne McIlroy and Ian Bailey, “Cuts to Canadian Coast Guard raise safety fears”, The Globe and Mail, May 17, 2012. http://www.theglobeandmail.com/news/politics/cutsto-canadian-coast-guard-raise-safety-fears/article4186600/ 86. Living Oceans Society, Who pays for oil tanker spills in Canadian waters? (2011). http://www.livingoceans.org/initiatives/tankers/reports-publications 87. Matthew Boulton, Financial Vulnerability Assessment: Who Would Pay for Oil Tanker Spills Associated with the Northern Gateway Pipeline?, (University of Victoria, Environmental Law Centre: 2010), 3-4. http://www.livingoceans.org/initiatives/tankers/

reports-publications; Transport Canada, “Compensating for Response Costs.” http:// www.tc.gc.ca/eng/marinesafety/oep-ers-regime-compensation-314.htm (accessed September 11, 2012) 88. Enbridge Northern Gateway Pipelines, Inc., Section 52 Application, Volume 2, Section 1.6 Project Need and the Public Interest (2010), 1-13. 89. Robyn Allan, “An Economic Assessment of Northern Gateway,” submitted to the National Energy Board Joint Review Board (2012). http://www.robynallan. com/2012/02/04/economic-assessment-of-northern-gateway/ 90. Robyn Allan, “An Economic Assessment of Northern Gateway,” submitted to the National Energy Board Joint Review Board (2012), 10. http://www.robynallan. com/2012/02/04/economic-assessment-of-northern-gateway/ 91. Mike de Souza, “Majority of tar sands ownership and profits are foreign, says analysis,” Postmedia News, May 10, 2012. http://www.canada.com/business/ Majority+tar sands+ownership+profits+foreign+says+analysis/ 6599547/story.html 92. ForestEthics Advocacy, “Written Evidence of Forest Ethics in the Matter of Enbridge Northern Gateway Project Joint Review Panel,” December 11, 2011, Hearing Order OH-4-2011, 32. http://www.ecojustice.ca/files/ngp-forestethics-written-evidencedec-21-2011 93. Environment Canada, Canada’s Emissions Trends (2011), 25. http://www.ec.gc.ca/ Publications/E197D5E7-1AE3-4A06-B4FC-CB74EAAAA60F%5CCanadasEmissionsT rends.pdf 94. Ibid., 22. 95. Nathan Vanderklippe, “Oil sands expected to undo carbon cuts,” The Globe and Mail, August 7, 2011. http://www.theglobeandmail.com/report-on-business/oil-sandsexpected-to-undo-carbon-cuts/article2122227/ 96. Environment Canada, Canada’s Emissions Trends (2011), 11-12. http://www.ec.gc.ca/ Publications/E197D5E7-1AE3-4A06-B4FC-CB74EAAAA60F%5CCanadasEmissionsT rends.pdf 97. Matthew Bramley, Pierre Sadik and Dale Marshall, Climate Leadership, Economic Propserity (2009), 3. http://www.pembina.org/pub/1909 98. Institute for Catastrophic Loss Reduction, Telling the Weather Story (Insurance Bureau of Canada: 2012), 10.6. http://www.ibc.ca/en/natural_disasters/documents/mcbean_ report.pdf 99. National Round Table on the Environment and the Economy, Paying the Price: The Economic Impacts of Climate Change for Canada (Government of Canada: 2011). http://nrtee-trnee.ca/wp-content/uploads/2011/09/paying-the-price.pdf 100. Ibid. 101. Ray Grigg, “True carbon costs and carbon tax,” Courrier-Islander, August 17, 2012. http://www.canada.com/True+Carbon+Costs+Carbon/7104288/story.html 102. Columbia Basin Trust, “Local Climate Change Impacts.” http://www.cbt.org/Initiatives/ Climate_Change/?Local_Impacts (accessed September 11, 2012) 103. Nicholas Heap, Hot properties: How global warming could transform B.C.’s real estate sector (David Suzuki Foundation: 2007), 4. Available at: http://www.davidsuzuki.org/ publications/reports/2007/hot-properties-how-global-warming-could-transform-bcsreal-estate-sector/ 104. Ray Grigg, “True carbon costs and carbon tax,” Courrier-Islander, Aug 17, 2012. http://www.canada.com/True+Carbon+Costs+Carbon/7104288/story.html 105. Ibid. 106. Ibid.

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