Enbridge bungled handling of Michigan crude spill, U.S. agency says in scathing report

By PETER O’NEIL, Postmedia News July 10, 2012 11:05 AM

OTTAWA — Enbridge Inc.’s handling of a massive 2010 crude oil spill in southern Michigan smacks of the “Keystone Cops,” National Transportation Safety Board chairman Debbie Hersman said today.

Hersman made the comments while revealing the NTSB’s scathing findings on the probable cause of the spill that began in July 2010 involving a pipeline owned by Calgary-based Enbridge Inc., the proponent of the Northern Gateway oilsands pipeline from Alberta to Kitimat, B.C. The NTSB is an independent U.S. government investigative agency responsible for civil transportation accident investigation.

Hersman also chided Enbridge staff for taking more than 17 hours to respond to the rupture, despite knowing the pipeline suffered from corrosion dating back to 2004.

She disclosed the total cost of the Enbridge spill has now exceeded $800 million US, or more than five times the previous record for most costly spill on U.S. soil. Although Enbridge has said the rupture resulted in the release of 843,444 gallons of diluted bitumen crude near Marshall, Mich., the U.S.

Environmental Protection Agency says on its website that 1,148,230 gallons of oil has already been collected in and near the Kalamazoo River.

“When we were examining Enbridge’s poor handling to their response to this rupture, you can’t help but think about the Keystone Cops,” Hersman said, referring to the fictional incompetent police officers in silent film comedies of the early 20th century.

“Why didn’t they recognize what was happening and what took so long?”

Hersman said poor regulatory oversight by the Pipeline and Hazardous Materials Safety Administration was also to blame: “In this rupture, we saw the operator take advantage of weak regulations for assessing and repairing crack indications …”

She also asked if the catastrophic spill — as well as a September 2010 Pacific Gas & Electric pipeline explosion in California that killed eight people and left another 58 injured — raised questions about the entire industry.

“In both cases, we found problems with integrity management programs, control centres, public awareness programs and emergency response,” Hersman said.

“While our findings raise red flags about the safety of these two companies, they should also force us to ask hard questions of this vital industry.

“With more than 2.5 million miles of pipeline running through this country — enough to circle the Earth 100 times — we have to ask, ‘Are these companies representative of others?’ If the answer is yes, we can expect to be back here again discussing the same issues with a different company. The only unknowns are when, where and how much damage?”

The crude was released in a wetland, a “high-consequence area within a mostly rural, wet and low-lying region,” the NTSB said. “The released oil pooled into a marshy area over the rupture site before flowing 700 feet south into Talmadge Creek, which ultimately carried it into the Kalamazoo River.”

Enbridge chief executive Pat Daniel was in the audience as Hersman delivered her comments.

The NTSB will also propose safety recommendations stemming from the spill. Earlier this month, the U.S. Department of Transportation proposed fining Enbridge $3.7 million, noting the company’s failure to deal with long-standing “corrosion anomalies.”

The spill has fuelled international opposition to two major Canadian oilsands pipeline projects – Enbridge’s Northern Gateway proposal and TransCanada Corp.’s Keystone XL project to the U.S. Gulf Coast. The latter has been delayed by U.S. President Barack Obama.

With files from The Canadian Press

More to come …[email protected]

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© Copyright (c) The Edmonton Journal

Energy minister Ken Hughes seeks explanation for blackout

Opposition calls for full investigation

By Kelly Cryderman, Calgary Herald July 10, 2012 8:07 AM

Energy Minister Ken Hughes said he will demand an explanation for the rolling blackouts that hit across Alberta on Monday, while the province’s official Opposition called for a full investigation.Hughes said the sporadic power outages crossing the province were caused by a combination of three factors: massive amounts of power required to keep air conditioners roaring on a hot day, no wind to power wind turbines, and unexpected failures at four power plants Monday afternoon.

Alberta’s energy minister said he doesn’t know why the four plants all went down on the same day, but he will get to the bottom of it.

“Oh, I’ll be getting an explanation. I just don’t have it in hand right now,” Hughes said in an interview Monday afternoon.

The blackouts hit homes and businesses unexpectedly on Monday, although the mercury has been rising across the province for several days, increasing power consumption.

Officials don’t get much notification when a problem is on the horizon, Hughes said.

“If you look at the experience in most other jurisdictions, you generally don’t get warnings of when something like this is going to happen,” he said.

