Enbridge pipeline

[twobits]

Well waaaay back I suggested (summarized):

1. Upgrade at source (no dilbit)
2. Double wall pipeline
3. Southern route with possible new terminal next to the coal terminals (Tswassen)
4. No "flag of convenience" tankers
5. State of the art clean up facilities with ongoing readiness
6. Big time insurance policy to cover all spills

Hard for even diehard greenies to argue with that approach.

Yup, hard to argue those great ideas. Problem is the business plan. Your items 1 and 2 alone would need the price of oil to pretty much double to make them viable. It's easy to say build upgraders at the source, and they do some small scale, but to do so in that location is extremely expensive. And at that, it still requires pipelines transporting a product, oil, which will still recieve the wrath of the green minded. I don't think you, or most others, realize the mammoth requirements of these facilites and it is these requirements that favour their construction near deep sea ports where the pieces can be economically brought in and assembled. They are not just concrete, steel I beams and 2 x 4's that can be landed on site and assembled.
So Hobbyguy, you were in business, how about a plan/solution that actually makes business sense instead of pie in the sky suggestions to placate greenies that have no chance in hades of ever coming to fruition unless oil is 200/barrel. Truthfully, when you put forth such ideas/solutions, I have to question both your motives in regards to Canada developing it's oil resources as well as your business acumen.

[hobbyguy]

So here's my response on a couple of viability issues:

Upgrading: Syncrude seems to do just fine upgrading. If they can do it, why not others? Especially given the huge discount that dilbit sells for. My suspicion is that either the producers have issues with financing (not enough capital) or the ROI number for shipping dilbit is better if they can get away with "cheap and nasty" transport systems. Remove the ability to ship via a less than responsible transport system, and the ROI for upgrading looks a lot more attractive.

Double-wall pipeline: The espoused plan is to build two pipelines, one to bring the dilbit to the coast, and one to transport diluent back to source. Double wall pipeline for syncrude consume roughly the same steel/welding and otherwise be a lower cost option. Only one set of pumping stations etc. etc. etc.

"Flag of Convenience": This is just a scam and should never be accepted for the transport of dangerous goods. It is just plain "laundering" of risk and leaves the taxpayer on the hook if and when there is a major problem. If you can't do it properly and therefore accept the risk - then why should Canadian taxpayers subsidize you by accepting the risk.

My conclusion, looking at the Brent price (which is the target for coastal exports) is that there is likely sufficient premium available for syncrude (not dilbit) to justify these additional expenditures and achieve an acceptable ROI.

The business plan arguments against these things remind me of employers who used to whine about the cost of safety programs for employees, until it became clear that done properly and thouroughly, employee safety programs add to long term ROI.

[twobits]

So here's my response on a couple of viability issues:

Upgrading: Syncrude seems to do just fine upgrading. If they can do it, why not others? Especially given the huge discount that dilbit sells for. My suspicion is that either the producers have issues with financing (not enough capital) or the ROI number for shipping dilbit is better if they can get away with "cheap and nasty" transport systems. Remove the ability to ship via a less than responsible transport system, and the ROI for upgrading looks a lot more attractive.

Double-wall pipeline: The espoused plan is to build two pipelines, one to bring the dilbit to the coast, and one to transport diluent back to source. Double wall pipeline for syncrude consume roughly the same steel/welding and otherwise be a lower cost option. Only one set of pumping stations etc. etc. etc.

"Flag of Convenience": This is just a scam and should never be accepted for the transport of dangerous goods. It is just plain "laundering" of risk and leaves the taxpayer on the hook if and when there is a major problem. If you can't do it properly and therefore accept the risk - then why should Canadian taxpayers subsidize you by accepting the risk.

And now I am convinced you were never a manager of anything significant, if anything at all. I suggest you do a little research on the in's and out's of building upgraders and refineries before you offer up high school class level business plans.

My conclusion, looking at the Brent price (which is the target for coastal exports) is that there is likely sufficient premium available for syncrude (not dilbit) to justify these additional expenditures and achieve an acceptable ROI.

