Category Archives: Tar Sands

US Boom in Oil Production Threatens Market for Canadian Tar Sands

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Read this story from The Globe and Mail on a boom in US domestic oil production that threatens to shake the economic foundation of Canada’s Tar Sands. (Sept. 11, 2012)

 

 

A torrent of oil pumped from new wells across the U.S. is setting in motion a decade of dramatic change that promises to wean the country off OPEC, and threatens the growth of energy imports from Canada.

The U.S. is now staring at an energy future awash with its own crude, with far-reaching consequences for Canada’s oil sands, the U.S. economy and global geopolitics. This massive shift has been sparked by changing political sentiment and technological advances that have allowed crude to be tapped in new places – from North Dakota to Oklahoma, Colorado, Michigan, and even Florida.

The United States, according to new data released Monday by Bentek, a U.S. energy analysis firm, will see its oil production rise nearly five million barrels a day, or 74 per cent, in the next decade.

In that time, reliance on countries outside Canada will largely disappear. The U.S. today imports 45 per cent of its petroleum, half from OPEC countries. But by 2022, Bentek projects, only a million barrels per day will be delivered to U.S. shores by tanker – down from 6.7 million in 2011 and just 5 per cent of total demand – and at least some of those won’t come from OPEC, but from countries like Mexico and Brazil.

The coming change, according to Bentek, is startling: By 2016, the U.S. will surpass its 1970 oil production peak of 9.6 million barrels a day; by 2022, it will have leapt to 11.6 million barrels a day.

For Canada, the news is both good and grim: Canadian crude, flowing by pipeline, will continue to be a substantial source of U.S. energy. But growth in Canadian exports south of the border could face a wall in 2018, when the combination of U.S. oil output and pipeline constraints raise the possibility for new “Canadian production to get pushed out,” said Jodi Quinnell, one of the Bentek report authors. “What comes in to the U.S. will slow and basically remain flat from 2018 to 2025.”

That projection suggests the coming half-decade will see Canada, and its fast-growing oil sands, struggle against the tide of U.S. oil. It also substantially raises the stakes for a country in the midst of two contentious applications to carry Canadian crude to the British Columbia coast for export to Pacific markets. It should “cause us to, even more than we are today, realize the importance of creating additional channels to the world,” said Wayne Chodzicki, the Calgary-based global head of oil and gas for consulting firm KPMG.

Read more: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/us-boom-in-oil-production-spells-peril-for-canadian-crude/article4535525/

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Farewell to Peter Lougheed – A Real Common Sense Canadian

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If you skipped A20 of Friday’s Province or B3 of the Sun, you would not know that Former Alberta Premier Peter Lougheed had died. Such are priorities of Postmedia.

I first met him at a Western Premier’s Conference, in 1976, at dinner. It was not one of my better moments. Bll Bennett cracked a one-liner just as I was taking a drink of wine and, as has happened to all of us with milk when we were kids, I shot the wine out of my nostrils all over the tablecloth. Bennett quickly said, “You can dress up these Kamloops guys but it doesn’t do any good.”

As minister responsible for constitutional affairs, I sat in too many conferences to count with Lougheed, present and a big force.

One amusing moment occurred at the Western Ministers Conference in Prince George, in 1979, I think it was.

During an intervention by Manitoba Premier Sterling Lyon he said, “As the Duke of Marlborough said, ‘publish and be damned.'” As is often my wont, I blurted out, “it was the Duke of Wellington.” This lese majesty brought silence for a second or so, then Premier Bennett said, “Some ministers can be replaced.” Hereupon Lougheed said, “Bill, I’ll trade you three of mine for Rafe.” Calm was restored!

Peter Lougheed was known as a stout defender of Alberta’s sole right to its natural resources. This, perhaps one might say obstinance, had deep historical significance.

Alberta had not come into Confederation as a political entity as had all the others, but by a federal division of federal crown land in 1905 that created Saskatchewan and Alberta. They did not, then, have control over their natural resources until they were ceded to them in 1930. After that, it was part of the Alberta psyche to demonstrate that control at every appropriate moment. At every First Minister’s Conference dealing with the patriation of the Constitution, Loughheed would make it plain that any attempt, however slight, to deal with Alberta’s resources would mean Alberta opposition.

