OEB Report Concludes that Risks and Benefits of Energy East Need Better Balance

The Ontario Energy Board (OEB) today released “Giving Ontarians a Voice on Energy East”, a report on its consultation and review of the proposed Energy East Pipeline.

At the request of the Minister of Energy, the OEB led a review of the potential benefits and impacts of the proposed Energy East project from an Ontario perspective. That review has determined that there is an imbalance between the economic and environmental risks of the Project, and the expected benefits for Ontarians.

The OEB consultation also found that there is widespread opposition to Energy East in Ontario’s First Nation and Métis communities. They are concerned that an oil spill would contaminate their local lakes and rivers, a resource they consider to be “the lifeblood of Mother Earth.” and they also feel neither TransCanada nor the National Energy Board has respected their treaty or Aboriginal rights.

The OEB’s report therefore advises the Minister that Ontario should encourage the NEB to insist that all Aboriginal and treaty rights are respected at the Energy East hearing, as well as the duty to consult.

Background

Our recent posts have dealt with progress of the National Energy Board (NEB) hearing of TransCanada’s application for approval of its Energy East Pipeline project, a proposed 4,600 kilometre (km) oil pipeline that would carry 1.1 million barrels per day of crude oil from Alberta to refineries in Québec and to a refinery and marine terminal in Saint John, New Brunswick (Project).

In November 2013, Ontario’s Minister of Energy asked the OEB to consult with Ontarians on the proposed Project to help the government formulate a position on Energy East before it participates in the NEB hearing.

Most of the Project in Ontario involves converting approximately 1,900 km of existing 42-inch natural gas pipeline in northern and eastern Ontario to carry crude oil. An additional 100 km of new pipeline would be built to carry the crude oil from Iroquois, near Cornwall, to the Québec border.

While approval rests with the federal government, Ontario has important interests in the Project, including critical safety, environmental, natural gas supply and economic concerns.

The Minister asked the OEB to consider the following impacts of the proposed pipeline:

  • impacts on Ontario natural gas consumers, particularly those in eastern Ontario;
  • impacts on the natural environment and pipeline safety in Ontario;
  • impacts on local and Aboriginal communities in Ontario; and
  • the short and long term economic impact of the project in Ontario.

After its initial consultation, the OEB added a fifth impact for review: the potential impact on climate change of the greenhouses gases associated with the Project.

The following is an extract from the Executive Summary to the report, summarizing the OEB’s advice to government.

THE OEB’S ADVICE

Our advice is based on TransCanada’s application filed with the National Energy Board on October 30, 2014 and additional technical material filed on January 30, 2015. Looking at what has been filed as of January 2015, the OEB is concerned with some aspects of Energy East. The following is a brief summary of our advice to the Ontario government. A complete summary of all of our advice on Energy East can be found in section 7 of this report.

IMPACTS ON ONTARIO NATURAL GAS CONSUMERS

Natural gas is a critical fuel for millions of Ontario consumers, heating their homes, operating their businesses and helping to generate their electricity. Energy East will remove pipeline capacity for natural gas by converting one of TransCanada’s 42-inch pipelines to carry crude oil. We are concerned that, even with the new natural gas pipeline that TransCanada is proposing to build in eastern Ontario, Energy East will reduce the supply and increase the price of natural gas for consumers in that region. Ontario needs to be assured that the pipeline capacity and the supply of natural gas in eastern Ontario will meet Ontario’s medium- and long-term needs and that Ontario natural gas consumers will not subsidize the costs of Energy East.

IMPACTS ON THE NATURAL ENVIRONMENT

The Energy East Pipeline would be near many Ontario waterways. The proposed pipeline crosses or runs beside the Nipigon, Ottawa, Mattawa, Madawaska, Rideau and St. Lawrence rivers. It would also pass by a number of lakes, including Lakes Temagami, Nipissing and Nipigon, Trout Lake and Lake of the Woods. In light of this proximity, the OEB believes that TransCanada needs to assess whether it is appropriate to take a route originally chosen for a natural gas pipeline and use it for the transportation of crude oil. Where the existing pipeline route is too close to environmentally sensitive areas, TransCanada should reroute the pipeline or justify why rerouting is not necessary.

