That seemingly straight-forward statement is replete with misconceptions.For one thing, the pipeline’s “initial estimate” was not $7.4 billion. In the National Energy Board hearings, Kinder Morgan estimated the cost of building the pipeline expansion at $5.4 billion. So the real leap in costs is from $5.4 to $12.6 billion.

For another thing that new figure of $12.6 billion isn’t the full cost to Canadians. To get that you have to add in the $4.4 billion of taxpayers money spent on buying the pipeline in the first place. So the real cost to Canadians is $12.6 billion plus $4.4 billion for a whopping $16 billion.

For a third thing, we paid $4.4 billion for the existing 67-year-old pipeline as the cost of getting to zero to build the expansion. But the value of the pipeline is now likely far below what we paid. In its June 2019 report, the Parliamentary Budget Office estimated that the value of the pipeline, when we agreed to buy it, was $2.8 billion.

On Friday, February 7, 2020, the CEO of Trans Mountain pipeline, Ian Anderson, announced that the costs of building the pipeline expansion have “soared from an initial estimate of $7.4 billion to $12.6 billion.”

‘Buying an old and leaky pipeline in order to take over a private sector project that had hit the rocks was hardly smart. But overpaying for it to the extent that the Liberals did was an act of political desperation,’ writes @ElizabethMay

Second, it took the money raised for the equity required by Canadian banks to secure their investment, $1.5 billion, and used it to pay down debt held by the parent company.

Instead of heeding those signs, the Liberals paid a price exceeding the old pipeline’s value in order to take on a project that Kinder Morgan had clearly decided would not fly.

The Liberals wanted more than anything to prove they could get the pipeline built. One can only imagine the glee of the Texas oil men when they realized they could sell the old pipeline for nearly twice what it was worth.

When Kinder Morgan kidnapped its own project to demand a guarantee — or else — they were not looking for ransom. They wanted to shoot the hostage. Being able to blame a third party when they abandoned the project could avoid penalties under long-term contracts Kinder Morgan had signed.

But the reckless behaviour with public funds does not end with the announcement in May 2018 that the Government of Canada was buying the pipeline for $4.4 billion.

On Aug. 30, 2018, the Federal Court of Appeal struck down the pipeline permits ruling that not only did the Liberal government violate Indigenous rights leading to the quashing of the permit, Kinder Morgan itself violated indigenous rights. In other words, the vendor contributed to the devaluing of the asset, and we should never have paid $4.4 billion without re-negotiating the price.

Yet, without any explanation, Finance Minister Bill Morneau cut a cheque for $4.4 billion to Kinder Morgan the very next day, Aug. 31, with no closing date for purchase and sale of the pipeline.

We overpaid not once, but twice.

What is most galling to me is that our public funds are being used to brow-beat First Nations along the route into signing benefit agreements. One elected council member of a First Nation that is fighting the project told me recently that they are being “bombarded” by the now government-owned Trans Mountain with offers of millions of dollars to agree to the project.

Those are public dollars being used to coerce acceptance of a project most Indigenous nations do not want to accept. And yet every time a First Nation accepts a benefit agreement, politicians celebrate it claiming Indigenous people want the project. That is the case in some instances, but it seems like the latest form of oppression and colonialism: Refuse to listen to Indigenous objections, convince people the project is inevitable and use our money to bribe and coerce.

As Chief Allan Adam of the Fort Chipewyan Nation explained his decision to agree to the Teck Frontier mine:

“We’ve been fighting industry for how long? And we’ve spent well over $1 million in court fees with nothing tangible in return… So what am I supposed to do? Am I supposed to continue on fighting as a chief while others sit on the fence and say nothing and do nothing?

“I don’t want to do this. I didn’t want to make this decision but I had no choice. I had to make sure my nation was protected, and that our people are going to benefit from it for the future.”

Now, we have federal dollars flowing into a Crown Corporation. Anderson boasts that he runs it as though it were in the private sector. Any notion that concern for Indigenous rights will be greater now that the people of Canada own the pipeline can be set aside as fanciful.