Lougheed had reason to suspect the feds as evidenced by Pierre Trudeau’s Energy Program of 1980, where the feds did clearly interfere with Alberta (and BC) natural resources. Premier Lougheed responded by cutting back oil production. This head to head confrontation continued until 1984 when Prime Minister Mulroney repealed the program. It was the time Albertans had bumper stickers reading “Let the eastern bastards freeze in the dark.”

It was a more progressive development of the Tar Sands that happened on Lougheed’s watch. What a pity his policy wasn’t continued, for he stood squarely for this project to be developed by Canadian refineries to be used for Canadian needs. Had his policies been followed, there would be no discussion of pipelines in BC nor tankers on our coast. Lougheed argued this point to his last days, calling for local refineries – and moderation in developing the resource.

It was he who created the “rainy day” fund putting oil revenues away for moment when the revenues weren’t there and Albertans would need some extra money.

British Columbia scarcely agreed with Lougheed – especially on constitutional issues – but always respected him and listened.

Peter Lougheed demonstrated his ongoing influence in the recent Alberta election when with a week to go, he endorsed Premier Alison Redford. This move was the kiss of death for the Wildrose Party.

The word “great” is much abused and misused but it belongs properly on Peter Lougheed  – he was truly a great  Albertan, great Canadian and great man. I feel highly privileged to have known him and witnessed his contributions to his province and his country.

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Alberta’s bogus labour shortage

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Read this article by Tony Clark at rabble.ca which deflates the idea that foreign workers need to be brought in for Alberta projects. Excerpt: “The Certified General Accountants Association of Canada released its own report with similar findings. Their findings include ‘Labour shortages are difficult to observe and measure directly’ and ‘Where sufficient data exists, an assessment shows that labour shortages occurred rather sporadically and did not persist for more than one year at a time over the past ten years.’
These bad numbers lead to bad public-policy decisions.” (August 7, 2012)

Read more: http://rabble.ca/blogs/bloggers/progressive-economics-forum/2012/08/albertas-bogus-labour-shortage

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First Nation says Alberta oilsands plan will ‘annihilate’ its lands and future

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Read this article from Canadian Press, published by The Tyee. Excerpt: “Your plan, your land, your future? This is not our plan, it’s the governments plan to annihilate our lands and our future.” – Chief Allan Adam (August 24, 2012)

Read more: http://thetyee.ca/Blogs/TheHook/Aboriginal-Affairs/2012/08/24/First-Nation-says-Alberta-oilsands-plan-will-annihilate/

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Suncor's Tar Sands processing plant

National Energy Strategy a Deception of EPIC Proportions, Designed to Fleece Canadians

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In this piece, the first of a series of three, we explore why a National Energy Program is political suicide, yet something called a National Energy Strategy is all the rage.

Decades ago Canadians were treated to a strategy that involved the oil and gas industry called the National Energy Program – its implications still resonate today. The program entailed Canada getting its fair share of the abundant natural resource wealth while establishing Petro-Canada as a vertically integrated, well to pump, crown corporation and an integral component of the industry. At no point did this move represent nationalizing the industry, as most of the world’s industry is, but instead simply aimed to have Alberta’s resource bounty diversified throughout the nation, while working in conjunction with private industry and its major players. What James Laxer explains as a “Canadianization” of the industry.

Through price controls that kept domestic consumption affordable and taxation on exports, which filled coffers in Ottawa by targeting foreign-owned players in the Canadian oil and gas patch, the federal government was able to offer a wide array of attractive incentives designed solely to encourage the upstart, growth and stability of wholly owned Canadian firms, while at the same time developing the public crown corporation to serve Canadian domestic needs and Interests.

This allowed for a threefold approach which involved: limiting the excessive dominance of foreign oil majors, creating “Oil independence” from the international – OPEC led – market, and encouraging development of private Canadian owned oil companies while nationalizing some of the benefits in an effort to facilitate a strong Canadian stake in the game, important operational inroads into the industry, and a handle on its reserves and future direction.

