ALF V1

CALGARY — As inspectors descended on the shuttered meat processing plant in Brooks, Alta., Tuesday, the company behind the country's largest beef recall issued its first comments in days.

"We have worked diligently to address all corrective actions and want to thank our employees who have worked tirelessly to prepare us for this inspection," said XL Foods co-CEO Brian Nilsson in a statement Tuesday.

"We will continue to work co-operatively with the (Canadian Food Inspection Agency) as they conduct due diligence and verification of our intensified and enhanced food safety systems."

The CFIA began an inspection of the XL plant Tuesday after the company issued a recall on meat products -- now up to 1,800 different items -- due to E. coli contamination concerns.

The CFIA suspended the plant's licence and inspectors slapped XL with demands, many of them sanitation-related.

Eleven cases of E. coli -- one in B.C., seven in Alberta, two in Quebec and one in Newfoundland and Labrador -- have been linked to XL, says the Public Health Agency of Canada.

The news release said members of the XL community "deeply regret the illnesses caused by the consumption of beef products. Our thoughts are with the affected people at this time."

Guy Gravelle with the CFIA said more information on Tuesday's assessment at the plant would likely be made public Wednesday.

"We're still waiting to hear back from the people we had on the grounds," he said.

The leader of United Food and Commercial Workers Local 401, which represents staffers at the plant, said there is still a desperate need for "food safety culture" at the facility.

Doug O'Halloran said for years the union has voiced concerns about training for temporary foreign workers, line speed and the need for whistle-blower protection. "We've dealt with other CEOs in the meat packing industry, but we've never come across anyone who wouldn't at least meet with us to talk about food safety," he said.

O'Halloran and Alberta Federation of Labour president Gil McGowan will hold a news conference in Brooks Wednesday.

Meanwhile, XL's handling of public relations -- communicating with media only through occasional statements -- was criticized by Alberta Wildrose Leader Danielle Smith during a luncheon in downtown Calgary.

"I wish the company, XL Foods, had taken a page from Maple Leaf (Foods) when they had their tragedy in 2008," she said, referring to the listeriosis outbreak that killed 22 people.

"The CEO (Michael McCain) was very up front about it, gave press conferences, kept the public informed," she said.

Smith called for a full review once the plant is reopened to understand what broke down in the regulatory and communication processes.

Toronto Sun, Tuesday, Oct 09, 2012
Byline: Jenna McMurray, QMI Agency
With files from Michael Wood

The technical hearings on economic issues raised by the Northern Gateway pipeline recently concluded in Edmonton. In these quasi-judicial hearings, Enbridge and intervenors (labour organizations, First Nations, environmental NGOs and the provinces of BC and Alberta) presented expert testimony and cross examined the experts of other parties. The Northwest Institute summarized the 15 days of hearings. Here are some highlights.

Cross examination of Enbridge Experts

Labour: refine the dilbit in Canada and create jobs

The Alberta Federation of Labour (AFL) questioned the export of raw dilbit (diluted bitumen, the tar sands' crude oil) rather than refining it in Canada. Enbridge responded that markets aren't looking for refined oil. They are looking for feedstock for their own refineries. No one could make money doing it, according to Enbridge, so there would be no benefit to Canada. Ninety percent of the claimed benefit to Canada is the "price uplift" that Enbridge claims will raise the selling price for all Canadian oil producers.

In later questioning, the AFL asked an expert for the Government of Alberta about the $8 per barrel "discount" for tar sands crude. The Alberta expert explained that tar sands crude fetches its highest price in the limited number of refineries capable of refining it for optimal value. When those refiners reach capacity, the price for tar sands crude drops $8. The $8 discount would be avoided by the Northern Gateway during its first year. Any pipeline (Northern Gateway, Keystone, Trans Mountain) would have the same "up lift" but, after the first few years, more heavy crude than refining capacity will trigger the discount and things will be back to where they are. Still, the Alberta expert concurred with Enbridge that, in his government's view, building upgraders in Alberta would not be commercially viable.

BC: an underinsured pipeline

The Province of BC questioned Enbridge about its insurance coverage. Enbridge stated that it was looking at exposure of $60 million for the cleanup cost of a spill once every 250 years. BC noted that works out to $280 million for a 20,000 barrel spill. That's the size of the spill in Kalamazoo which has already cost more than $767 million. BC also questioned whether the proposed separate corporate structure for the pipeline was intended to limit the liability of the corporate giant. Enbridge denied this. It stated that it would not consider a commitment to guarantee 100% of the clean up.

eNGO Coalition: National benefit from a pipeline that is half foreign owned?