“Everybody recognizes that sometimes we will experience events like this – but very rarely. Less often in Alberta than other jurisdictions like California or Central Canada.”

But Wildrose MLA Joe Anglin said the odds of four plants all going down on the same day are so low, “I could almost play the lottery on that one.”

“We need an investigation. It should be automatic,” said Anglin, who has long acted as a spokesman for landowners opposed to the major power-line projects.

For his part, Hughes said he has seen no evidence there was any manipulation of the market and everyone with a stake in Alberta’s electrical system understands that “would be treated very severely.”

NDP MLA Rachel Notley said the bigger picture is Alberta’s deregulation of power generation more than a decade ago has led to a lack of control over the system.

“We have a much lower level of oversight and control over our power generation system as a result of deregulation,” Notley said.

Liberal energy critic Kent Hehr said he would cut the government a bit of slack due to the hot summer weather. But he said Alberta has less excess power capacity than other provinces, and that hurts the system’s ability to deliver reliable and affordable power.

Anglin has also been a major opponent to the processes for approving major north-south transmission lines, arguing the multi-billion-dollar projects are an unnecessary overbuild.

But Hughes said Monday’s rolling blackouts speak to the need for a robust system to move power, “and as much as possible, a redundant transmission system so that you have access to multiple sources of generation.”

[email protected]

© Copyright (c) The Calgary Herald

Enbridge handled Michigan pipeline spill like ‘Keystone Cops,’ National Safety Board chief charges

By Peter O’Neil, Calgary Herald July 10, 2012 10:09 AM

OTTAWA – National Transportation Safety Board Chairman Debbie Hersman said Tuesday Enbridge Inc.’s handling of a massive 2010 crude oil spill in Michigan resembled the “Keystone Cops.”Hersman also asked if that catastrophic spill, combined with a deadly 2010 pipeline explosion in California, raised questions about the inevitability of future pipeline disasters.

She made the comments while revealing the NTSB’s findings on the probable cause of a massive bitumen crude spill in Michigan in 2010 involving a pipeline owned by Calgary-based Enbridge Inc., the proponent of the Northern Gateway oilsands pipeline from Alberta to the B.C. coast.

She disclosed that the total cost of the spill has now exceeded more than $800 million US, or more than five times the previous record for most costly spill on U.S. land.

“When we were examining Enbridge’s poor handling to their response to this rupture you can’t help but think about the Keystone Cops,” Hersman said, referring to the fictional incompetent policemen in silent film comedies of the early 20th century.

“Why didn’t they recognize what was happening and what took so long?”

She also asked if the 2010 Enbridge spill, as well as a 2010 Pacific Gas & Electric pipeline explosion in California that killed eight people and left another 58 injured, raised questions about the entire industry.

“In both cases we found problems with integrity management programs, control centres, public awareness programs, and emergency response,” she said.

“While our findings raise red flags about the safety of these two companies, they should also force us to ask hard questions of this vital industry.

“With more than 2.5 million miles of pipeline running through this country — enough to circle the earth one hundred times — we have to ask, ‘Are these companies representative of others’” If the answer is yes, we can expect to be back here again discussing the same issues with a different company. The only unknowns are when? Where? And, how much damage?”

Enbridge Chief Executive Officer Pat Daniel was in the audience as Hersman delivered her scathing comments on the company’s handling of the spill.

Hersman noted that the company took 17 hours after the initial alarm before taking action, and she added that the company failed to take action despite knowing for years that the pipeline suffered from corrosion dating back to 2004.

The NTSB will also propose safety recommendations stemming from the spill near the municipality of Marshall, which has so far caused more than $800 million US in damage and prompted earlier this month a proposed $3.7 million fine from the U.S. Department of Transportation.

Enbridge has said the rupture resulted in the release of 843,444 gallons of diluted bitumen crude, though the U.S. Environmental Protection Agency says on its website that 1,148,230 gallons of oil has already been collected in and near Michigan’s Kalamazoo River.

The incident has fired up international opposition to two major Canadian oilsands pipeline projects – Enbridge’s Northern Gateway proposal to Kitimat, and TransCanada Corp.’s Keystone XL project to the U.S. Gulf Coast that has been delayed by U.S. President Barack Obama.

Significant attention has focused on the “human error” aspect of the 2010 spill, since the company didn’t start taking action until 17 hours after the first alarm warned of problems in Michigan.

