Interview with Lexa Hobeshield, External Relations Spokesperson for Kinder Morgan Canada

The latest scoop on the Kinder Morgan Trans-mountain pipeline expansion project

by Luis Fernando Arce, Chief Interviewer

Image obtained via dfbphotos on Flickr Creative Commons

Image obtained via dfbphotos on Flickr Creative Commons

An interview describing in detail what the economic projections of the project are, in terms of costs and profits to the company as well as the contributions to the Canadian economy regarding the Kinder Morgan Trans-mountain pipeline expansion project. Also covered is the consultation process that is supposed to take place with the First Nations and the public in general.


What are the economic projections of this expansion? What revenue – if any – will Canadian Provinces through which the pipeline runs receive? What about for the American side?

The proposed project is a 4 billion dollar project that includes the twinning of the existing pipeline along with upgrades to pump stations, storage facilities and the Westridge Marine Terminal in Burnaby.

We estimate the overall expenditures on goods and services in Canada to be approximately $6.6 billion in 2012, and expect them to lead to an increased Gross Domestic Product in Canada (GDP) of $5.6 billion. We also forecast the labour income to increase by $3.0 billion and create 46,000 person years of employment. Economic benefits of direct project expenditures are deemed positive.

[pullquote]We also forecast the labour income to increase by $3.0 billion and create 46,000 person years of employment[/pullquote]More than half of the expenditures will be in B.C., with the remaining expenditures in Alberta and Saskatchewan. The project will generate revenues for all three levels of government – federal, provincial and municipal.

Will all or most of the transported oil be sold or consumed in Canada, the United States, or China?

There is strong interest from all market sectors from our customers that signed contracts.

Kinder Morgan Canada’s role is to transport crude oil and refined petroleum products and provide access to markets for our customers through the pipeline. The existing Trans Mountain provides the only West Coast access for Canadian oil products, including about 90 per cent of the gasoline supplied to the British Columbia’s Interior and Lower Mainland/South Coast.

Here is a link to the website of the Canadian Association of Petroleum Producers and more detailed statistics about Canadian exports that may help answer your question. – “http://www.capp.ca/library/statistics/handbook/pages/statisticalTables.aspx?sectionNo=9”

How does the fact that the federal government opted to close the Emergency Oil Spill Response Center in Vancouver affect the Trans-mountain pipeline in the event of a spill? If there were a spill, would there be collaborative efforts between Kinder and Morgan and the federal government at all? Or with tax-payers?

Kinder Morgan Canada is a leader in energy transportation and its safety record speaks for itself. The Company uses a multi-layered approach to pipeline safety that includes comprehensive damage prevention, pipeline integrity management and emergency response programs.

Kinder Morgan has effective spill response established through its own preparedness, and through its coordination with other emergency response agencies in the area – and in particular with its contracted responder, the Western Canada Marine Response Corporation. Kinder Morgan believes that this, combined with the Government’s additional commitment and funding to marine safety, will contribute to maintaining, and improving as necessary, marine safety.

If a release were to occur on land with our pipeline, Kinder Morgan would take the responsibility for responding and clean up. Liability for the release would rest with the party found liable who would then be required to pay for damages.

If a release were to occur on water (i.e. Burrard for example), the carrier of the product would be responsible for clean up and again liability would be assigned to the responsible party. In such case, while we believe effective spill response capabilities are in place, we will continue to support efforts to ensure that appropriate resources are in place for the safe conduct of tankers through our local waters.

[pullquote]For almost 60 years, the 1,150 km existing Trans Mountain Pipeline system has been operating safely and efficiently providing the only West Coast access for Canadian oil products[/pullquote]In your website you assure that appropriate consultations with First Nations have and will take place. Why is there so much opposition and protests from First Nation groups? And what do you say about the claims that no consultations have occurred either for the expansions that have already taken places (in 2005) or the ones planned?

Our existing Transmountain pipeline impacts 15 reserves as well as 82 traditional territories. We value our relationships with Aboriginal groups in whose territories we operate. We recognize and appreciate those Aboriginal groups’ interests; their responsibilities are unique and we are committed to open, transparent dialogue and mutually beneficial working relationships. Additionally, we view the Crown’s obligation for Aboriginal Consultation as an opportunity to demonstrate the recognition and respect for the constitutionally protected rights held by Aboriginal peoples and we are pleased to support a meaningful consultation process.

What steps are being taken to avoid having what happened in Abbotsford earlier this year happen again?

For almost 60 years, the 1,150 km existing Trans Mountain Pipeline system has been operating safely and efficiently providing the only West Coast access for Canadian oil products. As of November 2011, Kinder Morgan Canada employees worked 2 million hours without a lost time incident. We have our own stipulations, in addition to the stringent regulations and requirements of Transport Canada and other regulators who ensure that our pipeline system exceeds safety expectations. To monitor the integrity of the pipe, we regularly use in-line inspection tools called “smart pigs.” These high tech devices detect any pipe irregularities or anomalies and pinpoint exact locations where further investigation may be warranted by qualified pipe technicians.

The Abbotsford release of oil from a storage tank at the terminal was fully contained on our property within an area that was lined with an impermeable membrane. The containment worked exactly as designed, and all of the oil was recovered on the same day as the release. Company personnel responded to the site immediately and a comprehensive response occurred under regulatory oversight to make sure the product was contained and cleaned up. There were no injuries and no threats to the public.

However, since the incident, we have taken up several precautionary steps in order to avoid this sort of incident in the future. These precautions include: an enhanced early notification system that will send automated calls if needed, odour and air quality monitoring, as well as enhanced early detection.

Was the B.C. Terasen Gas Company bought in 2005 with the intention of keeping the pipeline after selling the company, or did that outcome come about afterwards, on its own? Who are some of the major investors? What prompted some of them to back out of the contracts?

We’re extremely pleased with the strong commercial support from our customers who submitted 510,000 barrels per day of binding commercial support. The commercial support process allows for shippers to reconsider in the 30-days after their initial commitments are first made. It is not uncommon in this process for commitments to change as companies go back and review the numbers as part of their process before signing a contract. The circumstances may be different for each customer, but overall we’re pleased with the support that reinforces the appeal of the project and our approach.

Do you think that the mayors of both Burnaby (Derek Corrigan )and Vancouver (Gregor Robertson ) will end up coming on board at some point? What about the Tsleil-Waututh Nation near the Burrard Inlet, one of the First Nation Communities citing the most danger to their community?

We are committed to working with local governments and value their input into the proposed project.

We have been seeking the opportunity to meet with Tsleil-Waututh for some time now.  While they have advised they are not ready to meet with us yet, we stand ready to provide information to them and to meet with them at any time.

Will there be super-tankers (with 1 million barrels capacity) crossing the Vancouver Port? In other words, is it Panmax Tankers or Suesmax Tankers that will be passing through Vancouver port, should the expansion become a reality?

Currently, the largest vessel calling at the Westridge facility are Aframax vessels and the proposed expansion plans are not dependant on larger vessels.

Has the lack of media coverage of the Kinder Morgan pipeline expansion plans been from Kinder Morgan’s side or the media’s?

We are at the beginning stages of the proposed expansion to our existing facilities, and expect that as awareness grows about the project, we will begin to receive more media requests, such as yours. Here is a link to a more detailed timeline from our website – “http://www.transmountain.com/project/timeline“.

We have also launched a dedicated project media line and email, and are working with local and national media as part of our efforts to communicate with the public about the project.  Kinder Morgan Canada representatives have given interviews or provided information to media about the proposed project on a regular basis since it was first announced.


ARB Team
Arbitrage Magazine
Business News with BITE.

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