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Canada acquires key pipeline link to Washington refineries
11/06/18
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This is a piece of the much larger acquisition of the Trans Mountain Pipeline, announced last month. An option to more than double the capacity of the small Washington spur line would create the potential for exports from the state — and huge pushback.
The Canadian government is purchasing a vital link in Washington’s oil network — a nearly 70-mile pipeline spur running through Whatcom and Skagit counties that feeds crude oil to four refineries, according to financial-disclosure documents.
This is a piece of the much larger acquisition of the Trans Mountain Pipeline — announced May 29 — that runs more than 700 miles from Edmonton, Alberta, to tidewater at Burnaby, British Columbia.
The sale by Houston-based Kinder Morgan to the Canadian government is expected to improve the prospects for a $5.4 billion pipeline expansion strongly supported in Alberta but fiercely opposed in British Columbia and Washington state due to the risks of oil spills and the broader climate impacts of boosting production of crude extracted from oil sands. The sale is expected to close in August.
The expansion would nearly triple the flow capacity through the Canadian mainline pipeline so that oil could be exported from Burnaby to California and Asia. But there also is an option — noted earlier this year in a Kinder Morgan financial-disclosure document — to more than double the capacity of the small Washington spur line. That would create the potential for exports from Washington, where tankers have a more direct path to the open ocean than those departing from Burnaby.
But any move to export oil from an expanded pipeline through Washington would face huge pushback from tribes, environmentalists and their political allies.
“We will not accept this risky project, not here in Washington or in British Columbia,” said Rebecca Ponzio, a Washington Environmental Council staffer and campaign director for the Stand Up to Oil Coalition.
This export strategy would also face formidable legal obstacles.
Whatcom County has imposed a temporary moratorium on permitting any new projects intended to increase shipments of crude oil, and environmentalists are lobbying to make it permanent.
Congressional legislation championed by the late Sen. Warren Magnuson, D-Wash., also throws up a roadblock. The amendment — passed by Congress in 1977 — forbids any federal permits that allow an increase in the volume of crude oil handled at the four Northwest refineries unless the increase serves state energy needs.
Back in 2005, lobbyists for BP, which has a refinery at Cherry Point in Whatcom County, supported a push by the late Sen. Ted Stevens, R-Alaska, to repeal the Magnuson amendment. That repeal effort was blocked by Washington’s delegation, including then-U.S. Rep. Jay Inslee, who as governor now opposes the Trans Mountain expansion, as does the leader of the provincial government in British Columbia.
In response to an inquiry from The Seattle Times, a BP spokesman noted the restrictions of the Magnuson legislation. If the Trans Mountain expansion is completed, BP “plans to process any additional Canadian crude coming to the Cherry Point refinery within the facility,” said spokesman Michael Abendhoff.
The Alberta provincial government — led by Premier Rachel Notley — also is a player in the restructured project, and could contribute as much as $2 billion to help finance the expansion. The Seattle Times on Friday asked a spokesperson for Notley whether there was interest in expanding the pipeline spur to facilitate export from a Washington port.
“Our government’s focus is squarely set on getting our resources to Canadian tidewater,” responded Leah Holoiday, the Notley spokesperson.
Bullish on oil exports
The Canadian government is taking over the U.S. spur line at a time when tensions between the two countries are on the rise as President Donald Trump and Prime Minister Justin Trudeau feud over trade. But they both are bullish on exporting oil, with Trudeau’s acquisition of the pipeline project representing a striking affirmation of the quest to carve out new markets for the vast oil-sand reserves in Alberta.
“Trans Mountain expansion project is of vital interest to Canada and Canadians,” Bill Morneau, the federal finance minister, told reporters after the sale was announced. “Our government’s position is clear: It must be built, and it will be built.”
The Canadian government does not intend to be a long-term owner of the project, but will work on a sale to new owners or owners. In the meantime, a new crown corporation will be created to take over operation of the pipeline and expansion project, and funding will be provided for the 2018 construction season.
Climate activists want to see Alberta oil-sand production curbed since it is a significant source of greenhouse emissions that contribute to a warming planet.
The potential for a tanker to leak its cargo has helped unite opposition in the Pacific Northwest, since the project would increase the number of oil-carrying vessels departing Burnaby each month from five to 34.
“Expanding the Kinder Morgan pipeline brings the risk of catastrophic oil spills to hundreds of communities across our region,” said King County Executive Dow Constantine in remarks Thursday at a Seattle event organized by opponents of the project.
There are also risks of pipeline links. In May 27, a spill was reported from the main line north of Kamloops. The size of the spill was recently revised to more than 1,200 gallons, which is 48 time larger than initially reported, according to the Toronto Star.
Brandon Lee, Canada’s consul general in Seattle, in an opinion piece in The Seattle Times, said Canada’s government is committed to pipeline and tanker safety.
“Marine vessels have been transporting oil from the Westridge Marine Terminal (at Burnaby) without incident since 1956,” Lee wrote. “We are proud of this safety record. Once the expansion project is complete, Trans Mountain tankers will represent less than 7 percent of the total large commercial marine vessels transiting the Juan de Fuca Strait.”
