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Kinder Morgan Bait & Switch: Backdoor pipeline to Washington State refineries could save Trans Mountain Expansion

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Posted June 8, 2018 by Common Sense Canadian in Energy and Resources
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Washington Governor Jay Inslee meets with BC Premier John Horgan in Victoria (Flickr/Province of BC)

By Joyce Nelson

In a widely published June 3 op-ed for Postmedia newspapers, Thomas Gunton – a former B.C. Deputy Minister of Environment – decimated the Trudeau Liberals’ decision to buy Kinder Morgan’s Trans Mountain pipeline and build its expansion project.

But instead of urging that the Trudeau government stop this controversial purchase, Gunton stated this: “Ironically, their purchase of the pipeline may provide them with one last chance for changing course. If they insist on building TMX they could appoint a multi-stakeholder task force including First Nations to consider redesigning the project to reduce its worst impacts by scaling down the size of the expansion and directing increased shipments to refineries in Washington State. This would avoid tanker exports from Vancouver, reduce the number of Alaskan tankers through Georgia Straight, and allow for the phasing out of the higher risk aging pipeline.”

This suggested “redesign” to benefit Washington’s major refineries may have been the plan all along, or at least since November 15, 2016 when Gunton’s former boss – B.C.’s former premier Mike Harcourt – suggested that Kinder Morgan and the federal Liberals “consider an alternate route” to avoid Kinder Morgan’s Westridge Terminal in Burnaby. Even before Trudeau had given federal approval to Kinder Morgan’s expansion project, Harcourt was here urging that the tarsands diluted bitumen (dilbit) be shipped “to either Deltaport or just across the B.C.-Washington state border to the Cherry Point refinery” in order to avoid “insurrection” in B.C.

The Trans Mountain pipeline has a southern leg – called Puget Sound Pipeline – which splits off at Kinder Morgan’s Sumas Terminal in Abbotsford, B.C. and delivers tar sands dilbit to several refineries in Washington State, including the Ferndale Refinery (owned by Phillips 66), the Cherry Point Refinery (owned by BP), the Andeavor Anacortes Refinery (now owned by Marathon Petroleum), and the Shell Anacortes Refinery (owned by Shell Oil).

The Puget Sound Pipeline currently has a capacity of 170,000 barrels per day (bpd), but in the documents filed for its IPO in May 2017, Kinder Morgan indicated that they want to significantly increase that amount, according to Sven Biggs of Stand.earth’s Bellingham, Washington office.

That finding seems to have been part of the reason that the local council of Whatcom County (located in the northwest corner of Washington State), voted 6-1 in June 2017 to effectively put a moratorium on the export of unrefined oil and coal from their area. But refined oil products are allowed in order to protect the hundreds of highly-paid refinery jobs in the state.

Oddly, none of the press coverage of Washington State Governor Jay Inslee’s visit to B.C. in November 2017 mentioned Kinder Morgan’s Puget Sound Pipeline. Inslee had expressed concerns about the Trans Mountain expansion project in terms of ocean oil tanker spills and threats to whales in the region, but apparently no reporter asked him about the southern leg of the project which brings dilbit to Washington’s refineries.

During Inslee’s November 2017 visit to B.C., I was writing my latest book – Bypassing Dystopia, published in April by Watershed Sentinel Books – and decided to contact Sven Biggs for the chapter on Kinder Morgan. Biggs told me by email that under Kinder Morgan’s current expansion plans, the capacity of the Puget Sound Pipeline branch “will be increased to 225,000 bpd and in the IPO that the company filed earlier this year [2017] to raise money for the expansion they said it could one day be expanded to 500,000 bpd.”

With regard to Gov. Inslee, who is co-chair of the U.S. Climate Alliance, Biggs told me, “I am not aware of him taking a position on the existing Puget Sound Pipeline or Kinder Morgan’s plans to increase the amount of oil flowing through it.”

In February 2018, Gov. Inslee won praise from environmentalists when he rejected a proposal for a huge oil-train shipping terminal in his state. Weeks later he was back in B.C., appearing to support B.C. Premier John Horgan’s efforts to stop the Trans Mountain pipeline expansion, but this time reporters were more skeptical.