A coalition of environmental NGOs (Forest Ethics Advocacy, Living Oceans ad Raincoast Conservation Foundation) established that Enbridge has ten potential funding participants who may each acquire a 4.9% interest and suggested that foreign ownership of the pipeline would impact the purported national benefit. Enbridge responded that the corporate structure would be modified for Enbridge to retain a controlling interest.

Later, the Coastal First Nations noted that, given 47% foreign ownership of Canada's oil and gas industry, that same percentage of the asserted $17 billion of benefit to private interest presumably would leave the country.

Chris Peters: Externalized cost of greenhouse gas emissions

Chris Peters, a Prince George engineer, calculated that the "well to wheels" greenhouse gas emissions would be 37 million tons (2/3 of BC's total emissions in 2010) and suggested this social cost should be entered into the equation. Enbridge responded that Canada is not responsible for emissions it exports to other countries, underscoring Peters' point that the social costs of the emissions enabled by the proposed pipeline are not accounted for anywhere.

Haisla First Nation: An undersized study

The Haisla First Nation's traditional territory will have more impacts than other First Nations because it is affected by all three aspects of the proposal: the pipeline, the terminal and the super tankers. The Haisla established that Enbridge gave different financial forecasts to different audiences – higher to the public, which inflates the claimed public benefit of a "price lift," - and lower to investors.[xii] Enbridge responded that the different forecasts were insignificant to the project's viability. The Haisla also raised concerns that the condensate costs and risks were not adequately addressed. Enbridge responded that this was the responsibility of the shippers. The Haisla noted that Mark Anielski's "natural capital and ecological goods and services" study included no impacts beyond the right of way, no river or salmon impacts and less land than the pipeline would actually occupy.

Coastal First Nations: Enbridge admits that a spill is 93% likely

The CFN noted that neither the provincial nor federal governments have exclusive jurisdiction to decide whether the project will proceed given that the First Nations have never ceded their traditional territories. The CFN couldn't evaluate impacts to salmon because they hadn't been provided the necessary information. "Whose responsibility is that?" CFN council asked. Enbridge responded that they had tabled sufficient information for a determination by the JRP.

Enbridge agreed that there is a 93% chance of a tanker spill, terminal spill, or full bore pipeline rupture happening within 50 years. In a heated exchange, CFN pointed out that there was no accounting of the social costs of the conflict that the pipeline would cause if the project goes forward.

Economist Robyn Allen: risks from tanker traffic increases are exponential

Enbridge's questions to the Alberta Federation of Labour panelist economist Robyn Allen allowed her to point out that if the pipeline were to increase from its stated capacity (525,000 barrels per day) to its potential capacity (850,000 barrels per day), this would increase tanker traffic by over 50 percent as well as activity in the marine terminal. "Risk is not additive," she said. "It is exponential."

JRP panelist Kenneth Bateman asked Allen about the value of Enbridge giving a "parental guarantee" that it would backstop all costs of a major oil spill. When Allen stated Enbridge won't entertain that, Bateman implied that it could be required by the federal government.

Next Steps

The technical hearings will continue through December. Beginning October 9, the JRP will convene in Prince George to hear expert evidence regarding the construction and impacts of the pipeline. Beginning November 22, the JRP will travel to Prince Rupert to hear expert testimony on marine and First Nations issues. Community hearings in southern BC are scheduled to begin in January 2012. The final arguments on technical evidence will be in April, 2013. The 2012 Federal Budget and Bill C-38 require the JRP to submit its report by the end of 2013. The federal cabinet will make the final decision.

Earth Matters, Oct 05 2012
Byline: Carrie Saxifraze

The sister of a Sherwood Park man who drowned on the job in Fort McMurray is urging workers to watch out for each other.

Christopher Fontaine, 32, was found dead on Sept. 26 in a tank he'd been working on at a water treatment plant. His shift ended at 5:30 p.m. but his body wasn't found until the next day.

Catheline Fontaine questions why her brother was working by himself. She believes her brother's death could have been prevented if someone had checked on him.

Catheline Fontaine believes her brother's death could have been prevented. Catheline Fontaine believes her brother's death could have been prevented. (CBC)

"His truck was left in the yard, and everything, so it's like, how could you forget about somebody like him?" she asked. "He was so caring."