The crude was released in a wetland area near Marshall, Michigan, a “high consequence area within a mostly rural, wet and low-lying region,” according to the NTSB.

“The released oil pooled into a marshy area over the rupture site before flowing 700 feet south into Talmadge Creek, which ultimately carried it into the Kalamazoo River.”

The U.S. Department of Transportation, in its justification for the $3.7 million fine that Enbridge has the right to challenge, also noted in its findings that Enbridge did not deal with “corrosion anomalies” on the Michigan line dating back to 2004.

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© Copyright (c) The Calgary Herald

Enbridge fined $3.7M for 2010 U.S. oil spill

US agency says uncovered two dozen violations

Reuters July 3, 2012 6:56 AM

WASHINGTON, July 2 (Reuters) – The U.S. pipeline regulator on Monday slapped a $3.7 million fine, the largest penalty ever imposed, on Enbridge Inc for a July 2010 crude oil spill which contaminated stretches of the Kalamzoo River in Michigan. The Transportation Department’s Pipeline and Hazardous Materials Safety Administration (PHMSA) said its probe uncovered two dozen regulation violations related to the leak on Enbridge’s Line 6B near the town of Marshall, about mid-way between Detroit and Lake Michigan. “We will hold pipeline operators accountable if they do not follow proper safety procedures to protect the environment and local communities,” Transportation Secretary Ray LaHood said in a statement. Enbridge has 30 days to respond to the order. PHMSA’s order against Enbridge accuses the company of failing to adhere to regulations for maintaining pipeline integrity. The agency also said the company attempted to bring the pipeline back into service despite receiving multiple leak alarms the night it ruptured, leading to the release of more oil. Enbridge’s 30-inch line ultimately spilled more than 20,000 barrels of heavy crude and contaminated 38 miles (60 km) of the Kalamazoo River. The accident shut down the pipeline for more than two months and spawned a massive clean-up that the company has estimated will cost more than $700 million. Following the Enbridge spill and other major pipeline accidents, the Transportation Department enhanced its oversight last year. The department is collecting more data on pipelines and in 2011 closed 102 enforcement cases, its highest level for a single year. Last December, Congress passed a pipeline safety bill that raised maxiumum fines and authorized an increase in the number of pipeline inspectors. Enbridge said it was reviewing the PHMSA order. “We will not comment specifically on the contents of the (Notice of Probable Violation) until that analysis is complete,” the company said in a statement. © Copyright (c) Reuters

Reader voices electrical generation and transmission concerns

H. Hanlan, Letter to the Editor

Good morning Southern Alberta, Time to wake up and smell the coffee.  The Alberta Government plans for the electrical generation and transmission of power is at best a farce. For now though let’s concentrate on the effects closer to us and our homes and ranches. The line that Alta link is proposing to run through this country will affect every one of us, not just the property owners whose land they will cross.  We are going to pay for a transmission line that will be built on the assumption that multiple wind farms will be built throughout southern Alberta and this multi billion dollar line will be required to collect and transport this energy. To where? Think export to California and you will be closer to the truth than any politician will admit.  In May of 2010 Trans Alta applied for permission to export 48,000 MW.H per day. In July of the same year permission was granted. In 2010 Alberta’s daily average usage was 7,984 MW.H. So the plan to export nearly 7 times the power we Albertans require will require increased transmission capacity. Are you willing to pay for this?? I’m not. Presenting false fears of blackouts and shortages to justify these new lines is unacceptable to me.

Take a drive down Highway 810 south of the Pincher Creek-Macleod highway, or through any other high density wind generator area.  Then ask yourself if you really want to see more of this spread through the rest of the south.  I certainly don’t. I don’t want to subsidize the power generated by the wind to line the pockets of major companies. I don’t want to see our lovely country through wires and turning (or not turning) props. I would classify these wind towers as a blight on the land with a pollution value exceeding that of other generation methods. Add to that miles and miles of enormous transmission towers winding their way southward, then east, then back north. Miles of excess line that we will be forced to pay for.

