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The Good, the Bad and the Ugly: OEB expert reports on Energy East

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

You can find the presentations on economic impacts, pipeline safety, climate change and natural environment impacts here (scroll down to “Part Two: Community Discussion Documents”).

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.

Here are my “Good, Bad and Ugly” tallies of the experts’ preliminary assessments.  

These reports, and the broader consultations 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 (more on this in the “ugly” section) 

Ultimately, these reports and the consultations will be used for a report that will inform the provincial government’s intervention in the National Energy Board’s Energy East pipeline review.


Economic benefits overblown

The Mowatt Centre does a good job debunking TransCanada’s economic promises for Ontario. This is consistent with the recent report on unpacking the proposed benefits of Energy East in Quebec, and TransCanada’s history of inflated job promises with the Keystone XL pipeline.

TransCanada used modelling 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!).

Their report 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, which is set to host a pump station, will add 1% to their property tax revenue. On jobs, the report finds, “… there will be 200 direct annual jobs in Ontario, approximately 0.01-0.02% 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 kilometres of the pipeline set for conversion are polyethlene tape wrapped and susceptible to stress corrosion cracking.

This is significant. The pipeline rupture in the Kalamazoo River in Michigan was caused by this exact type of tape disbanding, leading to a crack and devastating rupture that contaminated close to 60 kilometres of the waterway.

So watch out folks living in the Ignace, Martin, 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 approximately 15 kilometres upstream of Lake Superior.

As noted in this report we prepared, 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, more than 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 this report) 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.

Oh, and just recently, the American pipeline regulator PHMSA said that changing the product in a pipeline can have a “significant impact” on pipeline safety and integrity.

Natural Environment Impacts

The preliminary assessment finds TransCanada’s application incomplete, and provides only a partial 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 report affirms the assessment of drinking water impacts – a key concern – is incomplete. That means the report only assesses the impacts of the 28 new pump stations, two river crossings and pipeline operations and maintenance. Obviously, a lot is missing!

In fact, the report notes that information “on surface water intakes and springs on 95% of the route is absent.”

The report notes TransCanada will be filing more information in 2015. I wonder how this will figure into the OEB and NEB consultations?

Some of the suggestions in the report include: an alternative route 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,” “preparing source water protection plans for high profile areas including Trout Lake, the Rideau River and Nepean and Oxford Aquifers.”

The report also highlights the lack of detail on the impacts or mitigation for the converted pipeline crossing eight provincial parks, four conservation reserves and four conservation areas, as well as a lack of detailed emergency response plans for spills on agricultural land.

The Bad

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.

This will be brought up at the community consultations – again. 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, where diluted bitumen spilled in the water, costing more than $1 billion to clean up and submerged oil remains in 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 – what should be addressed in at least the natural environment or pipeline safety reports!)

The Ugly

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

Take a moment and send a letter to Ontario Premier Kathleen Wynne and let her know how you feel about the backtracking we’ve seen from the provincial government on recognizing the role Energy East would have in unleashing an unacceptable amount of climate pollution.

Then there is the climate report. In short, it’s 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 more detailed analysis of this particular report emerges. In the meantime, I’m certain some of the assumptions will be questioned including the following:

Equating an emissions increase in Canada with the project’s approval with a decline in emissions in the rest of the world? I’d like to see how the modelling gets to 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, when responding 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 roads.

Here it is revealed that this new 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 barrels per day of rail shipping capacity, noting the context of the Energy East pipeline adding 1,100 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).