The Trans Mountain pipeline remains a project outside market forces. The arguments for it rest on misconceptions and propaganda. It will not get a higher price at “tidewater.” Bitumen is inevitably expensive to produce with low value in the marketplace. As the carbon bubble bursts, these expensive “assets” will be the first to be stranded — uneconomical and unusable. Pursuing it blows our Paris commitments while squandering public funds.

It is not too late to ask the question: what could be done with the further $13 billion? Could we not do more for the Alberta economy in cleaning up toxic abandoned wells and mines, as well as tailings ponds in northern Alberta? Could we not fund green and renewable energy? Ensure clean drinking water for every First Nation? Ensure we have an electricity grid to move 100% renewable energy from province to province?

How much is too much? In my view, a single penny more is too much.

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Depending on where you are in Canada, you are likely dealing with one form of unpredictable extreme weather or another. For those of us on southern Vancouver Island, folks in Winnipeg and St. John’s are entitled to think we are a bunch of wimps who cannot handle winter. But, honestly, as a Cape Breton girl used to fierce winds and howling blizzards, what we had here this week was just as cold and stormy as a bad snow day anywhere I have lived. Here’s hoping you are reading this somewhere warm and cozy.

This morning, I am going to try to give you a decoder ring to the court cases swirling around the Trans Mountain (formerly Kinder Morgan) pipeline. The Supreme Court of Canada ruled unanimously on Thursday, dismissing the latest BC government case. This was reported, in error, as though this was the last possible legal route to stop the pipeline. Link

Fortunately, that is not the case. The case pursued by the BC government all the way to the Supreme Court of Canada was (in my view) their least winnable argument. Interprovincial transportation of anything is assumed to be federal jurisdiction. To assert that the pipeline is federal, but the province can regulate what’s in it was a stretch. The fact it was, at best, a long shot is underscored by the fact the Chief Justice made such an unusual and abrupt ruling from the bench immediately after the arguments.

I suspect that the province went to the wall on this case in order to make it look as though the Horgan administration was living up to its promise to “use every tool in the toolbox”. In fact, the BC government has stopped caring about blocking TMX. There are stronger courses of action that are being ignored.

For example, the BC government under Christy Clark agreed with former PM Stephen Harper that no provincial review was required. Clark’s Liberals agreed to rely solely on the strength of the federal review by the National Energy Board. Once that review was slammed by the court and the permits quashed, the BC government should have announced the former federal-provincial agreement was moot and the BC government would pursue its right to assess the impacts of the project. So, once the Federal Court of Appeal struck down the permits in August 2018, many of us urged Environment Minister George Heyman to start a BC environmental assessment process. I believe they still have that option.

Another indicator that BC has put away its “tool kit” is that the BC government has ignored its ability to intervene as a party in support of litigants trying to stop the project. Whereas in the first round of court challenges, the NDP government in BC injected itself as an intervenor and party supporting challenges to TMX, now they are MIA.

So what are the remaining cases?

They fall into two categories: those challenging the sufficiency of the consultations with First Nations, and those pursuing the protections of the marine environment, particularly the highly endangered Southern Resident Killer Whales. In September, the Federal Court of Appeal was asked to allow both kinds of challenges to go forward.

The court allowed most of the appeals that related to consultations, approving requests from the Coldwater Indian Band, Squamish Nation, Tsleil-Waututh Nation, and a coalition of First Nations in B.C.’s Fraser Valley. (Since then the Upper Nicola Band, the Stk’emlupsemc Te Secwepemc announced they had made deals with TMX and were withdrawing from the case). Link

But the court rejected most of the appeals related to the environmental impacts. These included requests from the Tsleil-Waututh Nation as well as the challenges from Raincoast Conservation Foundation and Living Ocean, both represented by lawyers from Ecojustice – including brilliant constituent and Pender Island resident, Margot Venton.

In early November, all these groups filed a request with the Supreme Court of Canada for leave to appeal the September rejection by the Federal Court. That request is still pending – as is the consultation hearing with the federal Court of Appeal. Link

So the court challenges are a long way from over. Much remains to be tested.

