All posts by Common Sense Canadian

Port Metro endorses “fuel of last century” with coal terminal OK

August 26, 2014Coal, Energy and ResourcesfeaturedCommon Sense Canadian

Port Metro Vancouver is taking a big step backwards with coal terminal approval, say critics — Port Metro Vancouver is taking a big step backwards with Fraser River coal terminal approval, critics say

By Chris Rose – republished with permission from Desmog.ca

Canada’s largest port has given the green light to a proposed controversial facility on the Fraser River that would unload U.S. coal destined for energy-hungry Asia.

Despite facing significant environmental and health concerns, Port Metro Vancouver said in its decision, released last Thursday, that the proposed coal transfer facility at Fraser Surrey Docks poses no unacceptable risks.

The $15 million project could handle at least four million metric tonnes of coal per year delivered by the Burlington Northern Sante Fe Railway Company. It will then be loaded onto barges at the Surrey facility and transferred to ocean-going carriers at Texada Island, prior to export.

Port Metro endorses fuel of last century with coal terminal OK — Photo: Fraser-Surrey Docks

Referring to environmental studies and mitigation efforts, Jim Crandles, Port Metro Vancouver’s director of planning and development, was quoted as saying “we are confident that the project does not pose a risk to the environment or human health and that the public is protected.”

Disappointed opponents, however, said there are many unanswered questions about local and regional impacts of building and operating the facility.

Those include coal dust and diesel exhaust exposure in local populations, fire risks associated with storing coal in open barges in local communities, noise impacts, emergency vehicle access constraints, and impacts associated with transporting coal in open barges on the ocean.

“If it goes ahead, this decision means more U.S. coal trains travelling through our communities,” Kevin Washbrook, director of Voters Taking Action on Climate Change, told DeSmogBlog in an email Friday.

[quote]It means more coal being shipped to Asia to be burned, and more emissions into our atmosphere, at a time when we absolutely, positively need to cut back on those emissions. All to run uncovered, football field-length barges of U.S. thermal coal down the world’s richest salmon river.[/quote]

Washbrook, who has compared Big Coal to Big Tobacco and its efforts to obscure the risks of smoking in order to keep making huge profits, added the decision will be challenged through the local air quality permitting process, during the coming municipal elections in November and in court.

Simon Fraser University health sciences professor Tim Takaro said the project runs contrary to public health.

“Coal is a fuel of the last century,” Takaro says.

[quote]We have to stop using it sometime and here’s a great opportunity to apply society’s ‘brakes,’ join communities in the U.S. that have refused to ship this same product, and think of the future generations who will inherit the messes we make.[/quote]

The Port Metro Vancouver decision comes shortly after the Oregon Department of State Lands rejected a proposal to export 8.8 million tons per year of coal to Asia from the Port of Morrow in Boardman.

But as DeSmogBlog noted on Thursday, the Long Beach City Council had just approved a proposal to export coal and petroleum coke, which is a tar sands by-product, to the global market, mainly Asia, to the tune of 1.7 million tons per year.

Last November, the Winnipeg Free Press reported a group of concerned citizens, environmentalists and scientists asked Port Metro Vancouver officials to delay any expansion of coal-exporting facilities, saying public input was required and climate change problems would be increased as a result of the projects.

Among those who signed a letter opposing any coal port expansion were David Suzuki, Naomi Klein and James Hansen, director of NASA’s Goddard Institute for Space Studies, the first scientist to warn the U.S. government of the potential dangers of unmitigated climate change and who described coal-fired power plants as “factories of death.”

[signoff3]

Opinion: Mount Polley demands full Judicial Inquiry – under oath

August 21, 2014Metals and Minerals, MiningfeaturedCommon Sense Canadian

By Ed Mankelow

The Tailings Dam breach at the Mount Polley Mine is likely the worst mining disaster that this province has seen and it could be getting worse. If the salmon and trout stocks of Quesnel Lake are impacted on their spawning journey to Quesnel Lake and feeder streams, then not only this year’s run but the runs from this year’s spawning of salmon and trout could be lost.

There are abandoned mines in BC and this is especially true with copper mines that have gone acid and leaked into rivers and lakes for years. An example would be the possible reopening of the Tulsequah Chief mine on the Iskut river and the Johnny Mountain mine. The latest mine approved by government, Red Chris, has in the Environmental Assessments Final Report a statement that on closure, the tailing pile would likely turn acid and would have to be treated in perpetuity.

On Mount Polley mine, one of the concerns is the issue of Hazeltine Creek. The massive tailings flow widened the creek to ten times its size, so when the creek returned to its usual size, a massive area of tailings will be left containing heavy metals.

While the news is that the water in Quesnel Lake is safe to drink, this is preliminary and taken soon after the release. If there is any danger of sulphides anywhere along the creek, then the area could become acid. Mines can become acid over many years and acid mine drainage is known as a “forever problem”.

From the evidence before us, this dam failure did not have to happen. While Imperial Metals must take responsibly for the ultimate dam failure, a host of government failures contributed to this mining disaster. The lack of clear responsibilities. A lack of inspection and monitoring by government branches. Allowing companies to be self-regulating. A lack of adequate budgeting and staffing, which would enable those who should be responsible to do their job.

