There are many sides to the story of the Trans Mountain Expansion project (TMX) and our federal government’s offer to purchase the existing Trans Mountain pipeline — and related assets.
There is the need for Alberta, especially in these times of uncertainty around capricious US tariffs, to be able to export their resources to non-US markets; there are hundreds of thousands of Canadians, both in Alberta and elsewhere, who depend on the oil patch to pay their rent and feed their families. And the fact remains that our economy still runs on fossil fuels.
There is also real concern over climate change and meeting our Paris commitments, to which it should be emphasized that as part and parcel of approving TMX, Alberta committed to our Pan-Canadian Framework on Climate Change, which includes:
- Putting a price on GHG emissions;
- Ending pollution from coal-generated electricity by 2030;
- Developing more renewable energy;
- Reducing methane emissions by 45% by 2025.
They also, significantly, agreed to cap oil sands GHG emissions at 100 megatonnes/year
There are concerns, as well, about indigenous consent, and indigenous communities themselves are not of one mind on this; some are on board, some are not, and there are important questions that need to have their day in court.
This is one of those important questions that has indeed had its day in court.
This Federal Court of Appeal decision (2018-08-30) sets aside the federal approval for the expansion project, citing serious deficiencies in the NEB process itself, in Crown v. Indigenous consultations, and particularly including failure of the NEB adequately to consider factors relating to marine transport.
“… Canada failed to fulfil the duty to consult owed to Indigenous peoples.
“… most of the flaws asserted against the Board’s process and findings are without merit. However, the Board made one critical error. The Board unjustifiably defined the scope of the Project under review not to include Project-related tanker traffic. The unjustified exclusion of marine shipping from the scope of the Project led to successive, unacceptable deficiencies in the Board’s report and recommendations…”
The government had hoped to fill in the gaps in the NEB process, as well as to avoid the consultation deficiency noted in the court’s previous decision on the Northern Gateway project, by means of a special Ministerial panel that conducted additional hearings. In the end, however, the court considered that this was not enough.
This decision has the potential to quash the expansion project entirely, but, more likely, it will result in project delays while the noted deficiencies are properly addressed. And indeed, therein lies an opportunity to improve and clarify the kind of respectful discussion and process that must prevail for such projects.
This decision does NOT, in any case, affect the existing Trans Mountain and Puget Sound pipelines or related facilities, which continue on the whole as a viable, profitable business enterprise.
Following the NEB Reconsideration report, and following extensive further consultation with indigenous groups, the federal Cabinet in June 2019 again approved this project.
The federal approval was again challenged, and this time rejected in the BC Court of Appeals, allowing the approval to stand.
The appellants then sought leave to appeal this decision to the Supreme Court of Canada, which declined the request — the appeals court decision prevails.
Then there is grave concern about protecting our BC coastal waters, and a lot of work has been done here: we know how dilbit behaves in water; we know how to clean it up; and we know that in over 60 years of operation there has not been a single cargo spill from Trans Mountain tankers. This is an exemplary safety record that we are further shoring up by doubling clean-up capability, creating additional bases for faster response, and requiring double-hulled tankers and double tethered-tug escorts, for example.
Transitioning to a New Economy
All of this was factored into the TMX decision as well as the offer to purchase.
Alberta is, even now, as are we all, moving from a fossil-fuel economy into a sustainable 21st century green economy. But it takes time, and if you look at the millions of fossil-fuel vehicles: cars, trucks, buses, heavy equipment, trains, ships, and planes daily traversing our land, sea, and sky, and imagine simply stopping them all tomorrow, cold-turkey, you will understand that as we develop this new economy we must for a while still feed these dinosaurs of the old century.
TMX Business Risk
Kinder Morgan Canada Limited (KML) was originally willing to put up their $7.4 billion to build TMX — against the normal risks of a large construction project — until the BC government chose to challenge federal jurisdiction here. This introduced a huge new and untenable project risk. As KML Chairman and CEO Steve Kean noted: “a company cannot litigate its way to an in-service pipeline amidst jurisdictional differences between governments.”
Update: This matter was heard by the BC Court of Appeal (BCCA), which ruled against BC’s challenge to federal jurisdiction. The Supreme Court of Canada subsequently declined their request for leave to appeal — meaning that the BCCA decision stands, and maintaining exclusive federal jurisdiction here.
While we offered to protect them against this unusual risk, with the construction season hard upon us we also offered to buy them out, subject to immediate resumption of construction. We do not want to be in the pipeline business, but it is key to retaining support in our overall climate strategy that this project proceeds, and succeeds.
The Trans Mountain pipeline has been well maintained and well operated throughout its 60-plus years. It is a profitable going concern with more business than it can handle, which will prevail well into the future even as we work to phase-out fossil fuels. These assets, upgraded over the years, have decades of remaining useful life, and, including engineering and development pertaining to the expansion, have been carefully evaluated by experts as a good buy at the negotiated price.
This is not an “expense,” where money is spent never to be seen again. It is an investment in productive assets that will return value to Canada in many ways for many years, and which we will recover in full measure when we divest, probably after the jurisdictional dispute is resolved.
It is also not “instead” of things like investments in housing or indigenous water systems and the like, but “in addition” to these and to our many other on-going commitments in so many areas.
I recognize that not everyone agrees with this decision, but we remain committed to working with the provinces, territories, and indigenous peoples to find a balance that ensures a strong economy while taking leadership on the environment.
- NEB: Release of Reconsideration Report; 2019-02-22
- NEB: TMX Reconsideration Report; 2019-02-22
- NEB: Update re Federal Appeal Court Decision; 2018-08-31
- Tsleil-Waututh Nation v. Canada; 2018-08-30
- Citizen’s Guide to Tanker Safety and Spill Response on BC’s South Coast
- Clearseas: Oil Tankers in Canadian Waters
- WCMRC: Can spill response organizations clean up diluted bitumen?
- Government of Canada Activities Related to Spill Management
General Risk Analysis and Intended Methods of Reducing Risks; Det Norske Veritas (U.S.A.), Inc.;
NRCan: Interim Principles for Review of Energy Projects;
NRCan: Ministerial Panel Report;
- Fed/BC: Joint Consultation and Accommodation Report;
NEB: Trans Mountain Expansion Report;
- NEB: Website — Trans Mountain Expansion