Common Sense Canadian
 

The Cost of an Oil Spill in Burrard Inlet: $40 Billion…For Starters

Posted May 10, 2012 by Rex Weyler in Energy and Resources
Greenpeace co-founder Rex Weyler
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The City of Vancouver passed a motion this month demanding that Kinder Morgan pipeline company carry full liability to cover the costs of an oil spill in our Vancouver Harbour. The request is just common sense but demonstrated very uncommon courage in the public political realm.

So, how much liability would Kinder Morgan – the now notorious ex-Enron billionaires from Texas, who bought BC Gas and flipped it for the pipelines – need to carry to indemnify our city from the ravages of an oil spill?

Well, for starters, some $40 billion, as I explain below. But let’s keep in mind:

  1. There is no such thing as “cleaning up” an oil spill. Most “clean ups” get about 10 percent of the oil spilled, like the way a 3-year-old “cleans up” milk spilled on the kitchen floor.
  2. There is no price to cover the soul of this region, the promises of indigenous rights, the food we take from this water, the childhoods on our beaches, the families of creatures and forests of fauna, the identity of this city and region, our heritage, and our dignity. There is no price for that.

Economic costs of an oil spill

The Aframax tankers now using Vancouver Harbour carry up to 700,000 barrels of bitumen, the deadliest crude oil on Earth. To estimate the costs of responding to such a spill, one must examine comparable costs for similar accidents. One method uses the historic “costs/barrel” for responding to oil spills.

The Exxon Valdez spilled 270,000 barrels, about one-third of an Aframax tanker. The Alaska tourism industry lost 26,000 jobs and $2.4 billion immediately – and another $2.8 billion over the next decade. Total loss for tourism alone: $5.2 billion. Ouch.

British Petroleum set aside $20 billion for clean up and compensation in the Gulf of Mexico, but Credit Suisse estimated total BP liabilities of $37 billion, just for cleanup and injury claims.

So, who pays this cost? Exxon has been in and out of court for 23 years over the Exxon Valdez spill, and still hasn’t paid its liability claims. BP is fighting injury claims, but in Vancouver Harbour there may be no such company that would even accept liability. The oil companies – Shell, Syncrude, Sinopec – and pipeline company Kinder Morgan have already indemnified themselves and would decline liability once the oil is on a ship. The ship owner has liability by Canadian marine law, but these days oil tankers are owned by obscure numbered companies with few assets, in slippery jurisdictions, where they can and literally do disappear overnight in the case of serious accidents.

The response costs would fall to Canadians – municipalities, the Province, the Federal government – that is, to the people. Imagine a $40 billion Canadian bill to mop up 10% of a marine and economic disaster, while our schools and social programs disintegrate.

Bitumen’s abrasive personality

Consider a 500,000-barrel bitumen oil spill in Burrard Inlet, 70% of an Aframax tanker. Globally, there has been an oil spill of this size about every 18 months worldwide for the last 40 years.

Bitumen (tar from tar sands) is a particularly dense, toxic version of crude oil. It has to be mixed with some thinner petroleum product to even move through a pipeline, whereby the pipeline industry calls it “dilbit” – for “diluted bitumen.” Something like arsenic diluted with vinyl chloride.

In July 2010, a 30-inch bitumen pipeline owned by Enbridge Energy – that other pipeline outfit angling for the BC coast – burst, spilling 20,000 barrels of tar sands bitumen into a tributary of the Kalamazoo River in Michigan. The challenges of dealing with the heavy, sinking bitumen shocked the U.S. Environmental Protection Agency, which Mitchell Anderson wrote about in the Tyee.

Costs of even partial cleanup soared to more than ten times historic crude oil costs. “I don’t think anyone at the state level anticipated that,” said EPA Incident Commander, Ralph Dollhopf. “I don’t think anyone at the EPA anticipated that. I don’t think anyone in industry anticipated that.”

Bitumen, diluted with solvents such as condensate or naphtha, separates in the marine environment. Volatile gases – toluene and the carcinogenic benzene – rise into the air, causing headaches, nausea, dizziness, coughing, and fatigue among the local population. One may fairly assume all other animals that breathe air experience similar symptoms.

