The Big Pipe: Enbridge’s plan to connect the oilsands and China divides locals

By Nathan Vanderklippe

The Globe & Mail

January 03, 2011 

Excerpted from The Globe & Mail:



Behind a stack of stripped timber piled like a giant’s game of pick-up sticks, a log cabin is taking shape in the backwoods of northwestern British Columbia. A sawhorse stands on a mat of sawdust next to walls that have reached about halfway to their intended height. The ends of the logs, not yet trimmed, stick out at uneven lengths from the corners.

 The allure of building a cabin here, some 50 kilometres by slushy gravel forest road from the nearest highway, seems obvious. A hole cut for an entrance door perfectly frames a view of the swift green waters of the Morice River. The riverbank is populated by flyfishers casting for steelhead and hunters bleeding out massive moose carcasses. The dark evergreen forest is quiet. It is an outdoor idyll.

 But it’s not the setting that has brought construction here. And it may be a mistake to call this a cabin when it is, in fact, a fortress. It has been built against a line on a map, a narrow yellow stroke that starts near Edmonton and ends at the Pacific. The line marks the future location of Northern Gateway, a massive 1,172-kilometre crude oil pipeline that may one day deliver Alberta crude to Asia. The cabin overlooks kilometre post 1,038, the spot where Gateway’s engineers plan to cross the Morice before tunnelling through the Coastal Range to reach tidewater at Kitimat, B.C.

 They will, that is, if Calgary’s Enbridge Inc. can prevail against this restive part of the country, where the cabin has been built by a clan of the Wet’suwet’en Nation as a brazen protest. Gateway remains years from being built—or even approved by federal authorities. But already, dozens of First Nations are linking arms with the federal NDP and Liberals to stop it, in part by bidding to ban the tankers that would take away the crude. And in the wilds of B.C., blockades are already being erected. “The clan,” says David de Wit, the natural resources manager for the Wet’suwet’en, “wants to make a stand.”

 A thousand kilometres away, in a different province that could easily be a different universe, John Kampjes watches a robot milk a Holstein. He’s in one of the most modern dairy barns in Alberta. Completed last summer, it automates many of the processes that once dominated a farmer’s life: not just milking, but dispensing grain and cleaning manure, too.

 The barn belongs to Kampjes’s son, Tom. Sitting here watching it work, John thinks back to the surprise phone call he received one morning in December, 2005. The caller said he wanted to talk about buyingthe family’s land. John had already retired, but he still owned hundreds of acres. Tom did, too. They figured they could be persuaded to sell for $5,000 an acre. Suncor and Petro-Canada offered so much more that the Kampjes could leap into a whole new league of farming. Tom “traded one quarter-section with a set of worn-out dairy buildings, and he bought four quarters back [and built] a state-of-the-art dairy barn,” John says. “It’s a dream come true.”

 John now wears a Petro-Canada hat everywhere he goes. He has used his money to travel around the world, and to buy a shiny F-350 truck. He parks it a stone’s throw from where two pipelines already run beneath the flat farmland. Gateway would be just one more, reaching kilometre post 34 alongside the other lines. Once it is built and buried, crops will grow on top. The Kampjes family has no problem with it—especially since the pipeline could help the oil producers that have already brought so much wealth here. “I know what industry has done for this area,” John says. “Unbelievable.” 

Gateway is a project of remarkable scope and ambition, as befits a company that is in the top tier of pipeline companies in North America. It would cost an estimated $5.5 billion, making it the biggest project ever undertaken by Enbridge, and one of the biggest industrial projects mounted anywhere inCanada. It would run twin pipelines—one for oil exports, another to import an oil thinner called “condensate”—across two mountain passes and 773 rivers, creeks and streams, and would carry up to 525,000 barrels of blended bitumen each day from Alberta to Kitimat, B.C., where the long arm of Douglas Channel delivers Pacific waters into a place that could serve as a terminal for supertankers. Those ships would be the last link between the Alberta oil sands and Asia. They would, for the first time in Canadian history, provide a substantial new export market for the country’s crude.

