Citizen Action Monitor

Ontario Energy Board’s expert reports on Energy East project

Council of Canadians give OEB reports a mixed review

No 1230 Posted by fw, January 14, 2015

From the Ontario Energy Board’s website, this explanation of the Consultation and Review process —

To better understand the four areas of potential impact, the OEB has retained prominent technical advisors to provide advice to the OEB on the potential risks and benefits of the proposed Energy East Pipeline for Ontario. These technical advisors will work closely together to ensure a full understanding of the areas of potential impact, particularly where they are interrelated (e.g. pipeline safety and environmental considerations). Their reports will be publicly available as part of the province wide consultation and will include analysis and input on the following topics:

  • Pipeline engineering and safety
  • Environmental and socio-economic considerations
  • Natural gas pricing and supply

The technical advisors hired by the OEB will each write two reports – a Background and a Final Report – outlining the potential impacts of the proposed project. These reports together with input received from the public, First Nations and Métis, and stakeholders will be considered by the OEB in preparation of its report to the Minister.

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The OEB’s website offers a veritable treasure trove of documents that will appeal to activist opponents of TransCanada’s Energy East project. For most of us, it will be challenge enough to wade through a lengthy Table of Contents.

In this post, I have taken the liberty of revising parts of the Council’s first look at four key OEB documents. To read the original article, click on the following linked title.

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The good, the bad and the ugly: OEB expert reports on Energy East by Andrea Harden-Donahue, rabble / Council of Canadians Blog, January 14, 2015

Preliminary assessments of four reports commissioned by the Ontario Energy Board (OEB) from technical advisers are now available on the OEB’s website.

There, you can find the presentations on economic impacts, pipeline safety, climate change and natural environment impacts. To note, we were expecting a report on the impacts to Ontario’s natural gas supply and cost. I’m assuming this will come shortly, it is obviously the subject of heated debate.

These presentations, and the broader consultation respond to four impacts the OEB was asked to consider by the provincial government, as well as the more recently announced conditions alongside the Quebec government. Ultimately these reports and the consultation will be used for a report which will inform the provincial government’s intervention in the National Energy Board Energy East pipeline review.

Economic impacts

The Mowat Centre does a good job debunking TransCanada’s economic promises for Ontario. This is consistent with the recent report, Economics of Transporting and Processing Tar Sands Crudes in Quebec. In particular, it focuses on the benefits and costs to Quebec of these activities, addressing the widespread uncertainty and disagreement as to how Quebec could be affected by crudes from the tar sands.

In addition, the Mowat Centre’s summary findings are consistent with the Cornell University report, Pipe dreams? Jobs Gained, Jobs Lost by the Construction of Keystone XL.

TransCanada used modeling that likely inflated economic benefits, while leaving out key costs and externalities such as the introduction of climate pricing (see today’s announcement in Ontario) and lower demand for fossil fuels over the life of the pipeline (we better hope to see a change in the 35 year span of this proposed pipe!).

The Mowat Centre analysis also finds local benefits are likely to be small, especially in northern Ontario where the converted portion will only yield municipal property tax revenue as a result of new construction, like pump stations. This means communities like Dryden, set to host a pump station, adding 1 per cent to their property tax revenue. On jobs, the report finds, “… there will be 200 direct annual jobs in Ontario, approximately 0.01-0.02 per cent of local labour force.” An important finding being, “it is not clear if this would involve the transfer of workers from the Canadian Mainline [pipeline set for conversion] If it would, then employment growth would be lower.”

Pipeline safety

The pipeline safety report finds approximately 99 kms of the pipeline set for conversion are polyethylene tape wrapped and susceptible to stress corrosion cracking. This is significant. The pipeline rupture causing the Kalamazoo disaster was caused by this exact type of tape disbanding, leading to a crack and devastating rupture that contaminated close to 60 kilometres of the Kalamazoo River.

So watch out folks living in the Ignace, Matrin, Nipigon and Jellicoe areas of the pipeline path.  The prospect of a pipeline spill in Nipigon is particularly frightening.  The pipeline crosses the Nipigon River around 15 kilometres upstream of Lake Superior.

As noted in the report we prepared, Energy East: Where Oil Meets Water, in 1990, a large section of the Nipigon River’s bank failed at the point where the pipeline crosses the river, leaving a 75 metre stretch of it hanging in mid-air with no support. If the pipeline had been full of oil at the time instead of natural gas, it would have ruptured from the sheer weight of the crude after an unpredicted landslide.

The pipeline safety report says that even if leak detection and shut down happens perfectly, 22 minutes could elapse before pumping stops. At its full capacity of 1.1 million barrels per day, over 2.6 million litres of oil could be pumped out in addition to “draindown” of oil remaining in the pipeline. So a perfect response from TransCanada could still lead to the worst oil spill ever in Canada.