After the Kalamazoo River spill, the toxic fumes remained for weeks and could be smelled up to 50 kilometres away. A major Aframax spill in Burrard Inlet – 25-times larger than in Michigan – would likely require evacuations in the lower BC mainland and islands. Clean up crews would battle toxic fumes as they watched the bitumen sink below their skimmers.

Bitumen contains sulphur, paraffins, asphaltics, benzenes, and other toxic compounds. Animals and plants are suffocated and poisoned. The die-off starts at the foundation of the food chain, obliterating the vital mudflat biofilm – the bacteria, diatoms, and mucopolysaccharides that provide a high-energy food source for shorebirds in Burrard Inlet and Georgia Strait. As the bitumen moves with wind and tides, it kills all bottom life, mixes with the intertidal sediments, and kills shellfish, ocean plants, fin fish, and marine mammals.

On top of this, the polycyclic aromatic hydrocarbons (“PAHs”) in bitumen, dissolve in the water. Two years after the Michigan spill, 30 miles of the Kalamazoo River remained closed to fishing, swimming, or even wading in the water.

After a bitumen spill in Burrard Inlet, the toxins would contaminate the entire marine ecosystem from Seattle to Campbell River, and beyond. Most of this damage could not be “cleaned up” at any price

Show me the money

Cleanup: According to the US EPA, historic U.S. crude oil cleanup costs have been about $80/gallon ($3,400 per barrel). The added problems with tar sands bitumen – toxic gas, sinking sludge, and soluble hydrocarbons – push costs up. The Kalamazoo River spill by Enbridge cost 10 times the traditional crude oil clean up costs – about $35,000 per barrel. Comparatively, the cleanup response to a 500,000-barrel bitumen spill in Burrard Inlet would be:  $ 17 billion

Tourism losses: “Tourism is dead,” said Charlotte Randolph, president of the Lafourche Parish in Louisiana, after the Gulf Oil spill. “We’re dying a slow death.” Oxford Economics estimated the Gulf region’s tourism industry would lose $7.6 to $22.7 billion over 3 years. Tourism dropped by 35 percent in some Gulf regions. Economist Sean Snaith, from the Institute for Economic Competitiveness in Florida, estimated that Florida alone would lose $11 billion in business activity job losses. BC brings in $14 billion annually in tourism, and we could lose half of this for 2-4 years, so added to the clean-up costs would be the tourism loss to BC over several years, on the order of: $ 20 billion

Fishing: “I’ve been fishing in BC since 1973,” says B.C. fisherman Ron Fowler, a Pacific Salmon Commissioner and Director of the Area-F Trollers Association. “If we get an oil spill anywhere in these waters, it would wipe out every fishery we have, shellfish, salmon, herring, and the plankton that they feed on. An oil spill would move with the wind and tides and devastate the intertidal zones.”

The BC fishing industry wholesale value is about $1.2 billion per year. An oil spill on the coast could destroy a large portion of this for 3-4 years and some shoreline intertidal fisheries for a decade or more. A 40% fisheries loss in the first year could be expected, with recovery to perhaps 10% loss within five years. The potential fisheries loss over several years is in the range of: $ 1 billion

Health costs: Oil companies, public, and private workers during the Exxon Valdez spill described health effects that forced them from the area and into hospitals. Some first responders in Alaska still suffer from the toxic intake. Bitumen is worse. In Michigan, the volatile benzene and toluene caused nausea, dizziness, headaches, coughing, and fatigue to some 60% of the local population for weeks after the spill. The health department encouraged an evacuation within a mile of the river. As with other oil spills, there will be a spike of cancer and other diseases. A 500,000-barrel bitumen spill in Burrard Inlet would likely cause a mass evacuation and severe health impact for over a million people. The costs could easily reach:$ 1 billion

Lost Time: The lost time for families, students, workers, business owners, and  others in the lower mainland and up to 50 kilometers way, likely farther up the Fraser River past Fort Langley, and south past Whiterock, would be massive. Given our normal tides and winds, the crude oil would be in Nanaimo, Sechelt, and the Southern Gulf Islands within a few days. The lost time for hundreds of coastal communities would likely reach at least millions of person-hours at a cost of another: $ 1 billion

Port losses: An oil spill would disrupt Port of Vancouver shipping business. The Port contributes over $2 billion in direct revenue per year and over $4 billion in direct economic output. The port generates some 30,000 jobs (~ $1 billion annual wages & salaries). Shipping could be virtually stopped for months and disrupted for several years, so the costs would be on the order of: $ 1 billion

So there it is, in round figures: a $41 billion price tag for an oil spill, with no one to accept liability except a renegade shipping company in Somalia or the Cayman Islands.