The 2011 Auditor General report, “The Environmental Assessment Office’s Oversight of Certified Projects”, clearly documents that this is not happening. As Auditor General John Doyle noted:

[quote]Adequate monitoring and enforcement of certified projects is not occurring and follow up evaluations are not conducted. We also found that information currently provided to the public is not sufficient to ensure accountability.[/quote]

In its Feb 10, 2011 report, “The problems with BC mining regulations”, the University of Victoria’s Environmental Law Centre noted the EAO’s lack of field presence coupled with its lack of a viable compliance and enforcement strategy are further challenges.

To the effective enforcement of provincial EA conditions, moreover – although the 2009 EAO user Guide provides that inspections may be undertaken where appropriate – government staff report successive budget cuts have had significant impacts on their enforcement capabilities and they do not consider the enforcement of EA certificates to be within their mandate.

While we are being told by the minister that Imperial Metals applied for an adjustment to their certificate to lower the water level in their tailings pond and it brought them into compliance, it certainly did not solve the issue. We are told by the former tailings pond foreman that he consistently warned the mine managers that their were problems with the height of the dam walls and the amount of water. He was ignored and finally quit.

Also, an environmental consultant hired by the company warned them of the issues on the dam and recommended that they bring in an engineer to inspect the dam. This they refused to do. The company that designed the tailing pond also talked of warning the company.

There are too many questions unanswered, too many allegations of government and company ignoring concerns. The only way to resolve this issue and arrive at the truth is to have a full judicial inquiry where people testify under oath. A joint review enquiry being suggested will not bring out the truth.

The public should demand a full judicial inquiry.

Ed Mankelow
Past Chair – Environmental Mining Council of BC
Member – Advisory Council on Mining

Mount Polley bankruptcy could leave BC public footing cleanup bill

August 13, 2014Metals and Minerals, Mining, UncategorizedfeaturedCommon Sense Canadian

Mount Polley bankruptcy could leave BC public footing cleanup bill — Rod Marining, a resident of the region, surveys the damage Polley Lake (Chris Blake)

Republished with permission from 250news.com

By Peter Ewart

The clean-up costs for the massive tailing pond spill at Imperial Metals’ Polley Mountain mine have been estimated by some to range between $50 and $500 million. In addition, legal action will undoubtedly be launched by individuals, businesses, and First Nations in the region which could result in hundreds of millions more in costs. And then there are law firms launching suits on behalf of Imperial stockholders who have suffered huge stock losses when the company’s stock plunged over 40%. Whatever the final amount, the issue comes down to – Who is going to pay?

On August 8, BC Environment Minister Mary Polak said: “We have a polluter-pay model in British Columbia and we expect the company will be the one paying for the cleanup and recovery” and that she has “heard commitments that [the company] is ready, willing and able to continue to fund what they need to”.

However, comments from Imperial Metals president Brian Kynoch suggest that the situation may be a lot more dicey than this optimistic statement from the Minister. According to one news report, Kynoch has committed to paying for the clean-up “to the best of [his] ability”. But in contrast to Mary Polak’s statement that the company is “ready, willing and able” to pay for the spill, Kynoch is more equivocal and doubts that the company’s insurance will be high enough to cover the cost (for more on the insurance issue see Aug. 12 column).

Imperial in financial Catch-22

After indicating that the company does not have the money in the bank at this time, Kynoch goes on to say that, “If it’s $400 million, then we are going to have to get mines generating to make that money to do the cleanup.”

But there is a problem here when Kynoch says that we need to “get mines generating” the cleanup funds. For one thing, as noted before in 250 News on Aug. 7th, company financial statements of previous years reveal that the Mount Polley mine itself was being used to generate “cash flow” for the company’s new Red Chris mine in northwestern BC, as well as other Imperial operations. Yes, the Red Chris mine is nearing finish as is its extension to the Northwest Transmission Line, and presumably will generate substantial amounts of revenue down the road. But completion of the construction, as well as start-up funds, will be required for a while before that happens, especially since negotiations are still going on between Red Chris and that Tahltan First Nation regarding the mine.

So the Red Chris mine will still need cash flow from other parts of the company. But the Mount Polley mine, which has been a cash cow for Red Chris, will likely not be in operation until the end of the year or later. In the meantime, clean up and associated costs for the spill will be mounting by the day. To compound the problem, Imperial Metals’ other operating mine, Huckleberry Mine (which Imperial has a 50% stake in), was down for several months earlier this year because of equipment failure. The company has a lot of debt, and, as one financial analyst says, “the shutdown of Mount Polley will stretch thin an already tight balance sheet”.

Red Chris: The sharks are circling

So how will the financial oligarchs who dominate the Canadian and global mining industry view this dicey situation? Speaking plainly, some are no doubt looking at how to hive off the lucrative Red Chris mining asset and other Imperial assets from the Mount Polley operation, which is already nearing the end of its life as a mine and will be beset with clean-up costs and lawsuits for years to come. Indeed, a number of big companies were in fierce competition to gain control of the Red Chris property several years ago, but Imperial Metals eventually won out. Now the situation has changed and the sharks are circling again as can be seen by recent business analyst speculation on how Red Chris might be torn away.

But could this conceivably happen? Could the Red Chris mine and other Imperial assets be siloed or separated off from a Mount Polley mine that is burdened with debt and lawsuits? Could then the Mount Polley operation (or even Imperial Metals itself) eventually go bankrupt requiring public funds to clean up the mess and leaving plaintiffs twisting in the wind?