Fontaine took the unusual step this week of making a plea to Alberta workers in a full-page newspaper ad which was purchased by her brother's employer, Bird Construction.

"Look out for each other, we're all in this together and make sure you've all gone home safe, don't work alone," the ad reads. "I hope you remember this page and take care of each other and then my brother didn't die for nothing."

Fontaine says the ad was also a tribute to her brother.

"I just wanted everybody to know who he was and what he meant to me, because I guess I never really told him myself," she said.

Employers also responsible, labour group says

"Honestly, that ad really tugs at my heartstrings," said Gil McGowan, president of the Alberta Federation of Labour.

McGowan argues workplace safety is a shared responsibility.

"We simply can't continue putting all responsibility for getting home safe at the end of the day on the shoulders of the individual workers," he said.

"We also need employers holding up their end and we need governments holding up their end and right now, in too many cases, that's not happening."

Occupational Health and Safety and the RCMP continue to investigate Chris Fontaine's death.

CBC News, Friday, Oct 05 2012

But we can win says economist Robyn Allan. Last in a series on Norway's petro-policies and lesson

[Editor's note: The Tyee sent veteran energy issues journalist Mitchell Anderson to Norway to learn how it amassed a $600 billion oil savings fund for its population of under 5 million, a stark contrast to Canada. To finish the series we invited him to share his views on how those lessons could be applied here. With input from economist Robyn Allan, here they are.]

Why do we tolerate homelessness and poverty in Canada? Underfunding for our schools and health care system? Why is our government eliminating 20,000 public sector jobs in a supposed effort to balance the books?

Imagine instead if Canada was a country capable of developing a national oil strategy similar to what has been achieved in Norway. This tiny nation enjoys full employment and enviable social programs, has no public debt, $600 billion in the bank, and remarkable public buy-in about their petroleum industry. Could we do it here? Do we have the guts to seize our economic destiny?

Such a system might seek to maximize employment, tax revenues and environmental protection -- exactly the opposite motivations of most extractive industries. There is another public policy goal that is of no interest to private companies: the energy security of our nation.

Seen through this lens, how is Canada doing? Abysmally, by four measures:

1. Dependency. Even with our vast oil wealth, Canada currently relies on other countries for about 50 per cent of our supply -- so-called "unethical oil" from the volatile Middle East. Proposals to pipe unrefined bitumen from western Canada to Asia will increase this dangerous dependence since Alberta will have to import vast amounts of condensate from the Middle East to dilute thick bitumen enough for pipeline transport.

2. Staying in the red. Alberta has been unable to balance the books since 2007, burning through $17.7 billion of past oil wealth, with another $3 billion deficit forecast for the coming budget.

3. Draining at full tilt. Labour and production costs are through the roof, at least until the next employment bust. Both the Alberta Federation of Labour and the late premier Peter Lougheed have both called for slower the pace of oil sands growth. Ten proposed upgraders have been cancelled since the 2007 recession, replaced instead with pipeline proposals for unprocessed diluted bitumen. With resource values rising relative to global currencies, what's the rush?

4. Getting global black eye. The oil sands have such a credibility problem the Alberta government spends $25 million a year countering "baseless" criticism from environmental groups.

Robyn Allan's prescriptions

Robyn Allan thinks we can do better. She is a British Columbia economist, former CEO of the provincial insurance corporation and outspoken critic of the Northern Gateway proposal to pipe diluted bitumen to Kitimat. She also believes the recent retreat from value-added processing in Alberta is not only a threat to the B.C. coastline, but to the entire Canadian economy. In an interview for this series she told The Tyee:

"Canada has an energy strategy, but it is being developed in a handful of boardrooms of multinational oil companies and national oil companies of foreign governments. And that strategy seems to be to extract oil sands bitumen as quickly as possible, mix it with distillate imported in increasing amounts from the Middle East, and move it down pipelines to Asia and the U.S. Gulf Coast. And that strategy is going to hollow out Canada's oil sector, move us away from creating jobs and value-added refining, and increase pressures on our exchange rate and the non-oil sectors of our economy. And when the boom becomes a bust, we won't have a strong economic fabric to fall back on."

So why does she feel so many state-owned oil companies now clamouring for a piece of the oil sands?

"More than 80 per cent of global oil reserves are controlled by state own oil companies, and there's good reason for that. Canada is the only major oil-exporting country in the world without a national oil company. Of the remaining global oil resources open for private sector investment, Canada has the majority. That's why national oil companies from China, Korea and Norway, and now maybe Kuwait and India, are coming here to buy up our resources -- it's the last big game in town."