Vancouver and BC brand value: The “Beautiful BC” and “greenest city” reputations would be lost. How much is that worth? Billions more. Stanley Park would be devastated. How do we put a price tag on that? The lost reputation and destroyed ecosystems – if we could even place a dollar-cost on these losses – would double the $40 billion direct costs to make the loss more like $80 billion.

This is the aggregate risk that the Vancouver region must accept if it wants to be the Tar Sands Oil Port in exchange for some tugboat jobs, port fees, consulting gigs, and payoffs.

Normal spillage

All oil ports have oil spills. Most oil spilled into the world’s bays, harbours, and marine environments is “normal spillage,” acknowledged by the industry as a routine “expense,” which they write off as a tax deduction.

Oil terminal workers have admitted that they spill oil virtually every time they load a tanker. Every time. Normal spillage includes routine leaks and spills along pipelines and at refineries, tank farms, and terminals. This constant drain of heavy hydrocarbons into the marine environment kills the intertidal life and other marine species. Try going east of Second Narrows, near Kinder Morgan’s Westridge Terminal and find a healthy clam or crab.

This Inlet once fed the Tsleil-Waututh, Squamish, Musqueam, and Tsawwassen people, who retain rights to this unceded territory. “When the tide is out, our table was set,” recalls Rueben George, Sundance Chief of the Tsleil-Waututh, the indigenous People of the Inlet. Second narrows, the traditional waters of the Tsleil-Waututh, is a sacred place that provided food for many generations. That food resource is already virtually eradicated from the normal spillage from the oil refinery and terminal on Burrard Inlet. “We’ve had enough of seeing our waters destroyed,” says Rueben George. “Second Narrows is sacred to us. Our creation stories go back to this channel of water.”

What price would one place on this? What price for the obliterated natural livelihood of indigenous people, our regional heritage, our marine and intertidal ecosystems, our coastal economy, and our community identity and pride in the sea? There is no way to protect these values and real wealth of this region if Vancouver becomes the tar sands oil port. The only way Kinder Morgan can indemnify the land, water, creatures, plants, and people of Burrard Inlet is to return our pipelines and our public policy to this region and to its people.

As Rueben George said on Earth Day: “We’re doing this for Kinder Morgan’s children too. They deserve a world that is rich and wild and that provides food to people and a place to walk with your children. We’re doing this for their children too. Not just ours.”

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About the Author

Rex Weyler

Rex Weyler is a journalist, author, and ecologist and the author of Greenpeace: The Inside Story (Raincoast, 2004), which was a finalist for the Shaughnessy Cohen award for political writing and for the BC Book Award for non-fiction. His history of the American Indian Movement, Blood of the Land (New Society, 1997), was nominated for a Pulitzer Prize. Weyler’s work has appeared in numerous publications nationally and internationally and he writes regularly for The Tyee online, and posts his “Deep Green” column at the Greenpeace International website.

29 Comments


  1.  

    This is the saddest event of my 50 year life.

    How in the world is Canada so lax in environmental controls.

    I will fight the proposed pipelines to the West Coast to the end.
    I will rally my peers and deny the Dictatorship Federal Govt. the power to ram rod these disasters in the making.

    We the people will stand up and power over the Dictator.




  2.  
    Rino Manarin

    YEah seems to me we have but one choice, build refinery or refineries and anybody who wants the refined product, can darn well pay for it. I have fished a lot out of the KItimat area and it is so easy to see what an oil spill will do. LEt’s just get real, Kinder Morgan is a giant, let them pay for the coverag that will be required when we get a spill. No thanks to more oil in Burrard Inlet or to Kitimat.
    no more catering to the chinese, they will dump us when it becomes convenient.