In the meantime, one of the more substantive changes is that the pipeline is no longer owned and promoted by Texas fossil fuel pipeline owners. It is owned by us. That makes it even more galling. Recently a local indigenous leader told me her community has been “bombarded” with offers of millions to “abandon our principles and accept the pipeline.”

It is unconscionable that there are millions to pressure First Nations to cave to the pipeline, but not enough to ensure clean drinking water.

The conflict on Wet’suwet’en territory deserves more space this morning. Just to say BC Green Interim leader and my MLA, Adam Olsen, visited the Wet’suwet’en leadership this weekend to see how we can de-escalate tensions, while Green MP Paul Manly is making his way to the blockade – a 5 kilometre hike in minus 40 today to communicate the opposition of the Green Party of Canada to the Coastal Gas pipeline and offer our solidarity with the hereditary chiefs standing on their rights to say no.

Thanks and love,

Elizabeth

This weekly blog is published by Elizabeth’s EDA in Saanich-Gulf Islands. You can sign up for it here.

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The twists and turns in the saga of the Kinder Morgan pipeline just took a turn for the seriously weird today, but the path has never been clear.

The Alberta oil sands lie under thousands of square kilometers of boreal forest, wetland and muskeg. Bitumen is a viscous substance found in small concentrations amid the rock and soil. It is either mined out from huge open pits, or pumped out through in situ production, injecting hot water deep into the ground to loosen it. Either way, the resulting product highly polluting, very expensive to produce and of low value. Bitumen is a solid. To be refined, bitumen must undergo costly upgrading. Bitumen, being both low value and expensive to produce, would never have been developed without government subsidies, with the lowest royalty rates in the world at 1% and massive federal subsidies of several billion/year.

Before the 2008 global financial crisis, there were upgraders and refineries being planned. But when the recession hit, those investments, along with any new oil sands mines, retreated. When the economy recovered, oil sands expansion came back. But not the upgraders and refineries. Instead, for the first time, industry began to promote pipelines. Keystone was the first pipeline proposed to run north-south to take Canadian bitumen to other countries for processing.

Since bitumen is a solid, there is nothing logical about proposing to move it through a pipeline. Stirring in fossil fuel condensate (essentially naptha) creates a mixture sufficiently liquid to flow through a pipeline, without the expense of upgrading it to synthetic crude. The resulting mix of condensate (called diluent) and bitumen is called dilbit. And it is very challenging to clean up. The 2010 dilbit spill in Kalamazoo, Michigan was the first time regulators realized dilbit behaved very differently than conventional crude. The diluent is highly toxic and volatile. Diluent separated from bitumen and bitumen sank to the river bottom.

By the 2011 election, pipelines had become a political issue. Former prime minister, Conservative Stephen Harper, an Albertan who stood four-square for fossil fuel development, opposed any pipelines heading to the British Columbia coastline. Harper’s position was that Canada should not export bitumen to countries with lower environmental standards for refineries than Canada.

Within months of that election, difficulties in gaining US permits for Keystone led to an entirely new position. With Harper’s support, Enbridge proposed a pipeline to Kitimat on the BC coast. In 2013, Texas-based Kinder Morgan asked to build a second pipeline more or less along the lines of the Transmountain pipeline purchased from a Canadian company from Alberta to Burnaby, not far from Vancouver BC. Kinder Morgan’s pipeline expansion would be 100% dilbit for export. It would increase tanker traffic, loaded with dilbit, seven-fold.

To grease the gears for pipeline approval, Harper gutted environmental laws. The resulting environmental review of the Kinder Morgan expansion was the worst in Canadian history. No longer reviewed by our environmental assessment agency, the pipeline was before the National Energy Board. Intervenor rights, such as cross examination of industry witnesses, were eliminated. Many intervenors withdrew alleging the process was “rigged.”

In the 2015 election campaign, Justin Trudeau pledged that no project could be approved based on such an inadequate process. Trudeau promised evidence-based decisions, respect for indigenous rights, the end to fossil fuel subsidies and an aggressive climate plan.