Allan believes our country is becoming dangerously exposed in a world increasingly short of energy, especially as we allow state-owned interests from other nations to snap up our globally-strategic resources.

"Canada is being outplayed. We are losing control of our natural resources. We're losing control of our environmental standards. And we're losing the ability to upgrade and add value in Canada. We're not even beginning to use the leverage in this country that we have to control and manage the pace of our development and ensure that oil resource returns come to the people of Canada."

So what can we do about it? Allan feels one of the key problems is that our petroleum continues to be sold in American, not Canadian currency.

"When the price of oil goes up, the value of our dollar goes up and this creates problems not only for the manufacturing sector but for our oil industry as well. Because we trade our oil in U.S. dollars, any Canadian oil producer finds that their profits fall when they sell their product in U.S. dollars and have to repatriate those revenues into Canadian dollars. The ability of the oil industry to expand and grow is hamstrung by an appreciation of the Canadian dollar. The oil sector itself hurts, it not just manufacturing, tourism, forestry and other sectors."

She also sees a linkage between our inflated currency and the cancelled upgrading facilities in Alberta.

"We need to address the issue that maybe because our currency has appreciated in value, it's not as economic to build upgraders in Canada. We have a natural resource in Canada that's traded in U.S. dollars. Why? When Russia decided to trade their oil with China they elected not to do it in U.S. dollars, but their own currencies. We have to start thinking about what is in the long-term interest of Canada, not what is in the best interests of a handful of oil companies."

Upgrade here first, then ship

By choosing Canada instead of China, Allan believes Albertans would benefit from higher prices and greater economic stability. Nation building through such mutually profitable arrangements might prove far more productive than past interprovincial posturing.

"One of reasons that bitumen is not capturing the value that western producers want is that its not good enough quality. So if we upgraded it in Alberta into a product that North America wants, we might solve so many problems. Everybody in Canada could win if less expensive western Canadian crude got to eastern Canada.

"At the recent Northern Gateway Hearings in Edmonton, the Joint Review Panel was told by Enbridge's expert witnesses that right now Eastern Canada is buying imported crude at $20 to $30 more than the price of western Canadian crude. If that's the case, that works out to about 15 cents a litre at the pump. Western producers could get a price premium of five cents a litre over what they are getting now, the refiners in eastern Canada could save five cents a litre on their crude supply and consumers could save five cents a litre when they fill up at the pump.

"So if that happened, producers and refiners would make more money and consumers would spend less money. That's got to have a stimulative effect on our Canadian economy."

Allan points out that shipping upgraded crude rather than bitumen would also require half as much pipeline capacity since we would not need to build supply lines for imported condensate. And most importantly, upgraded Alberta crude should be moving east rather than unrefined bitumen moving west.

"TransCanada Pipelines have said they are looking at converting one of their natural gas pipelines to ship Western Canadian crude to eastern Canada. That could be up to 800,000 barrels a day and would be a tremendous boost to the Canadian economy. We should be focusing everything we can to get that to happen. And the way to get that to happen is to say no to the Northern Gateway pipeline. The best thing that British Columbia could do is restrict bitumen from coming into this province, period. That would essentially be a little bit of tough love to Alberta."

The late premier Peter Lougheed urged Albertans to "think like an owner." That determination to do what's in the interest of Canadians rather than companies is what Allan seems to be championing as well.

"I would hope that the real issue here is what can we do to support and develop the future health and long-term growth of the Canadian economy. We need to stop responding to the preferences of corporations that don't have the Canadian national interest at heart. They don't. They're not meant to.

"Every single time issues are raised such as energy security in Canada, value-added and upgrading, concerns over the appreciation of our dollar -- the oil industry goes crazy. And the reason they do is because these are serious issues that need to be addressed and they could be addressed relatively easily for our long-term benefit. What the oil industry doesn't yet understand is that many of these changes would be for their long-term benefit as well."

A challenging question

The Enbridge and Kinder Morgan pipelines will obviously benefit China and the shareholders of private oil companies, but what is in Canada's interest? Are we even asking that question?

At the end of this series I'm left reflecting on the blunt advice of Norwegian petroleum engineer Rolf Wiborg: "You have to leave the feudal thinking and leave the idea that people coming to exploit you have the right to tell you what to do.... It can be done, but do the Canadian people have the power and the will? Do they have the collectiveness and guts to do it?"