Each Imperial mine is its own separate company

The first thing to get straight is that, although the Mount Polley mine and the Red Chris mine are all part of the parent company Imperial Metals and are subsidiaries of it, they exist as separate companies. For example, the Mount Polley mine is owned by the Mount Polley Mining Corporation (Imperial Metals acquired majority ownership back in the 1990s) and the Red Chris mine is owned by the Red Chris Development Corporation. In turn, both are wholly owned by Imperial Metals.

To many, it would seem logical that any debt or obligations incurred by the Mount Polley Mining Corporation should fall on the parent company Imperial Metals and its wholly owned subsidiaries such as Red Chris Development Corporation. But that is not necessarily the case according to current corporate law and government policy.

For example, a few years ago in BC, there was a tank car spill on a railway and the parent railway company and its 100% owned subsidiary company (which actually operated the railway) were sued. But the BC Provincial Court ruled “that the parent company wasn’t liable for the subsidiary’s environmental offences” because it merely owned the railway and didn’t operate it (Environmental Compliance Insider).

But wait. If we examine Business Registry records regarding Imperial Metals and its subsidiary companies, we find that there are several overlapping members of the Boards of Directors, i.e. several of the Imperial Metals directors sit on the board of Mount Polley Mining Corporation and the same is true for some of the company officers. Doesn’t this prove something in terms of potential responsibility?

Not in this particular railway case. The court found that it didn’t matter that there were overlapping directors. The parent company got off scot free (although this does not always happen).

BC public could be left out in the cold

In such a circumstance, it is within the realm of possibility that the subsidiary company could then go bankrupt and leave the plaintiffs and the people of BC out in the cold.

And yes, corporate reorganizations do happen all the time where assets are hived off. Indeed, Imperial Metals, facing bankruptcy back in the early 2000s, did exactly that in a court-sanctioned restructuring which saw subsidiary oil and gas companies and assets shifted into a separate company from its mining assets (which were facing difficulty at that time as a result of low metal prices).

[signoff3]

In any case, a better situation for the workforce, local communities and businesses, First Nations communities and the people of British Columbia will be that Imperial Metals and its subsidiaries remain intact and continue operating under strict public oversight, as well as with First Nations and community consent. It is especially important that Red Chris Development Corporation is not sold off by Imperial Metals and that the Mount Polley Mining Corporation is not hived off and put into bankruptcy.

Red Chris revenue should support Polley cleanup

As revealed in Imperial’s Annual Reports, the Mount Polley mine provided cash flow for the Red Chris mine construction and all sorts of profits for Imperial shareholders. Now it is Red Chris and Imperial’s turn. Clean-up costs and legal costs can be expected to go on for years. Rather than being sold off for a song and taken over by global financiers, the revenue from the lucrative Red Chris mine must be used to pay for these costs now and in the future. As previously noted, Imperial Metals’ president Brian Kynoch appears to support that course of action.

In terms of Imperial’s current financial woes, an immediate solution could be for Imperial’s largest investors, several of whom have very deep pockets, to step up to the plate and provide financing to stabilize the company’s situation. These dominant investors, who have directors connected to them on Imperial’s board, have profited greatly from Imperial’s operations in the past and should have been aware of the risks the Mount Polley mine was taking.

It is clear that vigilance is needed in this fast moving situation. For its part, the provincial government must make it very clear to Imperial Metals, as well as those who may be considering carving the company up, that it will not go along with any financial maneuvers that will hurt or endanger the interests of the people of BC or hinder the clean-up and financial reparations.

Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca

After Mount Polley, Alaska Senator doesn’t trust BC’s environmental reviews for mines

August 12, 2014Canadian Mining Abroad, Metals and Minerals, MiningfeaturedCommon Sense Canadian

Alaska Senator urges new cross-border review of BC mine following Mount Polley — US Senator Lisa Murkowski (R-AK)

The following is an open letter from Alaskan US Senator Lisa Murkowski to Secretary of State John Kerry.

Dear Secretary Kerry,

I am writing to reiterate my concerns about large-scale mining in British Columbia, which has the potential to adversely affect downstream fisheries and communities in Southeast Alaska.

The tailings pond breach at the Mount Polley Mine on August 4th has renewed the specter of environmental impacts from large-scale hardrock mineral developments in Canada that are located near transboundary rivers. While it is encouraging that Canadian officials are publicly stating that preliminary test results show contaminant levels remain below both drinking water and aquatic life guidelines, this incident should compel the State Department to evaluate additional steps that may be warranted to safeguard U.S. interests.

One such step would be to encourage Canada’s federal government to undertake a Panel Review of the Kerr-Sulphurcts-Mitchell (KSM) mine in British Columbia. While the project has already undergone extensive assessment, a rigorous final review would help ensure that its potential impacts on trans boundary waters – and Alaska – are fully minimized. A Panel Review would help guard against a similar breach of wastewater and tailings, which in the case of the KSM mine could be released into the Unuk River, just 19 miles north of the Alaskan border.

Thousands of Alaska Natives, commercial fishermen, and tourism industry stakeholders have legitimate concerns about the potential impacts that large-scale mining in Canada could hold for them. I therefore urge you to accelerate your work with your Canadian counterparts to confirm that new mining activities are subject to proper review and continued oversight.

I appreciate your consideration of this request.