Since Harper’s regime was installed by the oil giants operating in Canada, a much diminished and demonized Petro-Canada was quietly privatized for a song (marking the single largest share divesture in history). Five years later, in what was billed as a bid to bolster Canadian Nationalism, Suncor, the Tarsands behemoth, sucked up Petro-Canada in a merger that saw share prices rise once again, a reoccurring event after the public divesture of the remaining 45 million plus shares. The 2004 dumping of Petro-Canada marked the end of reasonable policy making in the oil and gas patch and the final victory for an unbridled global corporate free-for-all.

Under the NEP of old, foreign operators such as CNOOC would not be anywhere near the Tar Sands control-and-command centre, let alone slowly becoming a dominant player. Instead, they would have a place in developing the resource and exporting it but that would come at a significant cost in the form of export taxes going directly to Ottawa, something domestic companies could avoid. Moreover, had we still run with NEP-style policies, domestic prices would be capped and Canadians would enjoy both a secured supply into the future, eastward flowing supply lines (limiting our reliance on imports) and affordable petroleum products, while at the same time encouraging wholly owned and private Canadian companies to be at the very center of the growing industry, with the resulting fiscal rewards remaining within our borders and in the pockets of Canadians.

That is the fundamental difference between a National Energy Program stickhandled in Ottawa on behalf of Canadians and a National Energy Strategy stickhandled by oil majors on behalf of Global Corporate interests and executed by our politicians. Fundamentally speaking, the NEP goal was a fully integrated domestic industry shielded from the whims of the global market place, while a National Energy Strategy is the exact opposite. It is instead fully integrated with the global markets and largely owned and operated by foreign interests. One offers the people of Canada an integral role, adequate returns and a myriad of perks, while the other is a complete capitulation to some of the most powerful forces on earth in lieu of governments standing down and implementing the strategy drafted in corporate board rooms and rolled out by the EPIC corporate “think tank” (the secretive group of energy and political power-brokers previously detailed in these pages).

It is not difficult to comprehend the stark contrasts between the two approaches and why the rhetoric resulting from them is drastically different. When governments implement policies such as the NEP of old, people will benefit in the form of stronger public budgets, greater control over the resource and its extraction processes and policies, secure energy supplies into the future and a greater share of the pie, not to mention perks like affordable petroleum by-products and a much reduced price at the pump.

By contrast, the policies being ushered in by EPIC and its compliant politicians result in the mirror opposite. A reduction in our ability to protect the environment and a gutting of processes designed to uphold Canadian values. Exposure to globalized petroleum markets resulting in high prices at home, little control over the development and export of the resources and royalty regimes that cater to multi-national interests as Canadians are left exposed to the whims of market volatility. And, of course, there is the over all socializing of losses, costs and environmental impacts, as well as, a privatization and off-shoring of the wealth that is generated while governments are left to file deficits and increase debt.

The “benefit” to Canadians accrues to the very few plugged into the higher levels of the petroleum industry, their lackies and those lucky enough to obtain the few high paying “jobs.” In the final instance of jobs it seems those lucky few will in fact be American service men and veterans as apparently the talent pool in Canada does not exist, even with the swelling unemployment lines resulting from the 500,000 manufacturing jobs shed during Harper’s oily regime.

These fundamental underpinnings are never raised in the corporate media. Instead we are treated to a now decades-old demonizing of the NEP and similar policies while celebrating a new “National Energy Strategy” which is designed to fleece Canadians as illustrated above. Our mainstream media and politicians are only too happy to dish up an array of ridiculous rhetoric which amounts to hollow grandstanding and politicking while avoiding the real issues Canadians care about, all the while paving the way for the aggressive globalization of the agenda.

This is done through the implementation of the National Energy Strategy which has seen its most pivotal times occur during the height of the Summer vacation season in Kanaskis and again this summer on the east coast, in a less than transparent bid to keep the protests at bay and the implications under wraps.

With these fundamental points established, I will continue explore the details of the new National Energy Strategy offered up by EPIC and dutifully carried out by Canadian politicians on behalf of the corporations interested in transitioning Canada into an Energy Superpower in the remaining two pieces of this three-part series.