How about it Canada? Do we?

The Tyee, 3 Oct 2012
Byline: Mitchell Anderson

Dan Urban has been farming just west of Innisfail for years without a serious injury of any kind. Still, he knows he can't let his guard down for a second.

"The equipment is getting bigger and it's getting faster," said Urban. "It doesn't take a whole lot of horsepower to kill ya."

As the grain farmer toils away bringing in this year's harvest the provincial government is looking at ways to make agriculture work in Alberta safer.

Urban says while many farm employees have grown up around dangerous machinery, he thinks it might be time for the industry to consider programs similar to oil and gas sector certification programs.

"Maybe farming is going to have to go that way too," he says. "Maybe there has to be an organization out there to certify inexperienced help."

Agriculture is one of the most dangerous sectors Canadians can work in, said Gil McGowan, president of the Alberta Federation of Labour.

"It's simply not enough to encourage agricultural employers and workers to pay more attention to safety," said McGowan. "The reality is that no amount of education and promotion is going to improve the safety situation in the agricultural sector."

Alberta farm workers are completely exempt from the Labour Relations Code, mandatory Workers Compensation Board coverage, most provisions in the Employment Standards Code, and are only covered by the Occupational Health and Safety Act in mushroom factories, greenhouses, nurseries and sod farms, he said.

"We're the only province in the entire country that has this exemption," he said. "As long as these exemptions persist there's no way that agricultural employers can be held accountable or prosecuted when they put their employees at risk."

The government says it is committed to looking at legislative options for commercial agricultural operations and meeting with the ministers of Human Services and Agriculture and Rural Development this month to discuss workplace standards and health and safety issues in the agriculture industry.

"We want to make sure Albertans are able to work in a safe and fair environment, and come home to their families at the end of every day – regardless of what they do for a living," said Brookes Merritt, a spokesperson for the Human Services ministry. "We know education and awareness are effective ways of preventing workplace incidents, but we also know there's room for improvement when it comes to the culture of workplace health and safety on farms."

The government recognizes it needs to make a distinction between small family-run farms and multi-billion-dollar commercial-scale agricultural operations, she said.

Mountain View Gazette, Tuesday, Oct 02, 2012
Byline: Drew A. Penner

A leaked draft of a farm safety report is drawing new attention to a black hole in Alberta's labour legislation: Farm workers on traditional farms continue to be the only labour group in the province to be excluded from the Occupational Health and Safety Act (OHSA), to serious repercussions.

The Farm Safety Advisory Council was set up two years ago to review existing health and safety laws for farm workers, and to determine whether changes are necessary. The council's report is not public, and is still going through the government approval process. The leaked draft, however, recommended that farm workers remain exempt from health and safety laws. The industry should self-regulate, the report allegedly said.

"Basically (farm workers) have nothing. They're not covered under Workers Compensation legislation. They're not covered under occupational health and safety legislation," said Randy Corbett from the Alberta Union of Provincial Employees (AUPE). "If there's an accident on the farm, and that's right up to and including fatalities, Occupational Health and Safety won't investigate them because they're excluded from the legislation."

Only in Alberta, Workers Compensation Board (WCB) coverage is completely voluntary for traditional farm workers. Individual farm owners can choose to purchase it for their employees, or not. The AUPE represents nearly 80,000 working Albertans, none of them farm workers.

Between 1983 and 1993, there were 1,365 known deaths on Canadian farms, according to AUPE. Estimates suggest that farmers are five times more likely to be killed through occupation-related accidents than workers in all other industries.

Because of the lack of regulation, the government is relying on "education and awareness" to protect farm workers, according to David Hennig from Alberta Agriculture and Rural Development. The government recognizes that health and safety protection should be improved, and hired the advisory council to come up with recommendations.

The council, however, seems to consist predominately of big industry and government representatives.

The lack of health and safety regulation dates back to the 1950s, when most farms were small and family-owned, and the general consensus was not to interfere in the affairs of family farms.

Indeed today, on small acreages, health and safety issues remain minor. Reuben Loewen, farm owner in Fort St. John and president of Peace Region Forage Seed Association, gets all the work done within the family on his 1000-acre plot, and can't remember ever having a serious incident in his 40 years of work.

Heather Kerschbaumer's seed cleaning plant in Fairview, Golden Acre Seeds, falls under federal jurisdiction and as such has mandatory WCB coverage. But even so, in the more than 20 years of the farm's operations, the worst incident Kerschbaumer can recall among her seven or so staff is a sprained ankle.