Sincerely,

Lisa Murkowski

United States Senator

MP wrong to attack West Van council over Woodfibre LNG vote

August 10, 2014Energy and Resources, LNG, Oil&GasfeaturedCommon Sense Canadian

Conservative MP John Weston took issue with Rafe Mair's recent column criticizing the Harper Governmen't environmental "process." — Conservative MP John Weston

By Laura Anderson

On August 6, 2014, John Weston took space in The Local to append his name to an op-ed criticizing West Vancouver council’s motion against an LNG plant and tanker traffic in Howe Sound.

He “disagree[s] with the motion, the way it has been passed and its timing.”

[quote]I admire the Mayor and Council of West Vancouver and work with them regularly…In fact, I have never previously written publicly to challenge one of their decisions or actions. Elected officials have a duty to wait until they know what the concerns are, how significant they may be, and what can be done to mitigate them. At this time, we have not heard of the Council investigating the matter thoroughly or interviewing the proponent, Woodfibre LNG in Squamish.[/quote]

I disagree with Mr. Weston’s statements and do not consider they were appropriate for a member of parliament. As a private citizen, possibly, but not as a representative of the federal government and certainly not in public communication.

Mr. Weston took it upon himself to chastise council for passing the motion in question without a thorough investigation of the project and the entity he’s calling ‘the proponent’.

The proponent is Woodfibre LNG, owned by Pacific Gas and Oil, owned by Royal Golden Eagle International, owned by an Indonesian gentleman named Sukanto Tanoto. You can look up Mr. Tanoto, and his business interests and his environmental track record.

According to The Globe and Mail on March 26, 2014, there are 14 LNG project proposals in contention in BC. Each of them will require pipelines, terminals and tankers. Each will produce significant negative impacts on communities and the environment.

The federal government – the Conservative government – is in this as deeply as the provincial government.

Mr. Weston accused West Vancouver Council of NISEB or Not in Someone Else’s Backyard, an acronym evidently a step beyond NIMBYism.

It appears Mr. Weston’s intention is to remind West Vancouver that the LNG dream will bring enormous social and economic rewards to the province. I presume this message is intended for all those coastal communities that will be impacted by the presence of LNG tankers.

The MP for West Vancouver, etc., used the balance of the editorial space he was given to educate readers about those economic and social benefits.

Mr. Weston tells us that LNG will bring “(jobs, economic growth)…the ability to pay for our teachers, our medical services or welfare and the other good things we love in British Columbia.” He suggests that LNG is preferable to coal.

I think every British Columbian would agree with Mr. Weston about the benefits a robust economy can provide. However, all economic factors and consequences, not only the financial, need to be calculated and evaluated when decisions are made about how our economy is managed.

[signoff3]

Woodfibre LNG wants to ship gas brought by pipeline, then converted to LNG, aboard 40 tankers a year from its terminal. Imagine all 14 LNG projects at work. How many tankers, how many terminals, how many pipelines will they require?

Look at Enbridge’s abysmal pipeline spills and leaks history. Look at Mount Polley just the other day. Do we want to bear the responsibility, and the legacy, of transforming BC into the wasteland that is the Alberta tar sands?

LNG would be produced by fracking. The negative consequences of the brutal extraction process of fracking are too numerous to mention here. Okay, maybe just one: the amount of water required – a lot of water. And one more: despite our premier’s promise, the enormous financial benefits from LNG fracking are numbers that don’t add up, according to a wide variety of experts. These are not assumptions, Mr. Weston, they are science.

I believe factors like ownership and profit, as well as job creation and economic benefits, must be part of the equation. I believe we must make every effort to support, subsidize and focus on alternate energy production and delivery. Our current provincial and federal governments, by their actions, do not agree. Instead, they support an economic and political model that no longer works.

Maybe West Vancouver’s mayor and council skipped what might be a necessary step in the municipal process. I believe that’s arguable.

It certainly provided Mr. Weston with a golden opportunity to present his position on LNG, the fracking process and tankers in “our jewel, the Howe Sound”. I presume, since Mr. Weston is member of the Conservative party as well as a member of parliament, that he is stating the federal position as well.

Two days after Weston’s op-ed, Mayor Smith responded on the front-page of the North Shore News. The mayor said the motion would be revisited, presumably once council has reviewed a report from staff. That report, which presumably will include environmental, economic and political factors, (factors that experts spend years analyzing) will be available to council in time for the motion to be revisited either on September 8 or 15.

To conclude, I believe Mr. Weston’s statement was an inappropriate display of political positioning, cloaked in a message schooling West Vancouver council on matters of procedure.

I support Mayor Smith’s decision to revisit the motion, although I do not believe this is necessary.

I do not understand Councillor Trish Panz’s comment that “the jurisdiction in Squamish is not ours to comment on.” Surely, if the motion was about LNG and tankers in Howe Sound, Ms. Panz would agree that what happens in our waterways affects everyone living in the vicinity – and beyond, I would venture to say. Everyone in BC is affected by decisions about pipelines, terminals, coastal tanker traffic, LNG extraction (aka fracking).

I concur with Councilor Michael Lewis that council’s decision was based on legitimate concerns and strong community sentiments. I can only add my hope to his, that West Vancouver council’s vote against this motion will again be unanimous.

Laura Anderson
West Vancouver, BC

Mount Polley owner donated half a million dollars to Liberals, gets easy ride from Bennett

August 8, 2014Metals and Minerals, Mining, Politics, Western CanadafeaturedCommon Sense Canadian

BC Minister of Mines Bill Bennett (CP) — BC Minister of Energy and Mines Bill Bennett (CP)

By Alex Hanson

The Bill Bennett dog and pony show has been wheeled out in the media once again, this time to cover for his long time pal and major campaign contributor Murray Edwards – the biggest shareholder at the now infamous Mount Polley Mine.