The business plan arguments against these things remind me of employers who used to whine about the cost of safety programs for employees, until it became clear that done properly and thouroughly, employee safety programs add to long term ROI.

[asas]

Do pipelines not rely on valves that sense pressure etc? In other words, does a valve close when pressure drops below certain levels to prevent spills from becoming large? IF that is correct, would additional valve/sensors per set distance be a safety check?
As to where the upgrading or refining take place, I wonder what CENOVUS, in partnership with other big boys in the industry, is up to, as they have spent billions building complex, city size, steam, power and refining capabilities on their 'sands' projects?????

[hobbyguy]

My limited understanding of the pipeline sensors, mostly from the Kalamazoo hearings info., indicates that there is a problem with the sensor technology that Enbridge were using when applied to dilbit transport. The problem was consistently occurring false alarms. Thus the alarm going off didn't trigger an appropriate response from the operating personnel.

Alarms sensors, from my experience in unrelated industrial settings, if unreliable, actually contribute to reduced safety results as people learn to ignore them. Kind of like as if Pavlov's dogs only got food sometimes when the bell rang. That's why pressure mats for danger areas where access is sometimes required are better than alarms - provided the installation is such that folks can't bypass it.

[twobits]

My limited understanding of the pipeline sensors, mostly from the Kalamazoo hearings info., indicates that there is a problem with the sensor technology that Enbridge were using when applied to dilbit transport. The problem was consistently occurring false alarms. Thus the alarm going off didn't trigger an appropriate response from the operating personnel.

There is no argument that the Kalamazoo incident was not a huge disaster. Sometimes they are also blessings in disguise that wake up complacency. Do you seriously believe that this incident did not provide a huge wake up call, not only to Endbridge, but also every operator in North America and beyond? I'm thinking that every operations manual out there was scrapped and completely re written from the first paragraph.

[hobbyguy]

It seems perhaps not, as Enbridge has experienced problems with other spills since.

My limited experience in safety management tells me that each company and even operations within the company has its own culture, and those cultures are very resistant to change. "Shortcutting" and "good enough" are the most difficult one to cure, especially when it impacts the bottom line, as they appear to offer the path of least resistance for managers. I have also seen many cases where new "procedures and protocols" were poorly communicated and even more poorly adopted, if at all. We all think "it won't happen to me (or us)", or "those guys really screwed up, we're better at it than they are" or "I've done it this way a thousand times and it's never been a problem" - that is of course until it happens.

In this case, the inquiry seems to point to Enbridge having been doing things the way they did for a long time. In the subsequent spill to Kalamazoo, they even tried to hide the fact that it was a dilbit spill - which doesn't speak to a company that has learned much.

[danmartin]

[quote="twobits"]
There is no argument that the Kalamazoo incident was not a huge disaster. Sometimes they are also blessings in disguise that wake up complacency. Do you seriously believe that this incident did not provide a huge wake up call, not only to Endbridge, but also every operator in North America and beyond? I'm thinking that every operations manual out there was scrapped and completely re written from the first paragraph.[/quote]

I see that Enbridge is now being ordered to dredge the Kalamazoo as the sunking oil is a an ongoing problem. Dredging a river system is a huge disaster in itself so the need to do this indicates to me a "huge disaster." There really is no blessings to this spill. Lets hope we learn from it and don't allow it to happen here.

[MattJ]

I don't know if anybody else noticed, but we are getting the pipeline whether we like it or not. If you've seen the commercial on TV you will see what I mean. Everything described in the commercial is talking in the present tense, as though the pipeline is already approved and is going ahead.

[hobbyguy]

At the same time we are getting an NDP government that says no pipeline. It will be an interesting showdown.

That said, this is the province that has had "wars in the woods". According to the polls, public opinion in BC is stacked against the pipeline. I have to think that an alliance of environmentalist groups and aboriginal groups, with the backing of the public, is going to make it very hard to anything to advance this project.