  3.  
    Rex Weyler

    John: Exxon Valdez, including punitive damages, comes to $9.3 billion 1989 dollars, about $23 billion today, not counting long term or urban impacts. My projections appear reasonable.

    A tanker spill could happen in our harbour or in Georgia Strait. You say this is “near impossible,” but such spills occur regularly, even with double-hulled tankers, as in Port Arthur Texas and Singapore in 2010. “Near impossible,” appears vague and is refuted by the history.

    You ask: “Bitumen is the deadliest crude on Earth – on what basis?” On the basis of US EPA reports after the bitumen spill in the Kalamazoo River, costing ten-times a normal crude oil spill.

    You say: “A 500,000 barrel spill every 18 months is fiction,” and quote the Tanker Owners to support your case. The record shows that there have been 27 oil spills over 450,000 barrels since 1972: The Prestige, Aegean Sea, Exxon Valdez, and so forth. Some spills are from wells, but most from tankers. To the marine ecosystem, it doesn’t matter: 27 major spills over 40 years is 1 every 18 months.

    You say: “Crude is a natural product.” So is malaria. These are real risks, from which a prudent region would indemnify itself.




  4.  
    Damien Gillis

    John: Kinder wants to upgrade to suezmax tankers, which carry more like 900,000 barrels – so Rex’s figure would involve that hypothetical tanker spilling half its load. Take close to 400 tankers a year, multiplied indefinitely and it’s not at all unreasonable to take a precautionary approach and consider the worse case scenario. Also consider that WCMRC (formerly Burrard Clean) admitted to Vancouver Council 2 years ago that it is only certified to clean up 100,000 barrels – that’s for ships carrying 900,000! You do yourself no credit citing Saddam Hussein or the BP spill as if it were all cleaned up. Bollocks!! You sound like climate change deniers who say carbon is natural so how could pumping excess amounts of it into the atmosphere be a bad thing?…Finally, re: Exxon – you’re confusing the actual ecological and economic costs with the damages assessed by the courts…damages which have NEVER been paid, incidentally. Talk to the fishermen of Cordova Bay who lost their livelihoods 23 years ago and have yet to see the fish return and you’ll see how quickly nature dispenses with the effects of an oil spill. And we’re not talking bitumen in that case.




  5.  
    John Hunter

    I sure would like to see Rex on the witness stand, under oath, at the NEB. He writes fiction in my opinion. On the witness stand, with these fables, he would be demolished.
    Even Exxon Valdez, hitting a reef at 18 knots and rupturing 8 of its 11 tanks, cost “only” $4.3 billion plus punitive damages. A Vancouver Harbour tanker, tied to three or four tugs, at 5 knots max, with all other ship movements banned as it exits in daytime only, is $40 billion? He assumes almost all the tanker’s 10-14 tanks rupture – a near impossible event in Vancouver Harbour.
    Can’t clean up an oil spill, he claims. Some truth if it’s Alaska or the Arctic; the cold inhibits natural degradation and human cleanup efforts. But crude is a natural product and Mother Nature cleans it up over time, as when Saddam Hussein deliberately spilled million of barrels into the sea, the BP oil Gulf spill two years later, and the natural seeps that put a million barrels a year into US waters. Bitumen is the deadliest crude on earth – on what basis?
    He seems to pick his $40 billion cost to clean up a Vancouver Harbour spill out of the air.
    He claims a 500,000 barrel spill globally every 18 months over the past 40 years. ITOPF data show that in 2000-2011, the total oil spilled in all worldwide tanker accidents was 223,000 tonnes or about 1.6 million barrels; the average over those years is 135,660 barrels, and that is from multiple incidents. So his claim of a 500,000 barrel spill every 18 months is fiction if he is talking about tankers.
    There are just many errors and unjustified assumption to comment further.




  6.  
    Damien Gillis

    Stephen Hume’s spot-on piece on the risks of oil tankers cites Rex’s $40 Billion estimate: http://www.vancouversun.com/news/Risk+rhetoric+free+pass+industry/6628933/story.html




  7.  
    Peener

    A few weeks ago, the Financial Times or Rueters reported that Lloyd’s of London was very concerned about the insurance and re-insurance of crude oil Super tankers, as only $1 billion is the standard insurance rider for crude oil super tankers. As Rex points out this is not even a fraction of the clean-up cost if a tanker had a spill in a remote area like Haida Gwaii, Alaska or Kitimat.

