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Premier Clark Played by Oil by Rail Push?

Why are she and Alberta's Redford talking about risky rail transport as a pipeline alternative?

By Robyn Allan 4 Nov 2013 |

Robyn Allan is an economist and the former CEO of the Insurance Corporation of British Columbia. She was an expert witness at the National Energy Board Northern Gateway hearings.

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Oil by rail image via Shutterstock.

The best way to weaken resolve is to ceaselessly play on fundamental fears. The most effective way to reclaim resolve is to understand how you are being played.

It probably wouldn't be worth addressing the latest pro-bitumen fear-mongering tactic if the topic hadn't wormed its way onto the agenda for Tuesday's meeting between British Columbia Premier Christy Clark and Alberta Premier Alison Redford.

Their plan is to discuss ways and means of expanding energy exports. As if lifted right out of the Fraser Institute's playbook, the transportation section of the agenda claims that oil by rail is a viable alternative to pipelines, and warns: "If pipelines are not developed, rail will step into the void to deliver bitumen to the West Coast."

After the B.C. government rejected the Northern Gateway pipeline project on the grounds that heavy oil terrestrial and marine transport risk is too great, there was suddenly a joint announcement by B.C. and Alberta suggesting bitumen be cleared for transport by rail.

But British Columbians are right to be skeptical of transport of oil by rail. Beyond recent and tragic rail spills, such transport does not trigger an environmental assessment. So what message are they being sent with this announcement?

The sudden appearance of bitumen by rail granted the same weight as bitumen by pipelines feels like a set up to disempower British Columbians and to push pipelines through. Pipeline proponents aren't able to address the inherent spill risk of pipelines, so they threaten the public with what they say is an even more dangerous alternative.

It's a classic Big Oil bully tactic. If companies can't build and operate pipelines safe enough to pass muster, they are going to find something more dangerous out of spite.

It's not about what is safest

First of all, let's deal with safety. The transport of crude oil -- not just bitumen but any crude -- by any method, whether pipeline, rail, truck, barge or tanker, is dangerous. None is inherently safe.

Risk is a function of frequency multiplied by consequence. With rail transport, spill frequency is the major problem. With pipelines, the major problem is not how often spills happen -- although they happen far too often -- but the larger volumes of oil released, which results in more severe consequences.

The real choice is not which is safest, but whether our governments will require both rail and pipeline industries to develop the proven procedures, equipment, technology and capacity necessary to avoid or limit damage from an accident or malfunction before pipelines are built and rail line capacity is increased.

No matter how Alberta's oil might come to B.C.'s coast, it still has to be loaded onto oil tankers and moved through B.C.'s marine waters. Transport Canada confirmed at the Northern Gateway Joint Review Panel hearings that only 10 to 15 per cent of oil spilled in a confined channel or open water area is ever recovered.

Furthermore, if the provincial government believes bitumen transport is unsafe -- whether by pipeline, rail or tanker -- it should remember that it, not the federal government, has jurisdiction.

B.C. has the power to refuse marine transport over the "seabed of the Straight of Georgia, Juan de Fuca and Queen Charlotte Sound -- Johnstone Straight, and the coastal seabed between many major headlands along the outer coast." A 1984 Supreme Court decision ruled that the 1866 British Parliament decision to define B.C.'s borders as the Pacific Ocean gives the province authority over the inland marine waterways.

So despite guarantees Big Oil thinks it has from the Harper government, tankers won't be able to reach marine facilities without B.C.'s say-so.

'Filling the void'?

Then there's the notion of "filling the void" of bitumen transport by rail should pipelines be rejected. Infrastructure and other capital considerations, along with sheer volume, means there is no way rail can step in to replace the intended pipeline capacity through the province. Trans Mountain and Northern Gateway's increase in diluted bitumen volume is proposed to be around 1.1 million barrels a day.

In 2012, CN transported somewhere around 50,000 barrels a day across its entire system. Doubling capacity in 2013 takes it to less than 10 per cent of the "void," but as Mark Hallman, director of communications at CN explains, "There is no crude oil moved by CN to B.C.'s ports or terminals for export and there are no plans to do so." As for CP, it doesn't have a rail line to northern B.C. and doesn't ship any crude oil along its line to Vancouver for export, according to spokesman Ed Greenberg.

That's not to say that rail doesn't have a limited role as a complementary mode of transport for heavy oil. There are sound business reasons why it would, because of the unique properties of bitumen -- the same properties that make it more dangerous.

Because bitumen is so dense, like tar, it requires expensive diluent like condensate to allow it to flow down a pipeline. Moving bitumen by heated rail cars requires almost no condensate, because it doesn't need to flow. This improves transport economics, particularly if condensate is not imported.

Clark, you're being played

While media organizations tell us that public resistance to pipelines make rail the new rage, Enbridge tells investors a different story.

At its conference Oct. 1, Enbridge said rail in the Bakken is on the rise to a large extent because pipeline shipper arrangements have moved from annual negotiated toll rates to long-term take-or-pay contracts -- the same contractual arrangements contemplated by Northern Gateway. Smaller producers "haven't been anxious to sign-up for long-term take-or-pay shipping," because they don't have the balance sheets to support these commitments.

The oil-by-rail argument is a false trade-off cleverly crafted to deflect our focus. Most British Columbians and First Nations are not so easily fooled.

Premier Clark, you are being played. Please, regain your resolve.  [Tyee]

Read more: BC Politics, Environment

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