Trans Mountain pipeline expansion questionable due to low oil prices

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Trans Mountain pipeline expansion questionable due to low oil prices




If oil prices remain low over the long term the Kinder Morgan Trans Mountain pipeline's economic viability could be threatened. 



As the National Energy Board (NEB) gears up to hear final arguments on Aug. 24 into its embattled review of the proposed Kinder Morgan Trans Mountain Pipeline expansion, opposition is mounting as the price of oil drops, making the project less attractive.

Local economists say that, barring a major war in the Middle East directly impacting top oil producers like Saudi Arabia, Canada’s oilsands might be in for a prolonged period of lower crude prices. ...

Kinder Morgan hopes to triple the bitumen-carrying capacity of the Trans Mountain line by laying almost 1,000 kilometres of new pipe between Edmonton and Metro Vancouver in the $5.4-billion project, increasing the number of tankers in Burrard Inlet to 34 from the current five per month. However, crude oil prices, which stood at about $92 US a barrel in September 2014, have dropped to about $45 a barrel this week.

James Brander, professor of strategy and business economics at the University of B.C.’s Sauder School of Business, agreed that lower prices could make the pipeline less attractive. “However, what really matters is the long run trajectory in oil prices, not short run changes in price. After all, oil would not start flowing in the new pipeline until 2018 at the earliest, and probably later.” ...

The NDP submitted its letter of comment to the board to outline concerns with the risks of the project and flaws in the review.

The strongly-worded letter signed by leader John Horgan and environment critic Spencer Chandra Herbert details four major concerns with the NEB process, including that it lacks the public’s confidence, doesn’t consider climate change, hasn’t required Kinder Morgan to disclose its emergency response plans and failed to ensure First Nations were on board.

Burnaby sent a letter to the NEB refusing to provide extra policing services for the upcoming Trans Mountain hearings in September. The board had asked for seven officers and one supervisor. ...

Meanwhile, the Conservative government has named Steven Kelly — who wrote an economic argument for the pipeline — to the NEB on Friday, trumpeting his “wealth of experience” in a news release.



my post is missing


¨If oil prices remain low over the long term the Kinder Morgan Trans Mountain pipeline's economic viability could be threatened¨

Low oil prices is just one of the threats to Kinder Morgan and the entire capital intensive expensive oil industry, based on bubble finances.

Kinder Morgan I read recently holds huge debts, and as expected the US Fed will be forced to raise its base interest rates to its preferential (sic) corporate customers?

And with huge financial instruments coming due for renegotiation within moneths? And possibly at junk bond interest rates?


i heard this morning  there were 35 interests groups  who walked away from the table because of unfair bias towards KM


quizzical wrote:

i heard this morning  there were 35 interests groups  who walked away from the table because of unfair bias towards KM

Here are some details on why they walked away. 


The National Energy Board has issued 145 draft conditions that Kinder Morgan must meet if its Trans Mountain pipeline expansion is approved, including increased consultation with First Nations and upgrading its emergency response.

The sweeping requirements were released Wednesday, the same day 35 participants in the board's review said they were dropping out of a "biased" and "unfair" process. ...

Rueben George of the Tsleil-Waututh Nation said more consultation does nothing to mitigate the risks to his people or their land along the Burrard Inlet in North Vancouver. "It's a joke," said George, a band member who runs an initiative opposing the pipeline. "It doesn't address our concerns that we brought up."

An independent review released by the First Nation in May concluded that a major spill could kill as many as 500,000 birds and foul up to 25 kilometres of shoreline. The Tsleil-Waututh then voted to oppose the pipeline. ...

Earlier Wednesday, the Wilderness Committee and the Canadian Parks and Wilderness Society, along with 33 citizens, sent a letter to the board withdrawing from the review because climate change was not considered and citizens wanting to participate were shut out. "It's a sad day. We do not like to fly in the face of regulatory processes," said Wilderness Committee climate campaigner Eoin Madden. "But we can't abide by the system anymore. It's too flawed."

Peter Wood, terrestrial campaigns director for Canadian Parks and Wilderness Society, said the group's voice would best be heard outside the review. "The NEB will no longer be able to cite our participation as an example of legitimacy or buy-in by the environmental community," he said.

Two other high-profile interveners had already withdrawn. Economist Robyn Allan left the "rigged" process in May, while former BC Hydro chief executive Marc Eliesen called it a "farce" when he pulled out last year.










The entire Trans Mountain pipeline project has been questionable from the beginning.


Kinder Morgan Oversells Benefits of Trans Mountain Pipeline, Underplays Costs

Kinder Morgan has significantly overstated the benefits of its controversial Trans Mountain pipeline expansion proposal while vastly understating risks associated with increasing the flow of oil to Metro Vancouver.