Power loss on transmission lines runs 3% up to 7% based on the size and length of the line. Alta Link in 2010 estimated this loss at $70 million a year. Stelmach, in 2009 quoted $250 million and an M.L.A in 2010 quoted $350 million. Kind of makes you wonder if anyone really knows what the truth is doesn’t it???  80% of the power used in Alberta is used by industrial and commercial operations.  Can you really see southern Alberta becoming a large hub of industry??  Not likely!!  So wouldn’t it make more sense to generate power closer to the major users??  We have this vast surplus of natural gas in this province. It is clean burning and very cheap. Would a plant the size of Sheerness located on a section or two of land in the industrial area of the province not be a better idea than subsidizing the erection of hundreds and hundreds more wind towers and hundreds of miles of transmission towers throughout our homeland?

I am not an opponent of green energy however, it appears that wind power is not an economically viable commodity and to subsidize it, then add increased transmission costs to the users for miles of unnecessary lines at the expense of our beautiful landscape is not acceptable. Remember other power sources are necessary for the days the wind is over or under speed. To feed a fluctuating amount of power into a grid must be a nightmare. (more costs?)

Opponents will argue that the increasing population and industrial growth of our province requires this huge proposed electrical grid expansion.  This is not the truth. While the transmission charges and administration charges have increased your bill’s total by huge amounts (transmission charges increased 2009-2010 by 122%) the actual KW.H used has not increased that much. . Since 1996 Alberta’s generating capacity has grown 38% while demand has grown only 21%. Improved appliances, lighting, etc. have kept domestic usage fairly stable. The industrial usage has no doubt increased but if transmission costs and administration cost continue to rise, don’t be surprised when some of these major users install their own generating units or in the worst case, re-locate. We remaining residents will still be paying for the transmission lines.

We are fortunate to live in one of the loveliest parts of Alberta.  The wind, we have to live with, the windmills we do not. Let’s get this foolishness stopped while we still can. Come to the Alta link meetings, write your M.L.A. Ask that the need be proven with some facts not a snow job.

One more thing, do a web search on SNC Lavalin. They own Alta link. That should scare you.

H. Hanlan
Pincher Creek

Alberta MLA calls for adjournment of western transmission line project

The Canadian Press Posted: 06/11/2012

RED DEER, Alta. – A Wildrose MLA says a public hearing of a transmission project should be adjourned. The Alberta Utilities Commission’s hearing into the route of the Western Transmission Line began today in Red Deer. The line, which will run from west of Edmonton to east of Calgary, is one of five that were approved under Bill 50.

Joe Anglin says hearings for this and four others approved under the bill shouldn’t go ahead until the Court of Appeal rules on the commission’s jurisdiction.

Wildrose and other critics of the approved transmission lines, which will be paid for by electricity users, are a massive overbuild at ratepayers’ expense. “The transmission projects approved under Bill 50 never went through an independent needs assessment,” Anglin said.

“We need to know if the AUC can hear evidence and make a fair and impartial ruling at these hearings and until we do, the hearings absolutely should not go ahead.”

AUC WATL Hearing

  As you may have heard, the Alberta Utilities Commission hearings for the second Bill 50 line (WATL) are underway in Red Deer.

A couple of weeks ago, lawyers for landowners asked the AUC to adjourn the WATL hearing until after the Court of Appeal rules on the Heartland Appeal  (Shaw  v.  Alberta (Utilities Commission) and Altalink).

That appeal will decide whether the Commission can turn down a Bill 50 line on public interest grounds.  If the evidence put to the Commission at a hearing shows that a proposed Bill 50 line will do more social and economic harm than good, the Commission must deny the line.  It has to deny the line because building the line is not in the public interest.

 To better understand the legal grounds for the Heartland Appeal go to this link:  http://www.albertalandownerscouncil.com/Shaw_Court%20of%20Appeal_Written%20Brief_Execerpts_Feb%203-2012.pdf

 If the Court of Appeal rules in our favour on the Heartland, it would mean that landowners and industry groups can put the evidence in front of the Commission that shows that neither WATL or EATL are in the public interest—just like landowners and industry did in the AUC Heartland hearing.

 There is overwhelming evidence proving there is no demand and no electricity for these massive new lines.  To see some of that evidence go to these links:  http://www.landownersagainstbills.com/Appendix%202_Evidence%20of%20Church%20and%20MacCormack_Sept%202011.Highlighted.pdf

http://www.landownersagainstbills.com/Alberta%20Landowners%20Council_ALC_Submissions%20to%20the%20CRTC%20IR%20Requests_January%206-2012.pdf

In the May 12, 2012 Calgary Herald, Mayor Nenshi made some interesting statements about the Bill 50 transmission lines—they are not needed but the government is going to force them on us anyway.  Here’s an excerpt from the Calgary Herald story:

 Although it appears the war’s been fought and lost, Mayor Naheed Nenshi railed Friday against the province’s move to build north-south power transmission lines and vowed to continue pressing for a way to shield Calgarians from surcharges for the lines.