In the experience of Kenda Lubeck, farm safety co-ordinator for Alberta Agriculture, small farm owners are generally receptive to improving health and safety conditions for workers.

But there is a difference between a small family farm and a commercial industrial operation. The large farms use heavy-duty equipment, and more of it. "When you get hit with them, you break," said Corbett. The three main risk factors for farm workers are all machine-related, and are the same across Grande Prairie, the province, and Canada: Runovers, rollovers, and entanglements.

Most farms in Alberta are large operations, with Peace Country farms being particularly big. Nationwide, the average farm size is 778 acres, but it is 1130 acres in the Peace, according to the 2011 Census of Agriculture. Province-wide in 2010, the 4,454 largest farms represented only 10% of all farms, but 71% of total revenue. The number of farms in Alberta with $500,000 or more in 2010 revenue increased by 18% from 2006 to 2011 figures, and those with less than $500,000 decreased by 15%.

Specific commercial agribusiness is covered by the Occupat ional Health and Safety Act, including greenhouse, mushroom, sod and nursery farming. But this does not include grain and canola producers.

If a farm worker is seriously injured or killed where there is no OHSA or WCB coverage, the only option he or she has is to sue the employer, and most don't have such resources. The problem is complicated further in the case of temporary foreign migrant labourers, whose short stays prevent them from pursuing compensation from their employers. Of all paid farm employees, 62% were seasonal or temporary, according to the 2011 Census of Agriculture.

Farms and hospitals in Grande Prairie are not required to report farm worker incidents, confirmed Lubeck. The county does not have statistics on the scale of the problem, creating an environment in which it is difficult for farm workers to demand changes to the regulation, should it be needed.

Premier Alison Redford committed to revising farm worker health and safety laws in her 2011 campaign. In line with this, the ministers of human services and agricultural development are meeting next week to look at safety and standards in the farming sector to determine what the next steps should be, confirmed Brookes Merritt from Alberta Human Services.

Grande Prairie Daily Herald-Tribune, Tuesday Oct 02 2012
Byline: Alina Konevski

The battle over upgrading oilsands bitumen in Alberta dominated Northern Gateway pipeline hearings Wednesday, with a government consultant arguing local upgrading is not economically viable given the high cost of construction.

But the Alberta Federation of Labour pointed to a 2009 Alberta government report that set a goal of upgrading two-thirds of bitumen in Alberta. Upgrader Alley would have involved $314 billion in capital investment, created two million jobs across the country over 20 years and added $5 trillion to the national GDP.

Harold York, a witness for the province and author of the Wood Gundy report commissioned by Alberta Energy, predicted oilsands producers would lose $8 billion a year if the pipeline does not go ahead, because they would not get access to world prices for bitumen. The proposed pipeline will carry 525,000 barrels a day of bitumen to the West Coast for shipment to refineries in Asia.

York told the Joint Review Panel his analysis was focused on the benefit to oil producers and did not consider other government policy goals.

In response to questions, York said he was unaware of a provincial government goal of upgrading two-thirds of the bitumen in Alberta - though the government did mention to him, without providing details, that it wanted to encourage value-added resource development, he said.

Asked if upgrading the bitumen locally is a viable alternative to exporting, York said no, because building costs are high.

"The capital cost in northern Alberta is large - up to $15 billion for a large upgrader capable of handling 200,000 barrels a day," he said.

Leanne Chahley, a lawyer for the AFL, asked York if he had seen the report of the 2009 hydro-carbon upgrader task force produced by the energy department. York said he had not.

That report outlines a vision of "world-scale industrial complexes" northeast of Edmonton, known as "Upgrader Alley," that would produce higher value products such as synthetic crude oil and petrochemicals.

If the Northern Gateway pipeline goes ahead, experts have told the panel the amount of upgrading here will decline to 26 per cent by 2025, Chahley pointed out.

Earlier in the day, energy department official Christopher Holly, the only other government witness, confirmed the province will not present any other information to the panel. Holly rejected the suggestion that the energy department should have considered new pollution regulations set out in the recently approved Lower Athabasca Regional Development Plan when calculating the economic benefits for the oil industry.

Barry Robinson, lawyer for a coalition of B.C. environmental groups, told the panel that documents filed for Shell's proposed Jackpine oilsands mine expansion show that air quality limits (set out in LARP) will be breached if all planned oilsands projects go ahead.