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Canada’s Shrinking Oil and Gas Profits

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Read this story from the Huffington Post on the shrinking profit margins from Canada’s oil and gas sector and how that could be a sign of things to come. (July 25, 2012)

The talk coming out of Canada’s oil patch in recent months has been increasingly tinged with panic. Industry leaders are growing worried about the oil sands’ future prospects, and the earnings reports coming out this week are a good sign of why that may be.

Oil producer Cenovus on Wednesday reported a 40-per-cent decline in profit in the latest quarter, falling to $396 million from $655 million a year earlier.

Things were even worse for Calgary-based natural gas producer Encana, which recorded a whopping quarterly $1.48 billion loss. It had recorded a profit of $383 million in the same period a year earlier.

(And Canada’s largest energy producer — Suncor — said on Wednesday it’s mulling delaying some of its new projects. The company denied market conditions were behind the move, saying only that the company is “looking at how we get the best economics for those projects.”)

On the surface, the reason for this is obvious: Declining energy prices. Natural gas prices are at rock bottom, and prices for oil have been under downward pressure as the world economy faces a tough summer thanks to Europe’s credit crisis and a slowdown in China.

But beneath the surface is a rapidly-changing global energy industry. With the U.S. rapidly developing its shale oil and gas deposits, Asia increasingly looking to renewable energy, and the controversy over the environmental impact of the oil sands showing no signs abating, Canada’s energy exporters could find themselves in a seemingly unthinkable situation: Lots of oil, and few markets to sell it.

All this is happening just as Canada’s dependence on energy exports has been reaching new heights. As the Globe and Mail reported, oil and gas sales, as well investment in oil sands infrastructure, accounted for one-third of Canada’s economic growth in 2010 and 2011.

So what happens to Canada when energy and commodity prices go down? One thing that happens is it becomes cheaper to tank up your car. But at a certain point, as prices come down, the benefit to Canada of lower gas bills and cheaper commodities is overtaken by the cost to the economy of lost exports.

“If oil prices get to a point where they are going to deter investment in the [energy] sector, the negatives outweigh the benefits,” TD Bank economist Diana Petramala told the Globe.

That scenario — unthinkable just a few years ago — may be exactly what Canada’s natural resource sector may be facing. And it’s not just a temporary blip in prices Canada is facing — it may be a permanent and revolutionary shift in energy extraction that makes Canada’s oil sands far less desirable than they seemed until now.

One thing threatening Canada’s energy sector is the new American oil and gas boom. With new extraction techniques like hydraulic fracturing coming online, U.S. energy companies are busily starting to drill on domestic soil again. The oil industry in Texas is booming in a way it hasn’t in more than three decades, and plenty of other, less expected, places are becoming oil meccas. Meanwhile, new supplies of natural gas have pushed prices for the energy source down to near-record levels.

This boom is already having tangible effects on Canada’s oil industry. Insiders estimate that Canadian exporters, unable to export to markets other than the U.S., are facing a $15 per barrel discount on the oil they sell, when compared to international Brent crude prices.

But it’s not just supply and demand that’s cutting into Canadian energy profits — it’s Canada’s lacklustre response to the world’s concerns about oil sands carbon pollution.

Read more: http://www.huffingtonpost.ca/2012/07/25/canada-oil-gas-shrinking-profits_n_1702807.html

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Audio: Damien Gillis Discusses Energy and BC’s Economy on Co-op Radio

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Check out this interview from Aug. 15 on Vancouver Co-op Radio’s “Discussion”, with host Charles Boylan. Guest Damien Gillis and Boylan cover a wide range of topics relating to energy and the future of the BC and Canadian economy. The pair discuss the myriad alternatives popping up of late to the embattled Enbridge pipeline, including Kinder Morgan’s planned twinning of its Trans Mountain Pipeline to Vancouver, and shipping bitumen by rail. They also cover natural gas development in northern BC – including controversial hydraulic fracturing and the building of a new pipeline to carry this gas to Kitimat and covert it to Liquified Natural Gas to sell in Asian markets – plus an alternative economic vision for BC that doesn’t depend on becoming a major fossil fuel corridor to the world. (Aug. 15 – 1 hr)

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BC media mogul David Black announces his plan to build a $13 Billion oil refinery in Kitimat (Photo: Darryl Dyck/CP )

Refining the Black Stuff in Kitimat Doesn’t Make Sense

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One must, I suppose, take newspaper tycoon David Black’s offer to build a refinery near Kitimat seriously, although the idea is preposterous on several fronts.