The recent debacle at Mount Polley has the potential for being the biggest environmental disaster in BC history. It has the president of the mining company, Imperial Metals, running in circles with claims that the sludge from their tailings pond is “very close” to drinking water quality.

It also has Minister of Mines and Energy, Bill Bennett doing damage control on behalf of the BC Liberals for their mismanagement of mining in BC – choosing to let companies police themselves as the BC Liberals rid themselves of government inspectors.

Here’s what Postmedia columnist Stephen Hume had to say about Bennett’s response: “…the usually ebullient and forceful minister sounded uncharacteristically querulous, a hand-wringer rather than a strong leader. The best he could initially summon was the observation that the disaster shouldn’t have happened. Gosh, you don’t say! But it did happen, on his watch, and he is responsible for making sure accidents like this don’t happen.”

The most Bennett could muster was a whopping $1 million fine for this colossal fiasco.

But why would Bennett take a political hit by being so weak on the issue, when Imperial Metals has been so openly reckless in their stewardship of the environment?

Mount Polley owner one of Liberals’ biggest donors

Back in January 2013, two men – Murray Edwards and Rod Love – put on a $125 per plate fundraiser in Calgary for the BC Liberals, prior to last provincial election. Dig a little deeper and you’ll find that various companies in which Calgary billionaire and Flames owner Edwards is a major investor gave an additional $482,857 to the BC Liberals over the last several years:

Imperial Metals: $178,300
Canadian Natural Resources: $153,480
Penn West Petroleum: $65,835
Mount Polley Mining: $46,720
Resorts of the Canadian Rockies: $23,522
Ensign Drilling: $15,000 (source: Elections BC)

No wonder the BC Liberals began gutting the Ministry of Mines and paving the way for pipelines as soon they got into power. Less regulation and enforcement means more room for profit.

And with the 18th richest billionaire in Canada as Bennett and Clark’s major campaign contributor, we should expect to see more of the Minister of Energy and Mines sitting pretty in front of the cameras, as he whitewashes the Mount Polley disaster for his buddy Mr. Edwards.

Say cheese Minister Bennett!

Alex Hanson
Fernie BC

[signoff3]

SFU Prof Mark Jaccard: BC LNG a race to the bottom

August 7, 2014Economics, Energy and Resources, LNGfeaturedCommon Sense Canadian

BC Premier Christy Clark addresses a conference on LNG (Damien Gillis)

This is a guest post by Mark Jaccard, professor of sustainable energy at Simon Fraser University and a convening lead author in the Global Energy Assessment – republished with permission from desmog.ca

During B.C.’s 2013 election campaign, at a conference of energy economists in Washington, D.C., I spoke about how one of our politicians was promising huge benefits during the next decades from B.C. liquefied natural gas exports to eastern Asia. These benefits included lower income taxes, zero provincial debt, and a wealth fund for future generations. My remarks, however, drew laughter. Later, several people complimented my humour.

Why this reaction? The painful reality is that my economist colleagues smirk when people (especially politicians) assume extreme market imbalances will endure, whereas real-world evidence consistently proves they won’t. For B.C. Premier Christy Clark to make promises based on a continuation of today’s extreme difference between American and eastern Asian gas prices was, to be kind, laughable.

Shale gas its own worst enemy

For many years, natural gas prices differed little from one region to another. But the shale-gas revolution in the U.S. in the past decade created a glut, causing rock-bottom prices in North America. Meanwhile, prices in eastern Asia were pegged to the price of oil, which has risen. These two trends led to a price divergence starting in 2008. By 2012, Japanese gas prices were more than four times higher than North America’s.

The Asian equation

If that difference was to hold for several decades, producers could earn sufficient revenues from Asian sales to cover shale gas extraction, pipeline transport, cooling to liquid in LNG plants, shipment across the Pacific, healthy profits, and billions in royalties and corporate taxes. That’s an attractive image in an election. But it can quickly become a mirage as gas markets behave like markets.

In competitive markets, a price imbalance triggers multiple profit-seeking actions, which work to eliminate the difference — usually sooner than expected — by those hoping to benefit from it. In this case, there are many potential competitors for the gas demands of China, Japan and their neighbours. China can invite foreign companies to help develop its massive shale gas resources. It can buy from Russia, which has enormous gas resources. It can also buy from other central Asian countries, such as Kazakhstan. It can also encourage a bidding war between prospective LNG suppliers from many parts of the world, some of which will have lower production costs than B.C.

[signoff3]

The result will push down the price in eastern Asia. As was easily predicted by my smirking colleagues, it’s already happening. Unofficial reports put the price of a recent gas contract between China and Russia at $10.50 per million British Thermal Units, far below the peak Asian price, and close to (if not below) the cost of sending B.C. gas to China. At this price, there will be no government royalties, no lower income taxes, no debt retirement, no wealth fund. Maybe no LNG plants.

BC plants would cut corners

If any LNG plants are built in B.C., they will likely be constructed and operated as cheaply as possible, which will put the lie to another promise of Clark’s. In a province with legislated targets for reducing carbon pollution, she promised B.C. would have “the cleanest LNGproduced anywhere in the world from well-head to waterline.”