Tom Fletcher, writing for Grand Forks Gazette, noted, “Inslee sidestepped a question from a Vancouver reporter about his own state’s use of the pipeline to supply crude to its refineries at Anacortes, Cherry Point and Ferndale, some of which is sold back to B.C. as refined fuels.” The National Post’s Tristan Hopper called out the “hypocrisy of Washington State”, noting “Alberta oil products shipped through the Trans Mountain pipeline supplied 28.5 per cent of Washington’s petroleum needs in 2017. In fact, the majority of product now moved through the Trans Mountain pipeline ends up in Washington hands.”

Most important, The Tyee’s Mitchell Anderson wrote a major article exposing the extent to which Washington refineries already profit from Trans Mountain: “How badly is Canada missing out by not refining our own oil? The oil industry has a colourful term called the crack-spread to describe the profit margin for refineries between buying crude and selling refined products. Washington refineries buying Alberta bitumen have some of the largest profit margins in the world – up to $45 US per barrel in 2013. Not surprisingly, Vancouver also has some of the highest retail gasoline prices in North America.” 

Anderson cited a recent report indicating that Shell and BP refineries in Washington are especially poised to profit from the Trans Mountain expansion.

Of course, Alberta Premier Rachel Notley’s threat to cut off oil and gas shipments to B.C. provided good reason for Premier Horgan and Gov. Inslee to discuss access to refined products. And as the Ottawa Citizen noted, “…there are plenty of Washington State refineries ready to start sending gasoline over the border in a moment’s notice.” [6] That may have been the plan all along, with Washington State refining for the entire Pacific Northwest region.

After Prime Minister Trudeau announced his intent to purchase the Trans Mountain pipeline and proceed with its expansion, Gov. Inslee wrote an op-ed in The Seattle Times stating: “This project runs counter to everything our state is doing to fight climate change, protect our endangered southern resident killer whales and protect communities from the risks associated with increased fossil-fuel transportation – by rail and by sea.” Once again, Gov. Inslee was silent on the southern leg of Trans Mountain, the Puget Sound Pipeline feeding the BP, Shell, Marathon, and Phillips 66 refineries.

Now we have Thomas Gunton suggesting a “redesign” for the pipeline expansion that actually matches what Kinder Morgan has been planning for the Puget Sound Pipeline. 

On June 7, the Globe and Mail’s Justine Hunter reported that Ottawa’s proposed purchase of the Trans Mountain pipeline project would “make it the owner of [the] spur line that feeds Alberta oil to Washington State’s refineries”. [8] Hunter noted that Gov. Inslee “has been working closely with environmental organizations to impose new regulations and taxes on the transport of heavy oil through his state.”

But it must be said that Gov. Inslee’s May 30 op-ed mentions resistance only to oil transport “by rail and by sea”. Transport of dilbit by the Puget Sound Pipeline goes unmentioned, as does future export and transport of refined gasoline from Washington’s refineries by tanker and barge.

As usual, we are being “played.” Stay tuned.     

Joyce Nelson’s seventh book, Bypassing Dystopia: Hope-filled Challenges to Corporate Rule, has just been published by Watershed Sentinel Books. It is the sequel to Beyond Banksters: Resisting the New Feudalism and can be ordered at https://watershedsentinel.ca/bypassing-dystopia

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8 Comments


  1.  

    FACT: Canada CANNOT compete in building a refinery to process bitumen for domestic and international markets.

    From what I read, the attempt to build one in Alberta was fraught with corruption and waste.

    Plus, we still have to think about a matter now evolving in the Supreme Court of Canada. Who is going to pay for an estimated $260 Billion in cleanup costs for abandoned wells and unmitigated loss from tailing ponds bequeathed to us by immoral Tar Sands operators who abandon projects?

    The magnitude of that issue involves about 155,000 sites.

    Canadian taxpayers had best consider we may be stuck for the majority of that $260B before we go investing in refinery development on top of putting Pension money into $4.5 B to entice Kinder Morgan to continue, then there will be up to $12 Billion to build it and potentially up to $40 Billion excess of Liability should a major blowout or spill occur in the Vancouver area.

    A Petrochemical Engineer stated it takes colossal capital outlay to build refineries to meet current demands, and with markets and Technology evolving even less to Canadian favour, we just cannot duplicate what exists in Houston, Texas or even Cherry Point in Washington State.

    Note: none of those US refineries are situated so close to highly populous areas as would be the case in KM’s Westridge Terminus in Burrard Inlet and in largely increasing Burnaby Mountain tank farms right next door to the booming City of Vancouver.

    So what’s up???? A beneficial agreement? To be continued.