In 2016, the Liberals turned down the Enbridge pipeline due to the court ruling the previous government violated indigenous rights. Simultaneously, Trudeau announced support for the Kinder Morgan pipeline. In doing so, he violated election promises to respect indigenous rights, to base decisions on evidence, and to pursue real climate action. Having approved Kinder Morgan, he and his ministers became increasingly pro-pipeline.

Meanwhile fifteen different court cases were working through the Federal Court of Appeal. The new BC government raised its concerns about the threat of a dilbit spill and to survival of the endangered southern Resident Killer Whales. In March, I was one of the several hundred people arrested protesting the Kinder Morgan pipeline. As opposition built in British Columbia, Trudeau insisted the pipeline was in the national interest and must be built. On April 8th, Kinder Morgan upped the ante and demanded the federal government remove the uncertainty created by all the court challenges to the project by May 31st.

Astonishingly, the government announced on May 29th that the Government of Canada will buy the existing Transmountain pipeline. Canada will pay $4.5 billion for those existing assets, valued by Kinder Morgan in 2007 at $550 million. As well, the Trudeau administration says it will get the controversial expansion pipeline built. Kinder Morgan had pegged those costs at $7.4 billion, and that is just the beginning of federal liabilities. With this, Trudeau’s election promise to end fossil fuel subsidies is violated in spectacular fashion.

We await the court decisions. This battle is a long way from over.

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Mr. Speaker, I am reminded of something I was asked to say by one of my constituents, the Honourable Pat Carney. She used to be the federal minister of energy. She asked me to please mention that there is no oceans protection plan, that there seems to be an oceans protection wish list. She would like to see a plan.

I hope my hon. colleague from Kamloops—Thompson—Cariboo will not mind if I correct something that came up in an earlier part of the debate, which is the idea that bitumen moving by train represents a threat. Solid bitumen moving by rail can neither spill nor catch fire. It does not represent a threat.

I respect the work of my friend from Kamloops—Thompson—Cariboo. However, I wanted to put on the record as well that there is a very strongly worded letter that was sent to the Prime Minister and Premier Horgan from Tsartlip First Nation, which is within the boundaries of my riding. I respect Tsartlip First Nation enormously on a nation-to-nation basis. They have a specific set of treaties members may have heard of from southern Vancouver Island called the Douglas treaties. They have not been consulted at all, and the shipping lanes for the tankers loaded with dilbit go right through their treaty-protected territory.

I wonder if my hon. colleague has any comments.

Cathy McLeod – Member for Kamloops-Thompson-Cariboo

Mr. Speaker, I would like to note that if there is transport by train, if they are concerned about bitumen in the ocean they need to also be concerned about bitumen in the rivers, which is much more likely when there is transport by train than transport by pipeline. We actually want to prevent these. However, here we are fighting the NDP and the Green, both in the province of British Columbia and throughout Canada. They fight against the pipeline when it is going to go to refineries, but they do not worry about all those tankers going down the St. Lawrence. We have not heard a peep about those. Now there is not a peep about the pipeline; it is all about the ocean.

I do not think it really matters what it is, they are simply going to argue against it because they do not want oil extracted from the oil sands for the benefit of all Canadians.

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Mr. Speaker, there have been a lot of claims made, even here today in the House, about the jobs that would be created by Kinder Morgan, but there is no evidence to back up those claims.

There is no evidence because the National Energy Board refused to hear the evidence of Unifor. The largest union in the oil sands, Unifor went before the NEB to point out that building Kinder Morgan will cost Canadian jobs. The NEB refused to hear that evidence. Could the Prime Minister tell us, on what independent study is he basing the claim that Kinder Morgan creates more jobs than it kills.

Justin Trudeau – Prime Minister

Mr. Speaker, when it comes to the environment and the economy, we know the two things go together. That is central to the national interest. In regard to energy and pipelines, there are three elements that need to work together. First, we need to get our resources to markets overseas safely and securely. Second, we put forward a historic, world-class oceans protection plan to protect our coasts, and third, we put forward a real plan to reduce carbon emissions and meet our Paris targets.

We cannot get any of the three without getting all three. That is what our government understands.

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Madam Speaker, the debate so far today has been contaminated by so many claims that are contrafactual. In other words, the facts are clear, but the conversation in this place is ignoring them.