All one has to do is look at this: http://www.ntsb.gov/doclib/reports/2012/PAR1201.pdf , note that Enbridge have been ordered back to dredge the river 2-1/2 years later, consider that there have been more spills since, and place that in the context BC's much more rugged terrain and more numerous faster moving waterways.

The economic arguments are an interesting debate, this analysis may be a bit "over the top", but it provides an interesting counterpoint to Enbridge's spin: http://www.policyalternatives.ca/sites/default/files/uploads/publications/BC%20Office/2012/03/CCPA-BC_Enbridge_Pipe_Dreams_2012.pdf

Mind you, the potential negative impact of a spill may not be overstated in this report, as the pipeline would traverse a large drainage area that is critical to Fraser River salmon stocks - destroy those and the economic negatives really start to get out of hand.

[NAB]

It's not just about spills, but about the air quality too...Nab

Kitimat could face sky-high pollution from B.C. energy boom
Mar 19, 2013 - Experts fear one of the world’s most confined airsheds won’t be able to handle emissions from smelter, LNG, increased tanker traffic and oil refinery

More: http://www.biv.com/

[bob vernon]

Has the NDP said NO to the pipeline? They haven't. What they have said as their policy is this: following the election, the BC government can give seven days notice to opt out of having one set of Environmental Assessments on the route of the pipeline. Christy Clark gave this away to the Federal government long ago. And we all saw how the Federal hearings were handled, with closed doors and some intervenors being denied access. And the expansion of the pipeline to the lower mainland hasn't been applied for yet, so any discussion of that one is hypothetical...... yet.

If you follow politics and try to estimate who has what support to gain and lose, both the NDP and Liberals have nothing to gain from tipping their hands and giving their approval or disapproval to the pipeline(s). Those pro-pipeline are already in the Liberal camp or the Conservative. Those against are NDP or Green. So Dix can honestly say that he'll hold hearings after opting out of the agreement with the Feds, and disapprove, or even approve the pipeline,.................after the election. But the BC approval would come with a high price, like setting aside into an escrow account sufficient funds to cover a major spill. A recent study put a major spill as costing up to $9.6 billion. Currently Enbridge carries $60 million insurance to cover a spill, presumably walking away if the cost was higher and leaving the taxpayer with the tab. Giving approval before the election would drive some NDP support, but maybe only a small amount, to the Greens. The Greens will always be against the pipeline.
Dix holds all the cards. All he has to say is that he'll hold hearings if he's elected. Christy really painted herself into a corner on this by opting out.

My betting is that the pipeline will be built, but with much higher standards than the Feds alone are willing to impose. And what's up with the Feds telling us last week about giving the coast "world class spill cleanup technology." Do they mean that we don't have it already?

[twobits]

Oil haters MO

Can't do that, pipelines leak
Can't do that, railcars, well they can derail
Can't do that, air quality might suffer

Next up
Can't do that, noise pollution ya know
Can't do that, where is all the sewage from all these employee's gonna go

And finally
Can't do that, will endanger the habitat of......name your favourite nematode.

After ten years of this people are surprised there are 35 kids per classroom, two year waits for knee surgery, and potholed roads. Then a universal cry for the gov't to create employment.

Amazing there is any industry at all in Canada.

[maryjane48]

not really i think theres ways to have the oil create more jobs and make things better for canada, as in lower prices at pump

[hobbyguy]

twobits:

I'm not against OIL if done properly.

I am against DILBIT coming across our province any way shape form. Given what we have learned from Kalamazoo and other spills (look closely at the NTSB report). How is it responsible in any way to transport dilbit across our province and through our waters? It just plain doesn't add up to a reasonable risk.

Then we get an investment banker from Toronto (not sure if he knows port from starboard or what a tidal current can do) pitching the industry "line" and trying to tell us that it is a wonderful idea for BC. Don't know about you, but I don't have a lot of trust in an investment banker from Toronto intimating that they will dictate a decision to the people of BC. When asked if he will listen to the people of BC, I got the distinct impression that he didn't care what the people of BC have to say. Joe Oliver did nothing but undermine any sense that the federal government has any interest in properly sorting the right balance. The impression coming across is that they don't give a rat's ...