At the annual general meeting of Enmax — the first one for new CEO Gianna Manes — the mayor called the $3-billion twin power lines a “terrible” idea that won’t be needed because of the city-owned utility’s own project, a $1-billion gas-fired power plant in the Shepard district.

“And to build both of them and to put those costs on everyone, even the ratepayers in Calgary who, once the Shepard Energy Centre is built, actually won’t be using them very much, strikes me as very, very strange public policy,” the mayor told reporters after the meeting.

Alberta’s major industries are frustrated too.  The Industrial Power Consumers Association of Alberta (IPCAA) has not given up and is also hoping that the Court avenue will help stop the Bill 50 madness.

 We have posted the request from lawyer Gavin Fitch for the WATL hearing to be adjourned on our website at this link:

 http://www.albertalandownerscouncil.com/566%20Corridor%20Group%20Motion.pdf

 Here are some excerpts from what the lawyers for landowners and industry said to the Commission when they asked the WATL hearing be adjourned until the outcome of the Heartland Appeal:

 Lawyer Gavin Fitch:  The present motion [for adjournment] is advanced on the following related grounds:

The Court of Appeal’s granting of leave on the question of the Commission’s interpretation of its public interest assessment in the case of CTI projects, such as WATL, casts significant doubt as to the correctness of the Commission’s approach to its consideration of CTI projects; and

 The outcome of the Shaw appeal may result in a broadening of the scope of the Commission’s public interest assessment such that interveners in the WATL proceeding may, and likely would need to file additional evidence addressing the broader socio-economic impacts associated with approval of the WATL line;

 The 566 Corridor Group submits that any prejudice to AltaLink would be minimal. Conversely, interveners to the current proceeding would be significantly prejudiced should the hearing proceed as scheduled as they would be forced to participate in a hearing that may need to later be re-opened as a result of a decision from the Court of Appeal granting the Shaw Appeal

 Furthermore, the Commission has, in other cases opined that local interveners should not be compelled to dedicate their time to prepare for and attend a hearing unless the Commission could be in a position to rule on the application

 In our respectful submission, the granting of leave to appeal on such a critical jurisdictional question suggests that the Commission is not currently in a position to rule on the application and on this basis should properly adjourn the proceeding pending the outcome the Shaw appeal.

Lawyer John Gruber:  The Midway Group supports the Motion. We have reviewed the written submission of the 566 Corridor Group and concur with its contents.

The legislation deeming the subject matter of certain utility transmission applications to be Critical Transmission Infrastructure represents a departure from how applications for utility transmission infrastructure were considered in the past. Given the nature of this change, the scope of these projects, and the resulting impact on rural landowners, it is imperative that the jurisdiction of the AUC in these applications be correctly understood.

The Motion is premised on the Court of Appeal granting leave to appeal a jurisdictional question arising from the Heartland Decision. Such leave is not granted lightly.  The issue subject to leave in the Heartland Decision is at the core of the WATL application.

The time for certainty as to jurisdiction is before the hearing – not during or subsequent.  Should the AUC proceed with WATL on a jurisdictional understanding that is ultimately not shared by the Court of Appeal, it is likely that the process would have to essentially be repeated. Going forward in the absence of certainty would mean that landowner interveners would be participating with the knowledge that there is a reasonable prospect that they will have to do it all over again.

 ENMAX lawyers:  The Alberta Court of Appeal has made it clear that “in the interests of certainty and consistency” it must review the legislative interpretation made by the Commission in the Heartland Decision. As the Commission well understands certainty and consistency are two of the hallmarks of a fair impartial administrative process. Where serious jurisdictional questions exist the necessary element of certainty can not be achieved by this or any other tribunal. Put simply, the AUC’s ability to consider a significant portion of the issues which will arise in the WATL process is currently uncertain.  In the absence of this certainty, both Intervener and Applicant alike are placed in an unfair position in both understanding the case that must be meet and in preparing the case it intends to put forward.