For instance, the claim was made that shipping bitumen is safer in a pipeline. The opposite is true.

When the question at issue is the safety of pipelines versus trains, the critical point is to know what product is being shipped. If it is Bakken shale, which is what blew up in Lac-Mégantic, it is clear it should not be on a train, but solid bitumen can only be put in a pipeline once it has been made more dangerous by adding diluent, which doubles the shipment times as a result of making it into a substance that can flow. Diluted bitumen in a pipeline, once spilled, cannot be cleaned up, but solid bitumen on a train is the safest way to move solid bitumen. That is relevant to the first non-fact.

The second non-fact is the idea that diluted bitumen can be cleaned up. The member for Skeena—Bulkley Valley already mentioned this point, but let me point out two incontrovertible scientific studies that were ignored by the National Energy Board.

I intervened in the National Energy Board process. The process was flawed from the get-go by lack of procedural fairness and the abuse of the rights of intervenors in that process, and the courts will rule on that. However, I do need to say that the National Academy of Sciences in the United States—their premier scientific body—and the Royal Society of Canada expert panel both found that bitumen mixed with diluent does not, at this point, have any science to justify the claim that it can be cleaned up. It cannot. It still is not cleaned up in the Kalamazoo River in Michigan, and no matter how much we now hear from Liberals what we used to hear from Conservatives, the very well-modulated Kennedyesque tones do not make non-facts into facts.

…

Elizabeth May

Mr. Speaker, I am privileged to be able to put a question to my friend from Cariboo—Prince George. He is my friend. I do not say that merely as a nicety. We are friends. However, I do not agree with him that this project is in the national interest.

It is important for Canadians to know that when the National Energy Board reviewed the Kinder Morgan project, it refused to hear evidence from Unifor, the largest union representing workers in the oil sands. It refused to hear evidence from Unifor, because the National Energy Board ruled that jobs and the economy were outside its mandate in reviewing the project. Therefore, it cannot be said that the economic impact of this project has been reviewed.

It is interesting to know that what Unifor wanted to present to the National Energy Board was evidence that the Trans Mountain pipeline, Kinder Morgan’s expansion, would hurt Canadian jobs and cost Canadian jobs.

I would ask my hon. colleague if he does not agree with me that we should follow the plan for the expansion and development of the oil sands that came from Peter Lougheed. That was the era when the idea was put forward that Alberta’s economy would benefit from mining bitumen and processing it in Alberta. The reason this will cost Canadian jobs, according to Unifor, is that shipping raw bitumen to refineries in other countries will hurt Canadian jobs and actually lead to the closing of the Chevron refinery in Burnaby, because it does not have the capacity to process raw bitumen.

Why do the Conservatives prefer creating jobs in other countries, in refineries in other countries, rather than processing the material and creating jobs in Alberta?

Todd Doherty – Cariboo—Prince George, BC

Mr. Speaker, as my colleague mentioned, she is a friend, and from time to time, her interventions are interesting and well thought out. I always enjoy listening to her in the House.

I cannot speak to the comments Unifor made and its position on Kinder Morgan. I will not speak to that. I vehemently dispute my hon. colleague’s assertion that Conservatives are all about shipping jobs overseas and closures and whatever the question was insinuating. Clearly, the Conservatives are all about free trade and making sure that our suppliers and producers in Canada are able to access every market possible, creating not just jobs but great-paying jobs right here in Canada, and ensuring that our products get to market. Whether at home or abroad, Conservatives are all about—

…..

Elizabeth May

Mr. Speaker, with all due respect to my hon. colleague, as the member of Parliament for Saanich—Gulf Islands where my constituents are overwhelmingly against this project, I intervened before the National Energy Board on their behalf. I went through all 23,000 pages of so-called evidence from Kinder Morgan and I will say without a shadow of a doubt, most of what is being claimed in the House is nonsense. There was no rigorous review. There was no rigorous science. What science exists was rejected by the National Energy Board as coming too late in the process and therefore unfair to Kinder Morgan to accept.

