Trans Mountain will not have to provide an additional $1.1 billion to cover the costs of cleaning up any oil spills from its expansion project, the Canada Energy Regulator has ruled.
The regulator told Canada’s National Observer that the state-owned company must maintain “total coverage of $1.1 billion” to protect the public and the environment from a potential oil spill from both the current pipeline and its expansion. But others say that is not what was agreed in 2019 and that a total of $2.1 billion is needed to cover oil spill risks on the two pipelines.
The existing Trans Mountain pipeline transports 300,000 barrels of oil a day from Edmonton to Burnaby, British Columbia, and has $1 billion in financial assurances – such as cash, liability insurance and lines of credit – to meet the cost of a potential oil spill. The expansion project will twin the existing pipeline and increase its capacity to 890,000 barrels per day.
The regulator’s recent decision helps Trans Mountain off the hook and does not reflect the higher risk of an oil spill from the pipeline expansion, say environmentalists and some lawmakers.
“I think for most people, and for most Canadians, it makes sense that if you triple the capacity of a pipeline, there’s an increased risk,” said the NDP Critic. environment, Laurel Collins, at the National Observer of Canada. “When you see decisions like this, it undermines the trust that Canadians have in their institutions.
Independent economist and Trans Mountain commenter Robyn Allan said the decision runs counter to a 2019 report by the energy regulator that the company needs an additional $1.1 billion. in financial insurance set aside to cover the risk of the expansion project.
In April, Trans Mountain told the regulator that a “slight increase” to its current liability plan of $1 billion for the current pipeline is enough to cover the risk of a spill on the current line or its new counterpart. Under the Canada Energy Regulator Act, $1 billion is the minimum amount of financial guarantees allowed for pipelines transporting at least 250,000 barrels per day. The CER has the power to demand more than that.
“In place, [CER] decided to leave it at $1.1 billion, which I don’t think is commensurate with the increased risk,” Eugene Kung, a lawyer at West Coast Environmental Law, told Canada’s National Observer.
This 10% increase in liability plan is disproportionate when considering the nearly tripling of capacity and seven-fold increase in tanker traffic from the Westridge export terminal to the TMX endpoint in Burnaby, British Columbia, a said Kung.
Green Party MP Elizabeth May pointed to other oil spills to highlight the potential cost. The disastrous Exxon Valdez spill in Alaska’s Prince William Sound resulted in cleanup costs of US$2.5 billion for the affected region alone, she noted. The Kalamazoo River oil spill in Michigan in 2010 cost Enbridge up north $1.21 billion to clean it up. For the latter, the United States Environmental Protection Agency estimated that more than 26,000 barrels of oil were spilled in the watershed – relatively little compared to what we saw in a spill on the Trans Mountain pipeline,” May told Canada’s National Observer.
“I am flabbergasted that [the CER has] just once again cut corners to facilitate this completely outrageous project,” she said.
“This is another break for Trans Mountain that Trans Mountain doesn’t deserve.”
By not requiring an additional $1.1 billion in financial assurances, CER put taxpayers at risk, said Allan, who was formerly president and CEO of the Insurance Corporation of British Columbia. The decision also lowers operating costs for whoever ends up buying the pipeline and expansion project from the federal government. That might make it more attractive to potential buyers, but the risk and potential cost of an oil spill doesn’t go away, she said.
“That responsibility will be on the backs of taxpayers when these spills happen.”
It’s nothing new for the regulator to side with Trans Mountain, Allan said. Trans Mountain recently obtained permission from CER to request the opening of segments of the new pipeline before having put in place an appropriate financial assurance plan. In April 2021, CER granted the state company’s request to keep the names of its insurers secret.
“You have all these conditions that are strong and put in place to protect us, and then you have many examples of Trans Mountain coming in and asking for relief from the conditions and getting that,” Allan said. “By the time you’re done, it’s so watered down and our wards are gone.”
In an emailed statement, Federal Natural Resources Minister Jonathan Wilkinson’s press secretary Keean Nembhard said: ‘CER is an independent regulator and we respect the authority within its mandate. .”
The office of Tory MP Kyle Seeback told Canada’s National Observer that the shadow minister for environment and climate change was unavailable for comment.
Natasha Bulowski, Local Journalism Initiative Reporter, National Observer of Canada