The levels of sulphur dioxide and nitrogen dioxide will exceed the limits set out in the LARP, according to the documents.

The Edmonton Journal, Thurs Sept 27 2012
Byline: Sheila Pratt

Alberta's evidence contains multi-billion-dollar inflation of Northern Gateway benefits

Government consultant admits upgrading would solve market access problem

Edmonton - The Alberta Federation of Labour has identified a multi-billion-dollar error in the Government of Alberta evidence, showing the government's consultants are massively overstating the benefits of the pipeline to producers.

While the Government of Alberta analysis shows $8 billion/year impact if we do not have Northern Gateway access to Asian markets. That figure has been widely cited (see below). Under cross-examination, the government's consultant indicated the $8 billion-dollar impact was only for one year, not every year.
       

"Canadian producers not having sufficient access to premium heavy crude refining markets could lose about US $8 a barrel for every Canadian heavy crude barrel, with a revenue impact averaging $8 billion per year from 2017 to 2025," said the report, completed for the province by Wood Mackenzie.

Under cross-examination, the Government of Alberta consultant conceded to AFL counsel that pacing development and upgrading bitumen to synthetic crude oil – creating thousands of jobs – would also alleviate the problem of "market access," but that these alternatives were not explored in his report.

"The bottom line is Alberta is selling the wrong product," says Gil McGowan, President of the Alberta Federation of Labour.

"The glut of bitumen on the market is a result of bitumen looking for appropriate refineries. If the product was SCO, we could be selling the product to any refinery in North America."

Canadian Press, Dean Bennett, September 4, 2012.

http://www.huffingtonpost.ca/2012/09/04/northern-gateway-enbridge-alberta-hearings_n_1853372.html

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MEDIA CONTACT:  Gil McGowan, President Alberta Federation of Labour at 780-218-9888 (cell) or 780-483-3021 (office)

EDMONTON - Enbridge insists estimates of environment damage from construction of the Northern Gateway pipeline have been overestimated, because sections of the line will be built in areas already disturbed by a new natural gas pipeline, the federal review panel heard Thursday.

Enbridge lawyer Bernard Roth also questioned the expertise of economist Matthius Ruth, whose report for the Haisla Nation estimates the cost of environmental damage at between $254 million and $775 million for construction along the 1,700 kilometre route from Bruderheim northeast of Edmonton to Kitimat on the British Columbia coast.

That estimate includes cutting trees on the kilometre-wide corridor, crossing rivers and habitat damage, the Joint Review Panel was told.

The proposed $6-billion pipeline will carry 525,000 barrels of Alberta bitumen a day to Kitimat.

Enbridge proposes to use already disturbed land for about 80 per cent of the route, including areas already logged, old roads and along part of the 463-kilometre Pacific Trail Pipeline route, now under construction from the Prince George area to Kitimat.

"Through the entire Haisla territory, the PT pipeline is in the same corridor as the Northern Gateway," said Roth. Any environment impacts there have already occurred and should not be attributed to Enbridge, he said.

"If a road and power line is already constructed and we use the same right of way," how does Enbridge's pipeline cause additional damage? asked Roth.

But Ruth said the environmental costs might be higher because of the "cumulative effects" of two pipelines running through fragile ecosystems.

"Any new project will put additional stress on the environment," he said.

The Haisla Nation is a partner in a proposed liquefied natural gas facility that will ship natural gas from northeast B.C. to China. But they oppose the Enbridge bitumen pipeline because of fears that spills of the sticky product would pollute the water along the coast.

Roth said it's unfair to attach to a pipeline project the additional cost of greenhouse gases emitted in producing the bitumen, shipping it to Asia and burning the resulting gasoline in cars — a total calculation of $206 million in the Matthius report.

"These are indirect costs," he said.

Earlier in the day, a witness for the provincial government told the panel that building the Northern Gateway is just one way to handle the increased bitumen production underway in the oilsands.

Other solutions include upgrading the bitumen to synthetic crude oil, expanding refining capacity in Alberta or slowing the pace of development, said Harold York, author of the Wood Mackenzie report done for the Alberta government.

Oil producers will need other ways, besides the Gateway pipeline, to handle the increased amount of bitumen, he said.

In response to questions from the Alberta Federation of Labour, York noted that to get the price increase producers want, Alberta bitumen must be sold into "coking" refineries that can first upgrade it.

If it is sold to conventional refineries, it could only be used to make lower value fuel oil. That could lower the selling price of the bitumen, he said.