That’s the conclusion of a new economic analysis by Simon Fraser University and The Goodman Group Ltd. which also recommended that the proposed expansion be rejected as it is neither in the economic nor public interest of B.C. and Metro Vancouver.

“The jobs created are nowhere near the number claimed by Kinder Morgan and the costs are grossly underestimated when the risks of a major spill, particularly one occurring in the Vancouver area, are factored in,” said Doug McArthur, director of SFU’s Graduate School of Public Policy, which co-authored the report.

“The whole project is highly questionable from a public policy point of view,” McArthur added.

The report — Economic Costs and Benefits of the Trans Mountain Expansion Project (TMX) for BC and Metro Vancouver — said Kinder Morgan maintains building the $5.4 billion expansion project would create 36,000 person-years of short-term employment in B.C.

The analysis, however, shows it would only create 12,000 person-years, or less, of employment. ...

The analysis found, however, potential costs for a major rupture in a sensitive but non-urban setting could start at $1 billion (USD). Under a worst-case scenario involving a catastrophic rupture in an urban setting, costs could escalate to as much as $2 billion to $5 billion (USD). ...

The report also outlined a major profit disparity between the province and producers when it comes to the pipeline’s financial benefits. B.C. would receive less than 2 per cent of the increased revenues paid to tar sands producers who will retain 68 per cent of the new revenues.

“The lion’s share of the benefits flows to [Kinder Morgan and Trans Mountain], the Alberta tar sands producers and Alberta, whereas the citizens of B.C., and Metro Vancouver in particular, will bear the lion’s share of the risks and receive very small benefits,” the report said.





Both the Mayors of Vancouver and Burnaby have stated strong opposition to Trans Mountain, making the pipeline even more questionable. 


Mayor Gregor Robertson says new evidence proves the expansion of Kinder Morgan's Trans Mountain pipeline presents a grave threat to the City of Vancouver's health, economy and environment.

The city commissioned expert reports on the potential impacts of the $5.4-billion proposal and the findings were presented to council on Wednesday.

"Today we heard overwhelming evidence that the Kinder Morgan pipeline proposal and the oil tankers associated with it are incredibly disastrous for Vancouver," said Robertson outside council chambers after the meeting. ...

A Metro Vancouver-commissioned report on health and air quality concluded a spill could expose up to a million people to toxic benzene fumes and kill up to 100,000 birds.

The report said benzene, a component of diluted bitumen, can cause headaches, dizziness, nausea, respiratory problems, coma and even death. People on the Stanley Park seawall next to the water could suffer irreversible health effects, it said. ...

Another report found that Vancouver's "green brand" is worth about $31 billion and it's economy could suffer a $1.2 billion loss in the event of such a disaster.



The mayor of Burnaby has said he is prepared to get arrested and see his career in politics come to an end if that’s what it takes to stop a proposed expansion of the Kinder Morgan Trans Mountain pipeline. ...

Corrigan was also critical of the National Energy Board (NEB), the federal body conducting a review of the project. (One day earlier, an expert intervener for the NEB withdrew from the Trans Mountain review process with a critique that described it as “a parochial board steeped in Calgary petro culture, run by corporate interests”.)



thank you for all this jerrym.

it's pretty much fait accompli here in Transmountain heartland and its refreshing to see and hear people care. they are all for it here and all the way to 'loops.

the feds and the prov have been pouring money in revitalizing infrastructure and building community capacity along the route.

there's no doubt in Transmountains mind it's a go. they've even allocated  the community's residual 'benefit.'



That's an interesting comment, quizzical. I find the same here (just a bit north of you) with the proposed LNG pipelines. As far as the pipeline companies are concerned, it's a go, and they have the appearance of getting things in motion, putting out tenders, and all the community is a-buzz. Meanwhile, we know perfectly well that no company has yet signed on to build a plant, nor have all the FNs signed on, so there's still nothing to build the pipelines to.

It seems to be an industry strategy to keep things in motion, have everyone believing in it, possibly even getting shovels in the ground, even though final decisions from numerous sources are still pending. They're doing this with Site C dam as well. It's part psychological warfare ("This is already happening, don't try to stop it") and part magical thinking ("Build it and they will come").


i know it's just matter of fact it's happening and believe everyone will accept it. solid wall belief even.

maybe they think if they get the pipelines in the ground and no LNG plants happen, they can always use them to ship water to waiting tankers, as we keep selling off our rights to our own water systems. they have to transport all the h2o somehow. it's the next commodity to be fully exploited.