 The route from Edmonton to the coast is long and difficult. The kilometre posts on the proposed path march over prairie and untouched forest, across a pristine Rocky Mountain pass and under rivers that flow thick with salmon. They snake through farmland and clear-cuts, through valleys once frequented by dinosaurs and still stalked by grizzlies. They traverse towns and reserves populated by foresters and First Nations and environmentalists, each of whom has spent the past few years eyeing Gateway’s possible arrival and grappling with a complex series of calculations. For them, the fundamental question, permeating every concern—the salmon and the clams, the rivers and the mountains, the dollars and the cents—is this one: Is it worth the risk?

 The question has produced a remarkable range of answers. Some are expected: There is no mystery about the opinions of the fishermen who have blockaded before and will again, the blue-collar workers who are hungry for jobs, the First Nations who have banded together in opposition, the U.S. environmental groups that have funded the fight against a project tied to their bête noir, the oil sands.

 But were you to drive the great length of the route, you would find that many actors in this drama do not fit media archetypes. Take, for instance, a paleontologist who sees opportunity in development, or an industrial booster who is leery of how the pipeline might export jobs to Asia.

 When Enbridge began work on Gateway in 1998, it saw a chance to build pipe on bedrock economic principles: that sellers do better when they have more buyers, and profit tends to follow demand. Shipping to Asia, the company has argued, will provide the oil patch with an alternative to stagnating crude demand growth in North America. It will skirt the possibility of climate-based import restrictions in the U.S. and open up a market so hungry for energy it can be expected to pay a $2 to $3 premium per barrel over what U.S. refiners pay today.

 Not everyone believes that final argument. Competitors like Kinder Morgan have pointed out that it’s difficult to predict crude pricing with much accuracy, never mind willingness to pay the sort of “demand premium” Enbridge expects.

 As it has sought to make that case, Enbridge has, quite by accident, helped to unearth a remarkably nuanced portrait of Western Canada. Even in this breadbasket of natural wealth—a region rich with grain and oil and timber and coal and rare metals—the industrialization of the hinterlands has been equal parts blessing and curse. Gateway may be a mere pipeline, a utility for conveying crude. But long before the machines start digging up earth, long before the workers start laying their long ribbon of steel, it has also become something more significant.

 It has become a 1,172-kilometre invitation for an often-ignored part of the country to consider what it is, and what it wants to be. 

A pair of cows ruts between stands of aspen as Michele Perret opens a fence onto a plot of grazing land and warily walks in.

 “Just watch for the guy with the ring in his nose. That’s when we have to run,” she says, dodging cow patties as she strides through the grass in black business attire.

 She stops and looks past the beef, contemplating for a moment what the future holds for this place. Like the Wet’suwet’en cabin, it is just a dot on a line on a map—but that line starts here, in a plot of land northeast of Edmonton, a place that is surrounded by some of Canada’s most important energy development. Gateway’s kilometre zero sits at the confluence of refineries and a series of pipelines—each of them delivering product here that could then be shipped overseas.

 “Isn’t this a perfect place to put in a pump station?” Perret says, smiling. “This is the Alberta Industrial Heartland. They’ve rezoned for industrial growth. And they’re ready for us.”

 Perret is a senior manager in municipal relations for Enbridge, part of a team of six working in community liaison for the Gateway project. On most pipelines, Enbridge uses one or two such staff. But most pipelines aren’t as ambitious as Gateway, and most haven’t attracted the kind of attention it has.

 Perret, an economist, has a background in automotive marketing, where she discovered that you could sell a lot of cars “if you gave away free power locks.” She is now charged with selling Gateway, and has considerably more to offer. Gateway foresees $2.6 billion in government tax revenue over 30 years, 15,675 person-years of construction employment, and 217 long-term jobs on the pipeline and marine facilities. Excluding Edmonton, the pipeline crosses land populated by about 275,000 people; of those, fewer than 15% are native. But Enbridge has offered to fund a 10% ownership stake for affected First Nations, an amount worth, on average, $13,578 to each native person between Edmonton and the coast.

 Still, it’s been a hard sell. “A lot of it has to do with trying to educate people, because a lot of things that people aren’t familiar with, they’re scared of,” Perret says. That requires putting in “a lot of effort to sell the brand and explain to people what the product is. We think that if people understand more about the project, they would be less afraid of it.”