Lawyer Jim Laycraft for the WCG landowner group:  The WCG submits that Justice Berger’s leave decision in Shaw makes it clear that the Court of Appeal considers the scope of the Commission’s public interest jurisdiction in CTI cases to be an important question and, as Mr. Fitch has noted, Justice Berger has gone as far as to state that it is “imperative” that his court consider the issue.

 The Commission should adjourn this hearing pending clarification.  Proceeding with the hearing may create unfairness for parties, and will certainly cause a waste of time and resources in the event the Court of Appeal ultimately takes a different view on the Commission’s public interest jurisdiction.

Attached are some newspaper stories about the adjournment request for WATL that you should read.

 In the end, here is what the Commission decided to do:

           Ruling on the motion of 566 Corridor Group to adjourn — The Commission has considered the submissions of all the parties and denies the motion to adjourn filed by the 566 Corridor Group.  Proceeding now is not a waste of time, it allows examination of the evidence already filed and will ultimately save time and reduce the prejudice to landowners who have had to wait many years for a resolution of the Western Alberta Transmission Line Project.  The parties are ready to go, the evidence is relevant regardless of the Alberta Court of Appeal decision, so the hearing will reconvene on Thursday June 14, 2012 at 9:00 a.m. at the Winspear Room at the Holiday Inn 67 Street in Red Deer.

 So much for the Commission being concerned about fairness to landowners and ratepayers.

 ____________________________________

Update re Shaw (Heartland) Appeal to the Court of Appeal

 Significant progress has been made getting the appeal ready for the Court to hear the case.

The Shaw’s lawyer, Keith Wilson, has obtained a number of Court Orders to move the appeal forward and has completed the major steps in terms of Appeal Records needed to have the case heard.

 Attached is letter that describes some of the steps.

 Copies of the Court documents filed by Wilson are posted on our website under the heading Heartland Hearing.

 We will update you on timing and other important developments shortly.

 If we can win the Heartland appeal, we might be able to stop all of the Bill 50 madness. 

 Thanks for your support on this important appeal.

 Alberta Landowners Council

 

Redford issues mandates for associate ministers

By Karen Kleiss, edmontonjournal.com June 21, 2012

EDMONTON – Premier Alison Redford has asked the province’s seven new associate ministers to develop transparency legislation, reduce the number of children born with fetal alcohol spectrum disorder, and find new ways to borrow money for capital spending.

They will also review Alberta’s international offices, establish a council to look at municipal financing and implement $500 tax credits for children and seniors who engage in physical activity.

In the past, Redford has written a mandate letter for each minister in her cabinet, this time she has issued letters for each associate minister and a single “cabinet mandate” for the ministers.

“There are a few critical areas where special attention, discipline and effort are required to drive meaningful change and results,” Redford wrote in the cabinet mandate. “The success of this government and cabinet will be evaluated on the basis of our collective progress in delivering on the following priority initiatives.”

The priorities Redford listed include early childhood development, primary health care, education and entrepreneurship, fiscal framework, resources and market access.

The mandate letters were dated June 4, and were released by the premier’s office on June 21.

Redford last issued individual letters to ministers on Nov. 3, shortly after taking office. The Nov. 3 letters have been removed from government websites.

Redford again trumpeted her government’s commitment to transparency in her cabinet mandate, and asked Accountability and Transparency Associate Minister Don Scott to recommend changes to Alberta’s access and privacy, and to develop transparency legislation for Alberta.

Scott will be responsible for writing Alberta’s new whistleblower law and said Thursday he plans to review every major piece of legislation with a view to increasing government transparency.

“It’s always a balancing act,” Scott said. “So you’re always balancing the need to get more information into the public (domain) and the need to protect certain interests.”

Redford has also asked associate finance minister Kyle Fawcett to review “opportunities to borrow for capital expenditures.”

“This isn’t a significant departure from where we’ve been,” Fawcett said. “In 2009 there was some borrowing for capital purposes in that fiscal plan. There were bonds issued to build seniors facilities. We have in the past utilized P3 projects for both the ring roads and schools.

“We need to evaluate whether those were appropriate and what kind of value they provided us.”

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© Copyright (c) The Edmonton Journal

Encana to invest another $600 million this year and boost liquids production

By Dan Healing, Calgary Herald June 21, 2012 8:26 AM

CALGARY – Canada’s biggest natural gas producer is accelerating its move into the liquids game with a $600-million increase in spending on 10 North American plays where higher-value products like oil, propane and condensate are produced with the gas.

