Oil companies promised to pay for ocean protection, now taxpayers are footing the bill

Nov. 23, 2018

When it set out to expand the Trans Mountain pipeline, Kinder Morgan knew it faced serious marine transport safety hurdles. In February 2013, Kinder Morgan Canada president, Ian Anderson told the National Energy Board that, “One of the greatest challenges I believe in providing British Columbians with the confidence and trust will be confidence and trust that the tanker traffic industry itself can be operated safely through that port.” (paragraph 1176)

He said this under oath at the NEB Toll Hearing where cross examination was allowed.

Oil producers at that same hearing confirmed it would be a "great cost challenge" to ensure the safe transport of toxic diluted bitumen through marine waterways. They also confirmed they were willing to pay that cost.

Suncor said, “The other great cost challenge will be ensuring that the public, regulators, and governments are satisfied the tanker traffic through the Port of Vancouver and Canadian territorial waters and beyond can be undertaken as safely as practicable. This is entirely a shipper cost … Trans Mountain has agreed to essentially negotiate on behalf of shippers what these costs might be, but it takes no liability or responsibility for paying them. Regardless of what the costs are determined to be, the shippers have to pay them…” (emphasis added, paragraphs 7699 - 7701)

Similar acknowledgement is peppered throughout Toll Hearing transcripts. Trans Mountain, the shippers and the NEB all know this — they were in the room when the promises were made.

Yet, when Prime Minister Trudeau announced the Oceans Protection Plan — which he confirmed is needed because of the risk posed by the tanker traffic triggered by Trans Mountain’s expansion — he put this cost on the backs of taxpayers. Trudeau handed oil producers a huge subsidy the industry never expected to receive while unnecessarily burdening Canadian taxpayers in the process.

So what happened?

It looks like Kinder Morgan made good on its promise to shippers. Shortly after Trudeau was elected, Kinder Morgan was in Ottawa — month in and month out — “negotiating what these costs might be”on behalf of Alberta’s petroleum companies. Kinder Morgan reported 40 major meetings with senior officials and members of government between the time Trudeau took office and the announcement of the Oceans Protection Plan. According to the reports, matters discussed included the, “Promotion of the development of international oil tanker shipping, the economic development thereof and safety associated therewith.”

We all know what a successful negotiator Kinder Morgan is. It navigated Ottawa into using taxpayer money to overpay for a sixty-five year old pipeline and fork over more than a billion dollars for a permit to expand it. Since agreeing to buy Trans Mountain, a further $1 billion dollar loan has been made by the Export Development Corporation to fund the carrying costs of the Project while the NEB reconsiders whether a new certificate should be recommended. The certificate granted in December 2016 was quashed after the courts found the government had not fulfilled its duties to First Nations or the marine environment.

The cost to oil producers to pay for marine protection from increased tanker traffic? Nothing. The cost for Canadian taxpayers? One point five billion — and that’s just for the first five years of the Oceans Protection Plan. Considering the twenty years shippers have committed under long-term take or pay contracts, the oil sector subsidy is closer to $6 billion. How is that in the public interest?

The Oceans Protection Plan isn’t all for Alberta’s tar sands, but the majority is. In fact, Trudeau has stated publicly that without Trans Mountain, “We (Canadians) won’t get the Oceans Protection Plan” at all.

In addition to Kinder Morgan negotiating a free pass to oil producers for the risk they pose to marine waterways, the NEB played an important role in facilitating this corporate welfare.

Instead of advising cabinet that shippers would willingly bear the cost burden of protecting the marine environment, the NEB knowingly withheld this information. Nowhere in the May 2016 NEB report cabinet relied on to approve Trans Mountain’s expansion did the Board alert cabinet to the offer dock shippers have made.

As developments unfold in the NEB Reconsideration Review, increased costs for additional marine protection are likely. These must be borne by oil producers who create the risk, not taxpayers. The NEB needs to include this commitment by marine shippers to pay for Trudeau’s Ocean Protection Plan as one of its certificate conditions if the Trans Mountain project proceeds.