 Part of her argument is rooted in this cow pasture—or, more precisely, in the industrial development that punctures the horizon around it. The Enbridge site is wedged between the Shell Scotford refinery and the partially built BA Energy Heartland upgrader, which will process heavy oil sands bitumen into lighter crude. Other companies with similar ambitions populate the area: Giants like Total, Suncor and Statoil all have land nearby.

 The Industrial Heartland is not without controversy itself. Nearby residents are worried about health impacts, and have watched, unhappily, as the province transferred a local protected area into the hands of a major corporation in the name of development.

 But those corporations pump enormous amounts of capital into paycheques and government—and that is Perret’s point. The oil needs to flow for the money to flow. “We have a fantastic lifestyle in Canada,” she says. “And the only reason we have that is because we export more than we consume of the natural resources we have.” 

If anyone can be expected to buy that argument, it’s Tim Duhamel. He is the chief administrative officer in Bruderheim, the municipality that neighbours the kilometre-zero pasture. Bruderheim is surrounded on three sides by heavy industry, and much more is coming. Duhamel has read perhaps 15 emergency response plans in the past year alone, many from companies using ingredients far more worrisome than crude. Not that he is complaining. Industrialization has long brought wealth and opportunity to this place, including a new residential development that will substantially boost the local population and tax revenue. “From a Bruderheim perspective, Gateway is probably the least scary thing that we got out there,” he says. “It’s going through lands which are designed and intended for industrial use.”

 Yet, for Bruderheim, Gateway still poses a potentially major problem. The Heartland has been built with the expectation that crude will be refined and processed in Alberta. While Gateway is capable of shipping refined products, its rationale lies in its ability to deliver bitumen to Asian refineries, whose lower cost structure allows them to pay more for the unrefined product, transform it into gasoline and jet fuel and still turn a profit. And if China refines the oil, Alberta doesn’t. Gateway could actually hurt Bruderheim—and could, in fact, be one more example of how Canada is a mere hewer and drawer, not a manufacturer.

“One of the big things we’re fighting for now is to keep the value-add here in the province versus building pipelines that take the bitumen away,” Duhamel says. A pipeline like Gateway could transport more than oil. It could transport jobs.

 “We’re essentially just taking our resource and giving it away,” he says.

If there is one truth about any industrial project, it is that people are far more likely to chance disaster when there’s something in it for them. This is why three First Nations have asked Enbridge to move the pipeline route onto their territory, so that they can derive revenue from it. It’s why Darwin Alexis, a councillor in one of those nations, can walk onto the proposed route, where a thoroughfare the width of a football field has already been cut through the forest to accommodate three existing pipelines, and say, “the impacts are here already. So there’s no big impact.” Gateway would cross the Athabasca River just east of the lands of the Alexis Nakota Sioux First Nation, pass directly in front of their new Whitecourt, Alberta, casino and traverse some 250 kilometres of their traditional territory. It’s worth it, Alexis and the elders here believe, if Enbridge builds a community recreation centre they have been hoping for. “We are working with industry to meet our needs,” Alexis says.

The sunlight is fading into an early autumn evening. Ray Doering swipes away brambles and branches as he walks through heavy brush. Doering, the manager of engineering for Gateway, is approaching kilometre post 422, where the pipe would cross the clear, rocky waters of the Smoky River. He emerges from the forest onto a quintessentially Canadian scene. The river courses past fallen trees whose bleached torsos lie against three-metre dirt banks etched by the spring torrents.

 It is quiet—until a forestry truck rumbles over a nearby bridge, a reminder that even in the places that seem most isolated, industrialization is never far away. Gateway’s route takes it through nearly 1,200 kilometres of mostly isolated and uninhabited territory. But Enbridge will have to build only 23 kilometres of new access road. Of that, only 10 kilometres will be permanent. It will have to build individual crossings over each of the hundreds of waterways—burrowing below some, bridging others, trenching still others—but then, most rivers aren’t as pristine as they look.

 “All of these watercourses pretty much have been crossed by other pipeline projects already. For example, the Smoky River here. There’s dozens of pipelines that cross this river,” Doering says as he stands on the shore. That doesn’t make Gateway any easier. Indeed, it is one of the most technically difficult projects Enbridge has ever considered. “This is a very large project, with lots of challenges and lots of complexities,” Doering admits.