The overwhelming evidence is that bitumen mixed with diluents cannot be cleaned up. Therefore, having a wonderful, so-called world-class oil spill response program is nonsense when there is no technology known by science, including Canada’s premier scientific academy, the Royal Society of Canada, to deal with a substance that separates in a marine environment with bitumen sinking and the volatile diluents, which include benzene which is cancer causing, entering the atmosphere. We literally have no technology to clean this stuff up.

Would my hon. friend from New Brunswick and the federal Liberals be willing to wait so that a decent, rigorous environmental review can be done by the Government of British Columbia?

TJ Harvey – Tobique—Mactaquac, NB

Mr. Speaker, I completely 100% respect my hon. colleague’s concerns. What is important about the environment we have here in the House is that we can have robust discussions about a variety of topics recognizing that we are not always going to completely agree with each other’s opinions. I do not completely agree with my hon. colleague’s opinions. The reason is that we have done our due diligence. We have recognized the potential of this project given its merits. We have taken into consideration the effects on indigenous communities. We have consulted with indigenous communities. We have consulted with the people of British Columbia.

The National Energy Board has done its due diligence and approved this project. It is our responsibility to respect that decision and recognize the economic potential that we could have from this project, while taking into consideration the effects on the environment and the communities in that area.

I am really proud to say that I am part of a government that has taken those into consideration. I sit on the natural resources committee with hon. colleagues from both sides of the House and we have had robust discussions over the last year about the process and about consulting with Canadians and indigenous communities. I am happy to say that I think that within our committee we have come to a lot of general agreements across party lines. That speaks not only to the strength of this government and our approach but also to the strength of committees.

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Mr. Speaker, the National Energy Board expert panel that reported this week included prominent industry people, such as Brenda Kenny of the Canadian Pipeline Association and Hélène Lauzon of the Quebec Business Council on the Environment. The report was damning.

This is an agency that has no credibility whatsoever, and needs to be massively overhauled. Coupled with the expert panel on environmental assessment, it is clear that the bogus process upon which Kinder Morgan was subjected to a sham of a review does not have any credibility.

Will the government reconsider approving a pipeline that should never have been approved?

Jim Carr – Minister of Natural Resources

Mr. Speaker, the member knows that when we took office, there were a number of major infrastructure projects under review. We established a set of principles that would govern how they would be reviewed, and one of the important ones was that no proponent would be asked to go back to square one, which I am sure members of the House would agree is fair.

We knew and announced at the time that this would be an interim step leading to a longer term reform of environmental assessment in Canada, a reform and a process that is now well under way.

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Mr. Speaker, the hon. parliamentary secretary appears to be misinformed about the jobs impact of Kinder Morgan. The National Energy Board refused to hear evidence on jobs and the economy. Unifor, the largest union representing the oil sands workers, wanted to make it clear to the National Energy Board that the expansion would come at the cost of all the jobs currently in the Chevron refinery in Burnaby, as it will likely close if Kinder Morgan is expanded. I would like the hon. parliamentary secretary to clarify the lack of information on which the government was operating.

Karina Gould:

Mr. Speaker, our government is committed to creating an environment in which we can have well-paying, middle-class jobs. We know that infrastructure projects, whether social infrastructure such as housing or child care, green infrastructure like waste-water treatment plants or other important important infrastructure projects, or infrastructure that is going to help us get resources to markets is going to create jobs. Building is going to require new jobs.

There are many different areas in which jobs will be created. Jobs are an important factor for our government in making these decisions for all of Canada.

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No magical process has intervened, no testing of the evidence, there are no facts to justify this decision, and we know that dilbit cannot be cleaned after being spilled.

Will the Prime Minister reconsider and suspend yesterday’s decision to find the facts and the evidence that will show that approving Kinder Morgan is not justified?

Justin Trudeau: Mr. Speaker, the interim process we put in place both extended the consultation period with indigenous Canadians and strengthened the applied science.

We understand we made commitments throughout the election campaign and leading up to it. Getting resources to market in smart sustainable ways is a fundamental responsibility of the prime minister and of the Canadian government. One which was failed by the previous government, but one that we have delivered today.

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