As it turns out, this promise is easy to verify. Experts know the cleanest LNG in the world is the Snohvit project in Norway, which emits 0.35 tonnes of CO2 per tonne of LNG. The under-construction Gorgon facility in Australia will match it.

But, public documents indicate British Columbia’s proposed LNG industry will be three times worse, producing one tonne of CO2 per tonne of LNG. Were three such facilities built as proposed, they would bring oilsands-scale carbon pollution to B.C., doubling our current emissions and making it impossible to meet our legislated targets.

We could build the cleanest LNG systems in the world. This would require reducing methane leaks from processes and pipelines, capturing and storing carbon pollution, and using renewable energy to produce electricity for processing and cooling natural gas, as Clean Energy Canada has recently showed.

But this is unlikely, especially as those Asian gas prices fall. So brace yourself for another barrage of Orwellian doublespeak from government and industry, in which cleanest means dirty, great public wealth means modest private profits, and revised climate targets mean missed climate targets. No doubt my economist colleagues will be amused. But should they?

Follow Professor Mark Jaccard on Twitter @MarkJaccard

To the ends of the Arctic: The new frontier of extreme energy

August 6, 2014Energy and Resources, First Nations, Oil&GasfeaturedCommon Sense Canadian

By David Lavallee

Documentary filmmaker David Lavallee recently journeyed to Canada’s Arctic for his forthcoming film, To the Ends of the Earth, which drills deep into the modern age of extreme energy. Plans to open the arctic to seismic testing are a source of growing controversy.

“Nanook”, our guide Bryan Simonee says while scanning the ice floe edge. Nanook, nanook. I’ve heard that word before – my brain struggles with recall of its meaning. I know about five words in Inuktituk and this is the 6th. Nanook…nanook of the north? Doesn’t it mean polar bear?

Indeed it does, and this particular one is at about 50 metres and closing, drawn to our camp by the smell of boiled seal soup. A large male. “Uh, is your rifle nearby?” I ask nervously. Simonee’s rifle is already in his capable hands, and he seems mildly annoyed at this curious 1200 pound animal, a highly skilled and highly adapted predator. He walks towards it and growls something in Inuktituk. It pauses, then begins marching sideways instead.

Not satisfied with its slow retreat, Simonee aims his vintage Lee Enfield above its head and fires a warning shot. It stops, looks at us with mild concern and then saunters off with a look that says, “ok FINE then, have it your way.” I breathe a sigh of relief and Bryan says to me:

[quote]Yes, you see, the danger is real.

[/quote]

Extreme energy coming to Canadian Arctic?

The danger to the Arctic is indeed real, and that is why I’m here. I’m on location shooting my upcoming feature documentary, “To the Ends of the Earth”. This film focuses on our geographical and geological ends of the earth exploration for the last remaining reserves of oil and gas and the economic/environmental consequences of this new energy age. My goal with this film is to begin a conversation I believe we sorely need: what it means to live in an age in which we witness the rise of extreme energy.

Extreme energy is in its infancy in the Arctic, but there is no question that without sustained opposition and visionary thinking to create alternatives, world oil demand will force a final offensive into the most pristine and brutal environment known to humankind – those nether regions of the cryosphere (i.e. ice covered) areas north of the Arctic Circle.

No country for vegetarians

The impending gold rush starts with seismic testing, and that is what has the residents of Clyde River and Pond Inlet concerned. The subsistence hunting culture on Baffin Island dates back 4,000 years, and the advent of modern technologies, such as snowmobiles and high powered rifles, has facilitated that culture, not changed it.

Hunting is more than sport here, it is a way of life and food source for many in an area where a bag of grapes or red peppers could cost up to $20. Vegetarianism is not a realistic option up here, a place where the nearest tree is about 2,000 km away and vegetable gardens have perhaps a one-month out of twelve chance of producing anything, with constant risk of freezing. Tomatoes here? Good luck. “Vegetarian is an-other word for ‘bad hunter’,” said one of there folks we encountered. Free range organic meat is on the menu for sure though – we all enjoy a natvik Bryan shoots and butchers right there on the ice. Now I know what seal tastes like – the texture of beef but the taste of sushi.

[signoff3]

It is this subsistence hunting culture that is clashing today with big oil interests who would drill in the Arctic. In the National Energy Board hearings it became clear there would be opposition from locals due to the impacts of seismic on the food chain, or what they would call “country food”.

It all starts with seismic

The so-called regulator held hearings into seismic applications by various companies, who would do the seismic work then sell the data to oil companies. But locals are concerned about the process of consultation and the lack of information from the proponent about seismic and the potential for massive oil spills in such a fragile ecosystem. Indeed they should be – British Columbians and Canadians who watched for several years the NEB process regarding the Northern Gateway saw intense opposition. They poured their hearts out in presentation after presentation with some 96% opposed, only to watch the Harper government approve the pipeline anyways. Perhaps the people of Pond Inlet and Clyde River already know what we southerners have come to learn: that NEB processes to ‘regulate’ oil companies are like kindergarten – everyone passes.

In an interview in Clyde Rive, Jerry Natanine told us:

[quote]Seismic testing is the chief concern at the moment. The impacts will go all the way up and down the food chain.[/quote]

Indeed, there is evidence to support this. An article published in Elsevier, a science journal, questions the impact of seismic testing on narwhals in particular. Narwhal are a food source for the Inuit and are an animal highly dependent on its echolocation capabilities to find its way to the breathing holes in the ice it needs to avoid drowning. The underwater world, especially in winter, is a chaotic, dark and jumbled mess of ice blocks – if ever there was an animal that depended on its sense of hearing it is the narwhal.