 Yet he argues that modern safety standards are more rigorous than most people appreciate. Enbridge will spend nearly $50 million drilling holes to assess rock and soil strength to ensure the pipe can safely cross rivers. It has, for the first time, created a strategic watercourse-crossing assessment team—SWAT, for short—whose half-dozen experts in hydrology, fish biology, geology and construction have visited the most sensitive river crossings. In decades past, only 10% of pipeline welds were inspected. Today, 100% are examined, using X-ray and ultrasonic detection tools. The pipe is carefully monitored as it is laid down to ensure it’s not damaged. Once built, the pipeline is tested at pressures of up to 110% of its yield strength. It will typically operate at 80%.

 “No National Energy Board-regulated oil pipeline built in the last 30 years in Canada has had a rupture,” Doering says. “That’s really a testament to the quality of the materials, the coatings, the construction and inspection practices we use today. When you hear about incidents, they’re associated typically with much older pipelines.”

 At kilometre post 622, the Missinka Pass rises up in a narrow valley from the deep forest, threading between steep cliff walls onto the alpine of the Rocky Mountains. At least, that’s the way it looks on the Google Earth images spinning across the screen in Charles Helm’s home office.

 Helm, a doctor, is a South African expatriate who has lived in Tumbler Ridge, B.C., since 1992. An expert on the area, he has written five books on local subjects, helped create 30 hiking trails and is, as much as it remains possible today, an explorer of the vicinity. It was his son and a friend who first spotted evidence of dinosaur tracks alongside a nearby river in 2000, a discovery that has transformed his small coal-mining town into B.C.’s Drumheller—and which has given Helm a keen interest in Gateway.

 The pipeline may actually be good for the dinosaurs: Construction crews could unearth remains, and Enbridge has been willing to discuss diverting the line around any major historical find. But Helm’s chief worry is the pass, a remote and pristine home to caribou and grizzly. It isn’t a park—the Gateway route does not cross a single provincial or federal park—but it is “quite special, remote and pristine,” Helm says. He wonders, is it worth the trade-off to bring crude through the area? Why can’t it be sold to the U.S. instead?

 “My concern is, are we going to be creating a new highway over the mountains where none has existed before?” he says. “Why does the oil have to come over our mountains? I’m not sure what the ultimate reward would be to a place like Tumbler Ridge. And there is a risk.”

 It’s possible no one knows that risk better than Roy Pattison, one of the rare breed of individuals to ever reach Missinka Pass. A man of remarkable talents—he is a trapper, a guide, a pilot, a lumberman, a road builder, a taxidermist and a cowboy—Pattison grew up on the western side of the pass, where he homesteaded when he was 19. He knows the land like no one else.

 “I got chased by a grizzly up there,” he says from his home south of Bear Lake, B.C. That day, he was taking pictures of a sow with two cubs when the wind changed. “She was right after me. And I was skipping across the rocks there. I ran maybe 100 yards and she quit running. But she was gaining real fast.”

 Pattison’s home is festooned with all manner of trophy heads from hunts around the world. As a guide, he helps outsiders shoot numerous moose each year. Yet, come winter, he sets aside enough hay to feed a herd of 50 elk that he would never dream of shooting.

 While Gateway would cross his guiding area and one of his traplines, he supports the project—in large measure because he owns trucks and a gravel quarry, and he’s already told Enbridge he’d like to work on it. “I think it’s going to impact us, with the trapping and the guiding,” he says. “But if we’re involved with it, it would be justifiable.”

 Yet even for him, the Missinka is a concern. In spring, the water runs fast and hard. Landslides are common and rivers often blaze new routes. In winter, the pass can be buried under five metres of snow—a barrier that would be immensely difficult to penetrate in case of a spill. Enbridge has said it could use heavy-lift helicopters to bring equipment in an emergency. Pattison is worried.

 “You might not find a spill until a lot of damage is done,” he says. “If I got to work with [Enbridge], I don’t want to go making a bunch of trouble for them. But it’s rugged up there. Holy shit, it’s rugged country,” he adds. “It would be a tough project to safeguard. You’d never be able to safeguard against everything.”

 It is a Thursday night, but it feels like a Sunday-morning prayer meeting in the living room of John Phair’s small house in Burns Lake, B.C. The seven people present are fervent, and they are dedicated. They want Gateway stopped. Feelings have run so hot here that local police felt compelled to attend a recent community meeting where people argued that a drop of oil in local rivers will spread its poison far and wide.