    Is it possible to require the owners of these tankers to have the ACTUAL clean-up costs covered by their insurance policy? If the oil companies had to pay for the REAL cost of insuring the transportation of crude oil, then most likely the Enbridge Pipeline would no longer be financially feasible?

    In this case, would BC taxpayers be on the hook for costs over the $1 billion clean up? As Enbridge has exceeded their insurance rider in the Michigan Kalmazoo River spill by half a billion so far, who is going to pay for a spill, after the $1 billion is gone? What if the spill is caused by loss of navigation from a solar or geomagnetic storm) or an act of God? Is that covered?




  8.  
    Roger Middleton

    In my understanding, refined product has been regularly shipped around the BC coast for a long time.

    Shipping crude oil, and now diluted bitumen, is a relatively new phenomenon, a practice that needs to end, for all the reasons Rex states.

    Alberta’s oil should be kept to the mainland and transported east and south, with the bitumen upgraded before it leaves Alberta.

    Ultimately, there needs to be a global initiative aimed at reducing global tanker traffic. The oceans are stressed enough as it is.

    Here, we have an excellent opportunity to be a global leader, for every barrel of crude we keep on the continent is a barrel less that needs to be shipped onto our East Coast from Saudi Arabia and Venezuela.

    A win-win in my books.




  9.  
    Joey

    It’s not just the coast of BC. It’s that hundreds of countries the world over are going broke to pay interest on foreign debts which have been foisted on them by huge private banking interests. Can you say Rothschild? Nothing will change until we take back control or OUR money from foreign scam artists.
    http://whatreallyhappened.com/WRHARTICLES/wildbankers.php

    And even then, detestable as the idea may be to foreign nationals, we have to nationalize (BC, not Canada which is beyond hope) our resources and FAVOUR companies and workers who live here, much like China has always done. Where do you think foreign operators get the credit to start mines and other companies in BC? They get it by using the collateral which is already here and which by all rights belongs us; the people who live and suffer here under a foreign controlled government.

    Dear Gordon Campbell, who destroyed the future of this province, I hope you eat a rich steak in London and choke on it. Hope your bodyguards are not able to revive you. Hope you go into the MacDonald highlands of Scotland and meet your betters. They will have a thing or two to say to you. They know Campbells.




  10.  
    Joey

    Contined from previous post:
    They represent large; often foreign, companies which wish to exploit you.

    We would be far far better off with our own bank – Bank of BC – and a government which was responsible by law to the people who elected them. The only way that is going happen is if we; the people of BRITISH COLUMBIA, have a vote on the issues. I could care less who ‘represents’ me. I want a vote on the issues.

    No, these representative don’t have your best interests at heart – they have their own interests at heart and that; according to human nature, will always be the way until we the people demand a vote on the issues which concern us. Don’t tell me you are too stupid to think about it and vote the issues because the question is not ‘could we do better’, the question is: How could we possibly do worse?

    I won’t go into it but anyone with half a brain can see how we, the possessors of one of the richest countries in the world (BC) are being screwed out of our heritage. Who worked here? Who sacrificed blood sweat and tears to make BC what it is or could have been? Not some douche bag banker in New York or London or Tel Aviv, it was you. Now they are bringing in foreign




  11.  
    Joey

    Yeah, yeah, yeah. Well the problem is we only have one coast to give away and if it is tarnished by the incredible pollution even one bitumen spill would mean it would be worth next to nothing. I grew up on that coast when you could eat your dinner right off the rocks, take home some clams or oysters to make delicious meals, fish cod to your heart’s content and I for one would never trust a foreign oil company or the federal government (which is right now embroiled in a huge controversy over whether or not they stole the election by making false calls to voters to go to polling stations where they were not allowed to vote) Does it get any worse? Bush stole the American election twice and got away with it. Did Harper take a lesson from his book and steal the Canadian election? YES! Not that it matters as we the people have never had a say in how our government is run. It is becoming so obvious that even people with half a brain who are addicted to daytime tv are catching on.