    It had better be “in Canada’s best interests” to cooperate with the States this way, or it defeats Trudeau’s logic it will be built for that reason.
    .




  2.  
    Gyula Huszar

    It’s heartening to see that we, the great unwashed, see this ploy by our government to subsidize the building of an expanded oil pipeline out west when we don’t want it. As a not-so-funny added benefit, the government need not insure the course for liability in the event of the upcoming spills, since they would just claim eminent domain and say ‘so what?’
    This play is as complex and insidious as 9/11. !/ Pay off Kinder Morgan and Trans Mountain with our pensions, thereby linking our Canada Pension Plan to this pipeline; 2/ Effectively remove liability from the private sector (they can’t get additional pipeline spill insurance anywhere!) 3/ Go back to Trans Mountain and Kinder Morgan hat in hand and beg them to complete the pipeline (they won’t care how it’s built; no liability thanks to our government ownership) 4/ Thank Governor Inslee for his help in placating the great unwashed here in B.C. by shipping his refineries all the oil they need.

    We here in B.C. will see no benefit from this bait and switch plan of theirs. But we will bear the consequences in their entirety.




  3.  
    Gordon

    Northern Gateway was going to go to Prince Rupert or Kitimat, and it got shut down in the courts. I guess you were not paying attention in class eh? Or selective memory, Mr Non-confidence?

    This idea still leaves the entire length of the Fraser and Thompson Rivers exposed to risk of massive spills. 3 times the present risk.




  4.  
    nonconfidencevote

    Once again Canada’s raw materials are shipped to another country for further processing ( oil, logs, ore, etc.)
    Is anyone really surprised?
    Try and build anything, anywhere in this Province or Country and the obligatory protesters ( Luddites?) are storming the gates.
    I always thought trying to upgrade a pipeline into the Lower Mainland was one of the stupidest corporate decisions i’ve ever seen. And then trying to send ships down Canada’s busiest Harbour, out through the Georgia St. Expensive and endless protests.
    Nah.
    This whole Trans Mountain/Burnaby depot is smoke and mirrors.
    We’ll get a small feeder line to the tank farm and Chevron Refinery in Bby for local consumption and thats it.
    90% of the rest of the oil (and jobs) will flow south to Cherry Point.
    Well done protesters, you “won”.
    The oils still flows, 60 miles to our south and the same spills will flow north with the currents. And the Canadian taxpayer is now on the hook for at least $4-5 billion( but since the govt is involved double that estimate) to build a pipeline that will serve US oil companies.
    Protesters, just dont complain when there isnt any Govt money left over to increase your monthly Welfare Cheques.

    I’m just surprised Prince Rupert wasnt an alternative. Since its goegraphically closer to Asia…but we’d have to spend 10-20 years getting agreement with 100 different “special interest ” groups before any dirt would get moved.
    Canada formerly “Drawers of water and Hewers of wood”
    Now? Drawers of paperwork and hewers of meetings………




    •  
      Turcotte Jean-Pierre

      “The oils still flows…” Learn something: it’s NOT OIL. IT’S DILUTED BITUMEN AND CONDENSATE. And it cannot be cleaned up – a fact proven by the Kalamazoo spill. And the risk to the entire Fraser watershed fisheries is at risk, and that means tens of thousands of jobs compared to negligible.




      •  
        nonconfidencevote

        Oh for God’s sake. Get over yourself.

        Yes its Diluted Bitumen ( heated to several hundred degrees celcius , pressurized to several hundred PSI and “diluted” with toxic chemicals to allow it to flow) that when leaked from a pipeline reverts back to its solid state and doesnt flow OR float.

        We ALL know that.

        Its faster to say OIL

        It still doesnt negate the fact that the DilBit ( Happy now?) will flow to Cherry Point inside the Canadian Taxpayer owned Pipeline for 99% of its journey through Alberta and BC .
        Regardless of whether it is shipped from Washington State or Burnaby…..its still gonna get shipped.
        Oil spills?
        Absolutely. In Burnaby? Not unless the pipeline supplying Chevron springs a leak.
        The OIL will flow. Until someone replaces internal combustion engines with electric ones.( and if Tesla survives bankruptcy this year)
        Either way.
        Get over it.




        •  
          nonconfidencevote

          Hmmmm,
          Tesla stock plummeting overnight?
          Is Elon smoking doobies with his new girlfriend?
          Will he land on Mars?
          Will he be bankrupt by Christmas?
          Only Santa and his lawyers know for sure……





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