 “This is a headwaters. When we pee in the water here, it shows up in Vancouver,” says Phair, as he displays unflattering articles about Enbridge.

 Burns Lake is one of the few places where Gateway would pass a residential neighbourhood: Kilometre post 929 is right by the mayor’s house. At bottom, this is a forestry town, friendly to industry. But the community’s mountain bike park has waged a four-year battle to get Enbridge to change the route, which goes through the park’s main runs. “If a mine came in, that’s clearly 200 jobs here, long-term,” says Kevin Derksen, one of the bike park’s founders. With Gateway, “you’re talking billions of dollars in oil going through here, and what does our community see?”

 But among those gathered in Phair’s house, it’s clear that Gateway’s critics aren’t just interested in rivers and jobs. As remote a scenario as it may seem in an area of massive pickups and 150-kilometre grocery runs, they’re interested in an energy future without oil. They worry about the climate impact from the growth in oil sands production that Gateway would help foster. They want to know: Would Gateway’s $5.5-billion investment not do more good in search of new energy?

“We can’t keep shitting on the planet the way we are right now,” Phair says, his voice rising in passion. “If we allow this pipeline to go through, are we that different from someone who allows a dealer at the corner store to push crack?”

 Not far from here, near the cabin the Wet’suwet’en have built, John Ridsdale has a more personal argument. He, like many along the route, is convinced Gateway will leak, a conviction cemented this summer when first the BP Gulf spill renewed fears about the dangers of oil, and then Enbridge itself suffered two major pipeline ruptures on its existing crude network in the U.S. One of the spills coated an environmentally important Michigan river in a thick layer of black, providing visual evidence of the exact outcome Ridsdale fears. “You want to kill a people, you kill their culture. You kill our rivers, you’re killing our culture. That’s genocide,” he says.

 Later, he apologizes. For him and his people, Gateway has stirred a deep antipathy born of a history of wrongful treatment by outsiders. “I’m sorry that I used the word ‘genocide.’ But that’s how I feel in my heart,” he says. “They’ve tried for years and years and years to remove us from our land so that projects such as these can go through.”

In January, 2010, the federal government created the joint review panel that will assess whether Gateway is in the public interest and whether it will cause environmental damage. The panel’s blessing is not assured. Similar processes have denied applications in the past—and the uncertainty surrounding public approval of Gateway has created an extraordinary circumstance for Enbridge. Unlike almost every other pipeline project in modern Canadian history, most of which are submitted for approval with the bulk of their capacity spoken for, Gateway has been brought forward without a single contracted crude shipper. In fact, approval is so uncertain that Enbridge has yet to buy any of the land along the Gateway route.

 “It’s not a traditional pipeline across the prairies, where there’s very little risk that you won’t get approvals and get your permits, and where you can enter into those commercial agreements early,” says Doering, the engineer. Some of the shipping agreements with crude producers will, however, be presented to the panel before public hearings start, likely late in 2011, he says.

 Still, Gateway remains many years from being built. Officially, Enbridge says it could be complete by 2016. Privately, company officials acknowledge timelines will likely stretch. Approval may be delayed by the lawsuits that are almost certain to erupt as First Nations use courts to thwart Gateway’s advance. The legal questions are tricky, since the duty to consult and accommodate native people lies with the Crown, rather than Enbridge. Since Enbridge will pay economic rent to the government for crossing Crown land—the majority of the route is on government land—it’s also largely the Crown that will then have to work out compensation to First Nations. Even if those issues are resolved, construction will likely be slowed by protest efforts.

 Success also requires Enbridge to convince a skeptical oil patch. Its arch-competitor, TransCanada, has seriously looked at shipping oil to Kitimat—but has publicly dismissed the idea as being too difficult to get approved. Companies have other options to ship their product, too: Kinder Morgan has a plan to expand an existing crude pipeline from Alberta to B.C.’s Lower Mainland. That pipe is already sending roughly a tanker per month to Asia. CN Rail also has a “pipeline on rail” scheme that could see crude brought to Prince Rupert by train. CP Rail is pursuing a similar idea for exports from Vancouver.