    Keep at it Rafe, your message is getting through!

    And the message should be: Don’t trust your representative government because they don’t represent you. They represent large; often foreign, companies whic




  12.  
    Wayne Clark

    enter your message here…The Harper government of Canada is so eager to give away Canada’s un-renewable resources that they are willing to build not one pipeline but two through some of the most pristine environments left on this planet, which doubles the odds on a major environmental disaster. Then we get to load this toxic sludge on to a supertanker that is not able to get into most ports in the world let alone 240 Km up the fourth most dangerous waterway in the world.
    Canada is on the razors edge of becoming resource poor following the sad experience of many African countries where having resources is a curse.




  13.  
    Jerry

    How about spending the millions and billions of dollars on finding renewable energy sources, rather than enriching the big oil companies. The scariest words I have ever hears in over 75 years of life are; “Our first responsibility is to our stockholders.” In the minds of big business, this justifies anything.
    The thought of more tankers in our waters makes me physically ill. I’ve spent a good portion of my life at sea and I’ve had some first hand knowledge of oil spills, small ones, and the outcome is horrific.




  14.  

    Answer to David Alexander: Yes, I’m saying, and people all over the world are saying: Leave the tarsands hydrocarbons in the ground! What does not spill into our rivers, lands, and ocean, spills into our atmosphere when it is burned, increasing global warming. There is enough carbon in the tar sands to send Earth into runaway heating and leave a great disaster to our progeny.

    If you’d like to read the scientific explanation for this position, read this excellent report from NASA, Columbia University Earth Institute, Stockholm Environment Institute, Potsdam Institute, etc., here:
    http://arxiv.org/ftp/arxiv/papers/1110/1110.1365.pdf

    Cheers, Rex Weyler




  15.  
    Damien Gillis

    David, the question is not whether Vancouver needs oil – though we should be doing everything we can to reduce our need for it through investing in public transit, cycling infrastructure and more walkable urban communities…However, what this is really about is whether we want Vancouver – and Kitimat, for that matter – to become export centres for the Alberta Tar Sands to access Asian markets, or whether we will import only what we need for local use. We already have enough oil coming to Vancouver via Kinder Morgan’s existing 300,000 bpd line to Burnaby to fulfill our local demand. Every ounce of Kinder’s proposed new 550,000 bpd line and Enbridge’s 525,000 bpd line to Kitimat (which, as economist Robyn Allan points out, is designed with considerable expansion capacity in mind) is ENTIRELY for export. That means a wholesale transformation of BC into Alberta’s bitumen export bitch – and nay the risk but the certainty of spills at some point, which would further alter the very socio-economic, ecological and cultural character of this province we love so dearly. That’s what’s at stake – since you asked.




  16.  
    Dino

    Nobody wants this crap going through their back yard or in our water. Screw the Chinese, deal only with the states if we have to just to be safe or better yet, process it then transport it refined.
    Personally I think we need to go even further… produce electricity with it and send the exhaust down deep into the earth.
    This is not rocket science but these politicians and corporate ceo’s cant see beyond the dollar signs and have already counted their chickens.
    Besides, why do we have to use every fn drop of oil before we cut off the addiction?




  17.  
    David Alexander

    …..i am thinking that you are suggesting a solution to pipeline transmission of oil and subsequent tanker transmission, but your solution does not solve the situation and make clear what to do with the oil without transmission. Are you implying that the oil b put back into the ground from where it came? Are you implying that the oil be split on the plains of the prairies and foothills? What are you really suggesting that ought to be done with all this oil that is now in the hands of the barons and patrons of industry?




  18.  
    mariner

    A down to earth estimate of the subsequent damage in current dollars – hhhm, sure make you think harder doesn’t it.

    A copy of this article has been sent to Ottawa , Victoria and Vacouver (Gregor Robinson) for their attention. Doubt it will do much good Canadian Extremists Right Wing Conservative government, but ya never know maybe someone will be able to read “proper”.

    Thanks for the enlightenment – a much needed rebuttal of corporate and conservative government propaganda.





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