As an example, Jerry tells us about a narwhal entrapment north of Pond Inlet in 2008. Locals had rushed to the aid of the beleaguered creatures, all 500 of which were using the same breathing hole to avoid drowning. As they pulled the dead creatures out and attempted to punch new holes in the ice for them they noticed a curious thing:

[quote]They had just migrated from Greenland, where they had actively been doing seismic testing- we think that’s why there was that blood in their ears.[/quote]

Shell’s early foray into Arctic proves a comedy of errors

After seismic testing is complete, gold rush fever sets in. Oil Speculators and their petroleum geologists pour over the data and buy parcels to establish their claims to black gold, under the ice, at the ends of the earth. With the short season, 3 months at best, it can take up to two years to drill an exploratory well only.

The Shell drilling rig that ran aground, The Kulluk (Greenpeace photo)

A number of years and a few billion dollars ago, Shell International launched a program to drill in the Arctic, in the Chuckchi Sea off Alaska. Numerous incidents plagued its operations- a fire on one of their ships, an emergency evacuation as several millions tonnes of ice came rushing at an exploratory well which had to pull up stakes, another ship that slipped anchor in Dutch Harbour, AK, and the piece de resistance, the crashing of the Shell Kulluk on the rocks of Kodiak Island, AK, on New Year’s eve 2012.

Since the 2010 Gulf Of Mexico incident, the US Regulator has demanded of those who would drill in the Arctic certain safety precautions such as an Arctic Containment System (ACS) that could theoretically mop up spills in between icebergs. We interviewed Tod Guiton, a local resident of Bellingham (with an apartment overlooking the port) who had been watching Shell fail at this as well – one of the early tests of their containment dome ended up with it being “crushed like a beer can”.

What about growth?

A key focus of society is the environmentally pristine nature of the Arctic and the need to preserve it as such. Indeed this is of critical importance, but is this the only cause for concern? Our interview with Richard Heinberg, author of the book The End of Growth, gave me something else to think about:

[quote]Capital is fleeing big oil right now – it is getting increasingly difficult to fund large scale projects because as we venture into unknown territory (i.e. the Arctic) the chances of success are diminishing. And since there is only so much capital to go around, to spend our last dollars on these foolhardy projects seems like the road to collapse.[/quote]

Whatever dollars go to oil to fund their operations, are societal resources not available to us for transition-ing to clean energy.

Promise of jobs lures some Inuit

Not all the locals of Pond Inlet are convinced that seismic exploration is bad, however. The day after the polar bear incident Simonee and I are discussing the future of Canada’s Arctic and he surprises me by saying: “Seismic could be ok if it’s done right”. Having seen the large pay-cheques of his friends working in the local Mary River iron mine, it is tempting to succumb to the large of black gold as well. But as of 2014, with Shell pulling out of the Arctic, at least temporarily in order to staunch the hemorraghing of investor money, it’s an open question whether it’ll ever happen at all.

As I watch the sun not really set at 2:00 am one morning, casting the world in golden purple rays of unimaginable beauty, I hope it never will.

David Lavallee is a Vancouver-based documentary filmmaker who directed the award-winning White Water, Black Gold and is now filming To the Ends of the Earth.

Examining the BC Liberal Government’s real fiscal record

August 2, 2014Economics, Politics, Western CanadafeaturedCommon Sense Canadian

The Common Sense Canadian’s Damien Gillis discusses the BC Liberal government’s real fiscal track record with CFAX radio’s Ian Jessop in Victoria.

The two contrast a history of serious cost-overruns on major infrastructure projects with the oft-repeated myth of the government’s sound fiscal management. From the Port Mann Bridge and Hwy 1 widening (550% of initial estimate) to the a new roof for BC Place Stadium (514% of original projection), emerges a shocking pattern of inept project management.

From July 29 (19 min)

[signoff3]

Site C Dam threatens BC’s credit rating: Hudson’s Hope Mayor, Council

July 15, 2014Economics, Hydropower, WATERfeaturedCommon Sense Canadian

The following is a July 15 open letter to Premier Christy Clark from the District of Hudson’s Hope – near the location of the proposed Site C reservoir.

Dear Premier Clark,

Re: British Columbia Utilities Commission Review of Proposed Site C Dam Project

I am writing to urgently request that you refer the proposed Site C Dam Project to the British Columbia Utilities Commission (BCUC) for further review of project costs, alternatives to Site C, and related issues prior to making a decision on this project.

Prudent fiscal management requires further review of Site C

The District of Hudson’s Hope, a community of 1,100 people in the heart of the Peace River Valley, will be more adversely impacted than any other municipality by the proposed Site C dam.

Understandably, we wish to ensure that these adverse community and environmental impacts and the $7.9 billion cost of the proposed Site C project are justified and necessary for meeting British Columbia’s future electricity needs.

The proposed $7.9 billion Site C project may also be the largest provincial public expenditure of the next 20 years, adding over 10% to our growing $62 billion provincial debt. BC taxpayers, whether they live in Hudson’s Hope, Penticton, Surrey, Comox, Coquitlam, Prince George, Vancouver, Delta, Victoria or any other BC community, reasonably expect the government to subject Site C project costs and alternatives to open, rigorous and independent review with full procedural safeguards before committing to such a large capital expenditure.