Montreal Gazette, Thurs Sept 27 2012
Byline: Sheila Pratt, The Edmonton Journal

Reality Check:  Profits, Prices, and Access to Markets

Alberta is producing too much of the wrong product; no mystery why oil companies are getting a low price.

The Government of Alberta’s evidence filed with the Joint Review Panel for the Northern Gateway pipeline shows Alberta’s failure to upgrade bitumen is what is causing lower prices for bitumen and what is driving the alleged need for the Northern Gateway pipeline.

The Government of Alberta hired energy consultant firm Wood Mackenzie to do an analysis on the need for “new markets” for Alberta’s bitumen. The analysis is designed to support the Northern Gateway pipeline.

The report is technical in nature.

The GoA evidence says oil sands producers “could” lose up to $8/barrel because bitumen is flooding North American refineries incapable of handling it. Chinese refineries can handle bitumen, and it makes sense for oil sands operators deeply involved with Chinese state-owned oil companies to ship raw bitumen to Chinese refineries, who rely on lower labour and environmental laws.

There is plenty of North American refinery space for synthetic crude oil, which is upgraded bitumen. But the Government of Alberta hasn’t forced companies to build upgraders, and has allowed a stampede of development without any regard for keeping jobs in Alberta.

The Government of Alberta is responsible for the problems they describe in their evidence. We are pulling bitumen – a lower-quality product – out of the ground, shipping it out as fast as we can, flooding the market with a low-quality product, and wondering why we are losing money.

The Wood MacKenzie report before the NEB might be complicated and technical, but the explanation is quite simple. Upgrade the resource before it leaves Alberta, keep the good jobs here, earn more tax and royalty revenues for Albertans, and the economic case for the Northern Gateway pipeline evaporates.

Technical Backgrounder on the Wood MacKenzie Report

Wood MacKenzie’s $8/barrel “discount”

WMK’s $8/barrel discount prediction is a figure based on the concept of “refining value.”

WMK predicts Canadian producers “could continue to lose approximately C$8/bbl relative to its refining value.”[1]

The discount of value is driven by the fuel oil yield in the cracking configuration, which sells at a discount to the gasoline and diesel produced in a coking configuration.

“The Refining Value, which is the value of refined petroleum products produced from a given crude oil, falls as a refinery configuration becomes more ‘simple’ because the simpler configuration has less capability to convert the lower-value heavy end of the crude assay to higher-value products, such as transportation fuels.”[2]

The $8/barrel “discount” is attributable to:

• A glut of supply for coking refineries
• Too much non-upgraded bitumen looking for a home. It is finding its home in cracking refineries, thus simply producing fuel oil rather than diesel or gasoline

Prediction of losses of refining value are further attributable to:

• Not enough pipeline capacity to “premium heavy crude markets,” aka refineries that can process bitumen straight into gasoline or diesel
• Runaway growth in bitumen supply and a glut on the market

The Wood Mackenzie analysis relies on the following assumptions:

• A lack of upgraders in Alberta. If bitumen is upgraded to SCO in greater amounts, higher refining values can be achieved
• A prediction of just 26% of Alberta bitumen being upgraded by 2025, far below the Government of Alberta’s stated policy goal of 2/3 bitumen upgraded in Alberta
• A growth in supply due to ERCB approving every project, without associated upgrading capability
• A total lack of pacing by the GoA Department of Energy
• Ignoring the use of rail entirely, which is not only being used right now but also contained in Enbridge’s analysis

Heavy Crude Refining Predicted to Fall in Western Canada With Northern Gateway

According to Enbridge’s evidence before the National Energy Board, Western Canadian “heavy crude” – aka bitumen coming from the oil sands -  will be increasingly refined in China, where state-owned companies are building massive refining complexes capable of handling bitumen.

About the AFL Northern Gateway Reality Check Series

The Alberta Federation of Labour is a full intervener in the Northern Gateway Pipeline.

The debate around the Northern Gateway pipeline is heated, and we hear governments and industry saying all kinds of things to justify locking Canada in to being a raw resource producer, but never move up the value chain with our natural resource wealth.

“The Northern Gateway pipeline hollows out our value-added industries, imposes higher oil prices on consumers, and rewrites the rules of Canada’s oil industry. Gateway will reduce the amount of oil sands upgraded in Alberta and ship thousands of jobs to China,” Gil McGowan, President, Alberta Federation of Labour.