It’s worth noting that TransCanada’s leak detection record on the Mainline pipeline system is pretty poor. Our review of Transportation and Safety Board reports on mainline pipeline ruptures in Council of Canadians’ report, Energy East: When the Pipeline Spills, reveals that only one of the eight ruptures between 1991-2013 was discovered by a leak detection system. The rest were discovered by staff, nearby residents and an OPP officer. It took anywhere between 10 minutes to 2.5 hours from the time of the rupture to when the gas supply was shut off. In one case it took a total of six hours to fully shut off the flow of gas.

Just recently, the American pipeline regulator, Pipeline and Hazardous Materials Safety Administration, says that changing the product in a pipeline can have a “significant impact” on pipeline safety and integrity.

Natural environment

The Ontario Energy Board’s preliminary assessment finds TransCanada application is incomplete, allowing only a high level assessment until TransCanada submits more information. This may sound surprising after TransCanada’s media hullabaloo about submitting such an extensive 30,000 page report.

The assessment affirms that the drinking water impacts — a key concern — is incomplete. That means the report only assessed the impacts of the 28 new pump stations, 2 river crossings and pipeline operations and maintenance. Obviously, a lot is missing! In fact, the report notes information, “on surface water intakes and springs on 95 per cent of the route is absent.”

The natural environment section notes that TransCanada will be filing more information in 2015. I wonder how this will figure into the Ontario Energy Board and National Energy Board consultations.

Among the suggestions of the report are: an alternative route that should be considered that would see the pipeline moved away from the St Lawrence River; “rerouting the pipeline where too close to sensitive water resources or justifying why rerouting is not necessary to protect sensitive water resources”; and “Preparing source water protection plans for high profile areas including Trout Lake, the Rideau River and Nepean and Oxford Aquifers.”

Also highlighted are the lack of detail on the impacts or mitigation for the converted pipeline crossing 8 Provincial Parks, 4 Conservation Reserves and 4 Conservation Areas, and the lack of detailed emergency response plans for spills on agricultural land.

Climate change

In short, the climate change presentation is a huge disappointment.  It appears Navius, the company that prepared the research, makes assumptions that are far too lenient and favourable for industry. I look forward to the coming days when a more detailed analysis of this topic appears. In the meantime, I’m certain some of the assumptions and questions will include the following —

  • Equating an emissions increase in Canada with a decline in emissions in the rest of the world. I’d like to see how the modeling gets at this conclusion.
  • It also appears to assume Energy East will lead to greater refining of bitumen in Canada, yet the refineries along the Energy East path do not have the capacity to process diluted bitumen.
  • Then there is a key assumption revealed in the final page of the report in response to Pembina Institute’s analysis. Pembina’s report found the pipeline would lead to a far greater climate pollution impact, equivalent to adding 7 million cars to Canada’s road.
  • Navius’ research assumes, “oil can be transported by rail if it is economic. Therefore the pipeline may be partially filled with oil that would have been extracted anyway and shipped by rail.” It goes on to refer to producers estimating 1,000 thousand barrels per day of rail shipping capacity, noting the context of Energy East adding 1,100 thousand barrels per day capacity. That’s a big assumption. I don’t see how to settle this up with the accounts I’ve read of industry’s ambitions for expansion in the tar sands and clear indications of pursuing both pipeline and rail capacity increases, as well as the growing context of dropping oil prices making oil by rail a less likely option purely from an economic sense (without even getting into the clear dangers for communities along the way).

None of the reports mention diluted bitumen. None. I find this surprising after having personally asked the question of whether the risks of a diluted bitumen spill would be included in the expert reports at an OEB stakeholders meeting, and having the clear impression that this would be the case.

Despite TransCanada’s and the Canadian Association of Petroleum Producers assurances, diluted bitumen is unlike conventional oil. It has proven to sink when spilled in water. Yes, TransCanada will highlight that any oil will sink if left too long in water. Well sure, of course that’s true. But this says little about what happened in Kalamazoo Michigan, costing over $1 billion, leaving submerged oil on the riverbed five years later. Or the findings of a recent federal study demonstrating that when dilbit is mixed with sediment in salt water it forms “tar balls” and sinks (there is a lot more to say on this front that should be addressed in at least the natural environment or pipeline safety reports!).

Finally, where is the seventh principle?

The principles noted on the Ontario Energy Board’s website are six instead of the original seven. The principle “take into account the contribution to greenhouse gas emissions,” initially announced by the Ontario and Quebec Premiers, is nowhere to be seen.

Contact Ontario Premier Wynne

See Council of Canadians’ Stay strong on Energy East, Premier Wynne – “Premier Kathleen Wynne made a mistake. You can call her out on it.” Click on the preceding link to access the Premier’s phone number and email address, along with talking points and a sample email message.

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