 And even companies that like Gateway—or at least, the idea of Gateway—aren’t ready to commit to it. “It’s really important to the Canadian economy to find new markets for its products,” says Steve Laut, president of Canadian Natural Resources Ltd., one of Canada’s most important oil and gas producers. “The only problem we have is that for a producer to sign up for 20 years to get a pipeline built, they have to have pretty strong assurances they have a 20-year market on the other side.”

 And despite Asia’s growth story, companies like Laut’s are worried. If they sign a contract with a Chinese refinery, is there any assurance that the refinery won’t change allegiance within a few years? “You have to make sure you mitigate your risk,” he says. “It’s going to take some while to get that worked out.”

Ellis Ross and Sean O’Driscoll are not far from each other—at least not in distance. Just a 30-minute drive separates Kitimat, the B.C. coastal town that was built to house workers at the Rio Tinto Alcan smelter, from Kitamaat Village, home to the Haisla people. But the street signs speak to the gulf that divides them. In the village, Ellis Ross stands on Haisla Avenue, next to the waters his ancestors have fished for centuries. In Kitimat, Sean O’Driscoll is on Industrial Avenue, not far from the paper mill where he spent decades working.

In a small way, these street names are fitting bookends to a debate that has been especially strident here, at the end of the line. Not far away, the Gateway route reaches its terminus at kilometre 1,172.19, on a treed rise overlooking the blue waters of Douglas Channel. The channel has been a lifeblood to this area. It has fed raw material to the smelter that has brought many jobs. It has also fed a cornucopia of seafood to the people who continue to live off the waters they call their dinner plate.

 On Haisla Avenue, Ross strides to the water’s rocky edge. “This used to be lined with kelp beds and life,” he says. “There used to be clam beds. There used to be all sorts of wild salmon. We used to be able to come right here and fish for halibut.” Now, fishermen must travel, sometimes great distances. He looks across to Kitimat, where the smelter is clearly visible. “We know what the trade-off here was. In exchange for industry, we have traded off all our sea life. We’re just struggling to hang on to what we’ve got.”

 The smelters and the paper mill haven’t fully delivered on promised jobs, either, he says. And though the Haisla have embraced a proposed natural gas export terminal on their land—and some in the village support Enbridge, which has already brought employment—Ross isn’t willing to take a chance on Gateway. “There’s tonnes of benefits. If we negotiated well, our community would probably be the wealthiest band on the whole northwest coast,” he says. “But you can’t buy off the Haisla. We don’t want it.”

 It’s a sentiment that has echoed across the B.C. coast. In Hartley Bay, a settlement of 160 that is accessible only by air and water, the dangers of petroleum became excruciatingly clear one night in March, 2006, when the Queen of the North ferry hit a nearby island and sank. Seafood is such an important part of life in Hartley Bay that many families operate half a dozen chest freezers, which they fill with salmon, halibut, eulachon, seafood, crabs and clams. When the Queen sank, families couldn’t harvest some species for two years. Gateway would result in a tanker a day passing directly in front of Hartley Bay. Some would be supertankers, capable of carrying two million barrels—nearly 320 million litres—of crude. A spill would be devastating. Some locals have already decorated their laptops with foreboding “Enbridge Valdez” stickers.

 “We’re rich here. We’ll never starve,” says Cam Hill, a teacher who grew up in the town. He shows off the culinary treasures in his own five freezers. “But if there is anything that screws up the water, we are screwed.”

 Yet back in Kitimat, on Industrial Avenue, O’Driscoll says it’s hard to say no to a project that would deliver something so important to daily life. He has been in Canada for more than three decades, but still speaks with a decided Irish lilt. He has stayed in Kitimat because it provided work, but also because it is a place of stunning natural beauty.

 That idea—that beauty should be left untarnished—is at the heart of the argument for most Gateway critics. For O’Driscoll, it’s the opposite. Without oil, he says, he wouldn’t be here to enjoy it. “You go anywhere and open up the fridge. Ninety-five per cent of the produce is shipped in, trucked in or flown in. If it weren’t for oil, we would starve here,” he says.

 “Are all these people that are against this willing to hang up the car? Of course they’re not. I call that hypocritical and shameful. Eventually oil will be a thing of the past. But right now, we depend on it.”