For openers, he doesn’t tell us who will be behind such a refinery. He admits he doesn’t have the money – an important matter.

Of course, Mr. Black tosses out employment as jelly bean for us to enjoy, citing 6,000 jobs over the six year construction period and 3,000 long-term in the operation of the refinery. He doesn’t mention any research on this issue – one must take these numbers with the skepticism which always rightly greets announcements of undertakings like this.

Mr. Black ignores the fundamental issues here.

He ignores the certainty that the pipeline will continue to have spills of bitumen – Enbridge averages one per week – and BC will watch as its wilderness is incrementally destroyed.

It’s interesting to note that Mr. Black doesn’t deny the dangers from oil tankers but allays our fears by saying that because refined oil and gasoline will be replacing bitumen, that our worries are over!

What also is puzzling is the timing of this announcement.

Mr. Black is a self-made billionaire who admits that he knows bugger all about refineries. This suggests that he has some backers in the oil business who are a bit shy about having their pictures in the papers.

Wasn’t the deal that the main customers were Chinese who want the raw bitumen to refine themselves?

Was this idea from David Black? If it means anything at all it must be a diversion to focus on jobs! Jobs!

The announcement attracted attention – but when one reads it, it’s a damp squid.

In my view, the public will have no trouble seeing this proposition for what it is – environmentally unacceptable and as not only no improvement on the Enbridge proposal but, on analysis, worse.

Mr. Black should stick to publishing newspapers.

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Would the Enbridge pipeline really deliver Canadian jobs?

Audio: Damien Gillis on Enbridge ‘Jobs’ Myth, Harper Working with Oil Lobby, Pipeline Politics

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Listen to this half-hour interview of Damien Gillis on Opposition Radio, an Ontario-based online radio program. Hosts Mike and Tony discuss with Damien the recent revelation that the Harper Goverment has been working with the oil lobby on a coordinated PR strategy to promote the Alberta Tar Sands. The three also delve into recent pipeline politics in BC and the “jobs” myth around the proposed Enbridge pipeline, discussing a recent story by Damien on the drive to import American and Chinese labour to build the pipeline and expand Tar Sands operations, and how that flies in the face of the Harper Government’s contention these developments are good for the Canadian economy. (30 min – recorded July 31, 2012)

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BC Conservative MP James Moore

Conservative MP James Moore Dumps Enbridge for Kinder Morgan, Needs Refresher on Company’s Record

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And so it begins.The spin to jettison Enbridge’s proposed Northern Gateway Pipeline in favour supposedly “safer” alternatives.

This narrative will play out in two ways. The first was demonstrated by Conservative MP James Moore on CKNW’s Bill Good Show earlier this week (read the full interview here). After slagging Enbridge for its poor public engagement and safety record, the MP for Port Moody-Westwood-Port Coquitlam moved onto what he presented as the superior alternative. 

And I think, you asked the question, who else is there out there? I think if you look at the Kinder Morgan pipeline and the way in which they are very judiciously and responsibly engaging with British Columbia’s First Nations, the way in which they’re taking environmental challenges seriously, they way in which they’ve operated for 60 years without any spill—there’s one on land that had nothing to do with Kinder Morgan, but had to do with contractors who were tearing up the streets in Burnaby. There’s a difference, I think, night and day between a company that gets public engagement, Aboriginal engagement, environmental stewardship and Enbridge, which I think their track record is not one that I think any other company should follow if they want to do business in BC.

Bear a few things in mind when you read these extraordinary statements by Mr. Moore. First, Moore, the Federal Heritage Minister, is a rising young star in the Consetvative Party – particularly in BC.

Second, nobody but nobody in Stephen Harper’s button-down caucus opens his mouth – especially about something so key to the Prime Minister’s agenda, not to mention such a hot button issue – without having first received explicit directions to do so from the very highest echelon. What this clearly means is that Moore has been tapped to do Harper’s Enbridge damage control in BC – and the choice of the Bill Good Show to debut this new framing was as calculated as a Catholic Sunday Mass.