[signoff3]

Rating agencies such as Moody’s call this prudent fiscal management. When Moody’s reaffirmed B.C.’s triple-A credit rating in May of this year, it was accompanied by a negative outlook due to accumulation of provincial debt. Moody’s said:

[quote]The negative outlook reflects the risks to the province’s ability to reverse the recent accumulation in debt given a softened economic outlook, weaker commodity prices and continued expense pressures.[/quote]

What better way to demonstrate prudent fiscal management than to subject Site C project costs and alternatives to open, rigorous and independent scrutiny by the BCUC?

Yet this is not what has happened – at least to date. The Site C Joint Review Panel (JRP) was prevented by a combination of BC law, public policy, terms of reference, and a lack of information from fully scrutinizing key project elements including project costs and alternatives to Site C (1).

However, this did not prevent the JRP from flagging its concerns about project costs: “The Panel cannot conclude on the likely accuracy of Project cost estimates [by BC Hydro] because it does not have the information, time or resources. This affects all further calculations of unit costs, revenue requirements and rates.”

Or asking questions about alternatives such as natural gas:

[quote]Finally, if it is acceptable to burn natural gas to provide power to compress, cool, and transport B.C. natural gas for Asian markets, where its fate is combustion anyway, why not save transport and environmental costs and take care of domestic needs?[/quote]

To ensure proper scrutiny, the JRP recommended on May 1st, 2014 in its 457 page final report that a number of matters be referred to the BCUC for further review (2).

The JRP noted,”… available resources could provide adequate energy and capacity until at least 2028″ and accordingly there is time available for the BCUC to do this work. However, Minister of Energy and Mines, Bill Bennett was quick to dismiss further scrutiny. On May 8th, 2014, the same day as the report’s public release, Minister Bennett said:

[quote] …I think that the work has been done and I think subjecting it to another review after all the years the project has been studied is not a good use of public money …[/quote]

Madame Premier, this defies prudent fiscal management. BC needs to complete its homework on Site C.

Hudson’s Hope, BC taxpayers and rating agencies such as Moody’s need to be fully satisfied that this $7.9 billion project will not be characterized as a white elephant that transformed the beautiful Peace River Valley into a dam reservoir, increased the provincial debt by over 10%, and put BC’s strong fiscal management record at risk.

Urban Systems report supports need for BCUC review

Recognizing these major uncertainties, the District of Hudson’s Hope retained Urban Systems Ltd. to review the findings of the JRP Report, and compile information from the proposed project’s Environmental Impact Statement, BC Hydro’s Integrated Resource Plan, and other relevant resources and data to examine the following key question:

[quote]Are the anticipated community and environmental impacts, and high-costs of the proposed Site C project justified and necessary for meeting British Columbia’s future electricity needs?[/quote]

We are attaching a copy of the Urban Systems report entitled, “A Review of the Proposed Site C Clean Energy Project: Exploring the Alternatives” for your consideration.

The JRP concluded that BC Hydro has not fully demonstrated the need for this project on the timetable set forth and Urban Systems has also concluded that a commitment to the proposed Site C is project is likely premature: “The material cited within this document suggests that a commitment to the proposed Site C project is likely premature before the British Columbia Utilities Commission undertakes a review of the proposed project costs and long-term energy needs, including the comparative costs and benefits of potential alternatives. And as the JRP notes there is time to do this work.”

Urban Systems reviewed 5 alternative scenarios to Site C including retrofits and upgrades, geothermal, other renewables and enhanced demand side management, natural gas/cogeneration, and emerging technologies. Urban Systems concludes: ” … there are likely alternatives which could be cost-competitive and viable to meet future electricity needs.”

A preliminary comparison of selected alternatives to Site C suggests that BC could pursue these alternatives and potentially save over $ 5 billion in project costs. The “accumulation of debt” by the province would be significantly reduced. Please refer to Table A.

Finally, Urban Systems cautions that emerging trends could result in a risk to ratepayers: ‘

[quote]Three trends are occurring simultaneously that could substantially reduce the need for the proposed Site C project and affect BC Hydro’s forecasted revenues, thus limiting its ability to pay for such an asset over its 70 year amortization period. These three trends include: increases in BC Hydro electrical rates, the decreasing cost of solar photovoltaic (PV) modules, and the commercialization of micro grid enabling technologies.[/quote]

Conclusion

With the benefit of the information contained in this letter, I urge you to do what is fiscally prudent and makes common sense – refer the proposed Site e project to the BeUC for open, rigorous and independent review of project costs, forecasted revenues and less costly alternatives to Site e prior to making a decision on this project.

To do anything less for the largest and most expensive public project in Be in the next 20 years is imprudent, especially for a government that prides itself on its triple-A credit rating. I would appreciate a written response from you by July 31st, 2014.

_______________________________

1 JRP findings:

• The Panel concludes that, basing a $7.9 billion Project on a 20-year demand forecast without an explicit 20-year scenario of prices [by BC Hydro] is not good practice. Electricity prices will strongly affect demand, including Liquefied Natural Gas facility demand.

• The Panel concludes that demand management does not appear to command the same degree of analytic effort [by BC Hydro] as does new supply.

• The Panel concludes that a failure [of BC Hydro] to pursue research of the last 30 years into B.C.’s geothermal resources has left BC Hydro without information about a resource that BC Hydro thinks may offer up to 700 megawatts of firm, economic power with low environmental costs.

2 Please refer to JRP recommendations 46,47,48 and 49.