TransCanada should pay particular attention to protecting Nipigon Lake, Trout Lake, the Ottawa River, the Rideau River, the Oxford-Marsh Aquifer, the Nepean Aquifer, and other areas where there is elevated public concern. As for the route near the St. Lawrence River, TransCanada should study an alternative route near the Canadian Pacific (CP) rail line and reroute the pipeline to follow the CP right-of-way.

In addition, TransCanada should work with local and First Nation and Métis communities to identify the “significant water crossings” that will require additional shut-off valves.

IMPACTS ON CLIMATE CHANGE

The National Energy Board has decided to examine the greenhouse gases that are emitted by the construction and operation of Energy East. Ontarians, however, remain concerned about the Project’s effect on upstream and downstream greenhouse gas emissions. After people said any assessment of Energy East would not be complete unless it studied the potential impact on climate change, we added climate change to the impacts to be reviewed. The issue of climate change is bigger than any one pipeline project, and the discussion paper we commissioned is a valuable contribution that should be used as part of a broader discussion of the issue.

IMPACTS ON PIPELINE SAFETY

Pipeline safety, and the effects of a spill on local rivers and lakes, were the most important concerns for people living near the proposed route of Energy East. They insisted the pipeline have the highest standards for integrity and emergency response. We believe TransCanada should be using the latest generation of leak detection systems for Energy East, as the impact of an accident on an oil pipeline is far more profound than with a natural gas pipeline. TransCanada also needs to demonstrate that, in the event of a spill, the amount of crude oil that could be released will be as low as reasonably practicable.

The most important threat to the integrity of Energy East is the four sections of the pipeline in northern Ontario that are coated with polyethylene tape. Ontario needs to be assured of the reliability of the in-line inspection tools that TransCanada will use to detect cracks on the four tape-coated sections. TransCanada should conduct a hydrostatic test before the pipeline is put into service carrying oil.

As well, TransCanada must demonstrate its financial ability (and associated guarantees) to cover the response, clean up and remediation costs of a spill, knowing that these costs could easily surpass $1 billion.

IMPACTS ON LOCAL COMMUNITIES

Participants at the OEB’s community meetings appreciated our consultation and review. The process raised both the awareness of the Project and the desire for ongoing engagement on the issues of pipeline safety including emergency response.

The OEB believes community engagement needs to be long lasting and treated as an essential part of the life-cycle approach of operating Energy East. So, TransCanada should continue its community engagement effort and be accountable to First Nation, Métis and local communities for its monitoring and emergency response measures.

First responders must be given information about the trajectory of spills at specific sites, along with the type of oil carried by the pipeline. TransCanada should perform emergency drills to demonstrate that it will be able to effectively respond and minimize the damage from spills.

IMPACTS ON ABORIGINAL COMMUNITIES

Ontario’s First Nation and Métis communities generally believe neither TransCanada nor the National Energy Board have respected their treaty or Aboriginal rights. Ontario therefore needs to encourage the National Energy Board to insist that all Aboriginal and treaty rights are respected at the Energy East hearing, and that the Federal Crown fulfils its duty to consult.

SHORT AND LONG-TERM ECONOMIC IMPACTS

Pipelines generally produce minimal economic benefits for the communities they flow through. So while almost half of Energy East will run through Ontario, it is expected to produce only modest economic benefits for the province. This will result in an imbalance between the risks of the Project and the expected benefits for Ontarians. Under these circumstances it is even more important that Ontario natural gas consumers face no harm due to Energy East.

To read the full report, please click here

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Manning Environmental Law is a Canadian law firm based in Toronto, Ontario. Our practice is focussed on environmental law, energy law and aboriginal law. 

Paul Manning is a certified specialist in environmental law. He has been named as one of Canada’s leading Environmental Lawyers by Who’s Who Legal: Canada and ranked by Lexpert as one of Canada’s Leading Energy Lawyers.

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