The second alternative to the Northern Gateway Pipeline to Kitimat is one that will only work if Enbridge’s reputation is deemed salvageable – and let’s face it, at a spill a week, that’s looking increasingly doubtful. Neverheless, there may well yet be a move to reroute the Kitimat line to Prince Rupert, dumping the perilous planned port at the end of Douglas Channel in favour of a safer harbour just up the coast.

In many ways, Rupert is the more sensible choice, although the pipeline route itself is potentially riskier in this case, transiting several hundred km down the Skeena Valley – a vital salmon artery, rife with geological instability. It is for this reason the Prince Rupert option lost out to Kitimat back in 2005 when both were still on the table.

No matter the comparative safety of the Port of Prince Rupert, many other concerns about the pipeline, the Tar Sands it would carry and whose expansion it would facilitate, and the dangers of a spill in BC’s rugged coastal waters – particularly in Dixon Entrance and Hecate Strait, which the tankers from Prince Rupert would still transit – remain unchanged in this scenario.

Moreover, Enbridge’s credibility remains a major obstacle no matter what. The choice could be made to switch to a different pipeline company altogether, such as TransCanada or Kinder Morgan (the company from whom Kinder bought the Trans Mountain Pipeline, Terasen, had a rival bid to build a pipeline to Rupert in the early 2000s)…but I wouldn’t bet on the Prince Rupert option, for all of the above reasons.

Rather, as James Moore predictably indicated, the twinned Kinder Morgan Trans Mountain Pipeline to Vancouver would seem to be the alternative the powers that be will most likely glom onto to salvage their dreams of expanding the Alberta Tar Sands and accessing new Asian markets.

It is for that reason Mr. Moore needs a refresher on Kinder Morgan, the Texas-based energy giant that has indicated it wants to boost its bitumen pipeline capacity through BC from 300,000 barrels a day to 850,000, meaning a five-fold increase in tanker traffic through Burrard Inlet, the Gulf Islands and Strait of Juan de Fuca.

Moore was wrong on everything he told Bill Good about Kinder Morgan’s track record.

First, to his claim of good aboriginal engagement on the part of the company, just ask the Tsleil-Waututh First Nation, in whose territory the pipeline terminus lies and the tankers would transit. They came out last month, along with their neighbours the Squamish First Nation, to sign the “Save the Fraser Declaration”, joining over 60 BC First nations who’ve already declared their opposition to oil pipelines and tankers through BC.

The Musqueam First Nation of Vancouver, who also have a big say in the company’s plans, had already signed onto the declaration.

The Tsleil-Waututh have voiced their concern about the lack of consultation they’ve recieved on this matter from the BC Liberal Government and stated in April after the company made its plans official, “We want to make it crystal clear that we will oppose any and all increased oil tanker traffic in the Inlet and we oppose the notion of Kinder Morgan turning Vancouver into an oil port city.”

To Moore’s point that Kinder Morgan wasn’t to blame for the rupturing of its line in Burnaby in 2007, he must not be aware that the company plead guilty in 2011 in provincial court for the spill. The court heard that the pipeline’s owner should have done a better job of monitoring work near the line that tore into it, as this Global TV report shows.

Moore must also be ignorant of or deliberately ignoring the leak of 110,000 litres of oil the company suffered at its Abbostsford tank farm earlier this year.

Moreover, with drastically increased bitumen flow and tanker traffic – up to nearly 400 a year from the company’s port in Burnaby, if it gets its way – comes vastly increased risk; or, as my colleague Rafe Mair and many others remind us, certain calamities. And with such a disaster in the waters of Vancouver or the Salish Sea come enormous consequences, both environmental and economic, as Rex Weyler has illustrated in these pages.

Kinder Morgan may not have faced the same scale of public opposition to its plans as Enbridge has seen – but that’s only because it just made its plans official a few months ago. Campaigns are already developing to target the Texas company (full disclosure: I’m part of one of them) and with the likes of Moore shaping this new narrative – dumping Enbridge for a supposedly “safer” Trans Mountain option to Vancouver – the spotlight will increasingly be on Kinder Morgan.

Either Mr. Moore is deliberately deceiving the public about Kinder Morgan’s track record or he’s simply ignorant of it – and being from Vancouver, frankly, he should know better.

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