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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Northern Gateway Pipeline at Risk as Enbridge Faces the Flack over Oil Spill

Northern Gateway Pipeline at Risk as Enbridge Faces the Flack over Oil Spill

As the presidential campaign ramps up, Republican heir apparent Mitt Romney is being torn between advisors that want to make Obamacare the centrepiece of the campaign, and those that want to focus on the economy.

If the Romney campaign chooses to make the sluggish U.S. economic recovery one of its centrepieces, it is likely to use the thwarted Keystone XL pipeline.

The 1,700-mile-long, $7 billion Keystone XL pipeline is designed to transmit 830,000 barrels per day of oil extracted from Canadian Alberta oil sands to U.S. refineries on the Gulf of Mexico.

Having assiduously greased the requisite plans in Washington, the pipeline’s operator TransCanada apparently believed the deal was in the bag until a surreal coalition of environmentalists was joined by an unlikely ally in the form of Nebraskan Republican Governor Dave Heineman, effectively sandbagging Keystone XL.

Oil sands have been under development in Alberta since 1967 and investments there now exceed $97 billion. So, given the massive investment, where is this oil to go? On 10 November 2011, four days after 12,000 pipeline protestors encircled the White House, President Obama announced, "the decision on the (Keystone XL) pipeline permit would be delayed until at least 2013, pending further environmental review.”

The following month House of Representatives Republicans added to legislation a provision to force work to begin again on the Keystone XL pipeline, at which point President Obama deferred a decision on the pipeline until after the upcoming November presidential elections.

But, given the kerfuffle in Washington, Canadian pipeline operator Enbridge patriotically stepped up to the plate, proposing an alternative to Keystone XL, the $5.54 billion, 731-mile Northern Gateway pipeline, which would carry 525,000 barrels a day of Alberta's oil sands to a supertanker port in Kitimat, British Columbia in order to tap Asia’s lucrative markets.

In a major “oops” moment for the safe transportation of oil sands petroleum, the U.S. National Transportation Safety Board (NTSB) on 10 July released the initial draft of what is considered the "definitive safety investigation" of a 27 July 2010 incident near Marshall, Michigan, when 800,000 gallons of heavy crude oil spilled into the Kalamazoo River from Enbridge Energy's 6B 30-inch pipeline.

The EPA and Enbridge have put the cost of the clean-up at more than $800 million and earlier this month federal regulators announced a proposed $3.7 million penalty against Enbridge, which would be the largest ever for an onshore pipeline spill.

The spill, which occurred a mere two months after BP's Deepwater Horizon spill in the Gulf of Mexico, was unlike anything the U.S. Environmental Protection Agency had previously responded to, because diluted bitumen oil is a viscous admixture of Alberta heavy crude oil and chemicals to help it flow through pipelines. The EPA accordingly had to develop new methods to remove the heavier parts of the oil mixture that were trapped under the riverbed.

Mincing no words, NTSB board chairwoman Deborah Hersman said, "When we were examining Enbridge's poor handling to their response to this rupture you can't help but think of the Keystone Cops."

Enbridge said that it would not comment on specific details of the report until the final report is published, most likely in two to four weeks.

The end result of the NTSB report, issued by hardly a partisan entity, is that it has handed a powerful weapon to environmentalists on both sides of the U.S-Canadian border opposed to both the Keystone XL and Northern Gateway pipelines.



Beyond pointing out lax Enbridge practices, the report underlines the fact that what oozed from Enbridge’s 6B pipeline was qualitatively different from earlier pipeline oil spills, a heavy, gooey admixture of bitumen oil and chemicals, requiring the EPA to improvise its responses.

A fact that those “America firsters” waving the flag about the importance of Keystone XL for jobs and opportunities ought to bear in mind as the election approaches, since their opponents most certainly will.

By. John C.K. Daly of Oilprice.com

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Leave a comment
  • J.Brian Waddington on July 16 2012 said:
    Sir I like the direction of your comments and opinions but you have your facts wrong. There is no such thing as 'diluted bitumen oil'. There is diluted bitumen which is called Dilbit from which you can manufacture synthetic oil.

    As well the Athabaskan Tar Sands do not produce heavy oil they produce Bitumen which when thinned down is correctly called 'Dilbit'.

    The Canadian government and their allies have spread the lie about Athabaskan 'oil' sands because they believe it to be an easier sell than Athabaskan 'Tar' Sands.
  • gar on July 18 2012 said:
    I really find this orchestrated outcry about disaster facing us a bit much. Every ship of any consequence that goes through the Straits carries at least 250 gallons of fuel. Japan is recovering from a major disaster of unimaginable proportions. We are not immune from tidal waves or earthquakes. Our economy needs a big boost. As an octogenarian I really have no worries but the future of our country depends on our economy. If we continue to oppose these pipelines we will be at the mercy of countries like Iran and the Saudis forever. Funny how their money has influenced the ones who will moan the most when we hit a major depression and will still be needing their oil .
  • Linda on July 18 2012 said:
    We see people in Chinese cities, wearing respirators and face masks. The smog is so thick, they can't even see the oncoming traffic. Now, Canada is sending the dirtiest oil on the planet, to the most polluted country on the planet.

    P.M. Harper has permitted Communist China to buy up huge chunks of the tar sands. They are bringing their own people, to work those tar sands jobs. China is bringing swarms over, to build the Enbridge pipeline. Nor, is this dirty oil refined in Canada. It is much different in Canada. The tar sands do squat for the citizens, of BC. Communist China owns the tar sands and our jobs.

    Only brain dead fools, would string a pipeline across BC's wilderness. We have had several mudslides, that carried away homes and highways, as we speak. There are numerous snow avalanches, earthquakes, rock slides, and swift flooded rivers that too, carry away homes and highways. We all saw how Enbridge cleaned up, the Kalamazoo River spill.

    The seas into Kitimat BC, are one of the most treacherous seas in the world. This is a northern port. There are hurricane wind warnings, every other day. There are waves 30 to 50 feet high, rogue waves over 70 feet high. The channel narrow, the tankers massive, that have to do hairpin turns. It takes three miles, to stop one of those behemoth tankers.

    Just this spring there were three freighters caught in one of those storms. The storm tore their cargo off and into the sea. One ship put out a distress call. They lost the top load of their logs. They were afraid, if the bottom load shifted, the ship would capsize. It took hours to get to the stricken ship. The freighters all had to turn back, and limped into BC harbors.

    It's as they say. Man is the most destructive animal on earth, and the most stupid one at that.

    What in the hell do we do, when the oil is gone? At what point, will common sense trump greed?

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