It said its investment will exceed cash flow for at least 18 months but will allow it to increase liquids output for 2012 by seven per cent to 30,000 barrels per day by drilling 115 to 120 wells, 75 more than were originally envisioned.

“Our stated goal is to transition to a more balanced portfolio of production and cash flow generation and to do so as prudently as we can,” said Randy Eresman, president and chief executive, on a webcast from the company’s investor day event in New York Thursday morning.

“We plan to increase the pace at which we develop our liquids-rich natural gas and oil plays while minimizing our investment in dry natural gas plays to largely preserve their value. We also plan to maintain our finanical strength through multiple joint ventures and divestitures.”

The company has already closed $2 billion in transactions this year and will aim to close another $2 billion to $2.5 billion by the end of 2013, he said, noting that the assets targeted for sale or partnership will include some of the same liquids-rich plays it has identified for heavier investment – such as the Alberta Duvernay ‑ and dry gas plays that might provide feedstock for liquefied natural gas projects.

Analyst Andrew Potter of CIBC World Markets gave the plans a “mixed” rating in a note to investors, noting that Encana is bucking the trend in industry by increasing spending as oil prices fall and gas remains locked in the price basement.
“On the positive side, Encana is clearly seeing good results from its liquids plays and has the ability to ramp-up quicker than we expected,” he wrote.
“However, on the negative side, the high spending strategy in a declining price environment (at least in the short-term) raises the risk profile of the company.”

He estimated Encana’s production in 2013 could averaged 3.39 billion cubic feet equivalent per day in 2013, composed of three bcf/d of natural gas plus 60,000-70,000 bpd of liquids, up about six per cent over 2012 estimated production.

Encana’s 2012 capital program will jump from $2.9 billion to $3.5 billion and in 2013 it plans to spend $4.5 billion. At the investor day, Eresman said the spending will depend on the success of the third party deals.

The company is expecting to drill approximately 350 oil and liquids rich wells in 2013, taking production to 60,000 to 70,000 bpd, about 40 per cent of which is expected to be comprised of oil and field condensate.

Encana is targeting 10 plays including the west central Alberta Duvernay play, where it holds 160,000 net hectares of drilling rights, and will drill 10 wells in 2012.

It said it is getting 50 to 60 degree API gravity field condensate yields ranging from 120 to 200 barrels per million cubic feet in the play and its most recent tied-in well delivered 1,200 barrels per day of condensate and 3.5 million cubic feet per day of natural gas during its first two days on stream.

Encana’s other oil-rich plays are the Tuscaloosa Marine Shale, Eaglebine, Mississippian Lime, Utica/Collingwood, San Juan, DJ Niobrara and Clearwater Liquids.

dhealing@calgaryherald.

© Copyright (c) The Calgary Herald

Enbridge pipeline spill adds to worry of First Nations group

By Gemma Karstens-Smith, edmontonjournal.com June 20, 2012

EDMONTON – A faulty gasket is to blame for the 230,000 litres of oil discovered Monday spilling from Enbridge’s Athabasca pipeline, says a spokesman for the Energy Resources Conservation Board.

About 1,445 barrels of heavy crude oil leaked out of the pump station where the gasket was located. The 541-kilometre pipeline stretches from the Fort McMurray oilsands to Hardisty and has a capacity of 345,000 barrels per day.

Enbridge spokesman Graham White said it is not possible to offer an estimate of the area affected by the spill because “some areas are more affected than others.”

“The area affected is our pump station site, some area along the pipeline right-of-way that is also (owned by) Enbridge and part of a local field,” White said in an email Wednesday. “The vast majority of the spill is on the site and there is no impact to waterways or wildlife.”

About 180 barrels of oil spread on to a neighbouring landowner’s property, said Darin Barter, spokesman for Energy Resources Conservation Board.

White said the company is keeping the site closed to reporters because of “safety and operational issues.”

He could not say how long it will take to clean up the spill site, about 24 kilometres southeast of Elk Point.

Clean-up and investigation crews have been on-site since Monday.

Barter said leaks in pump stations are “fairly rare,” and investigators will look into “less obvious” reasons behind the release, such as operating pressure.

The pipeline was shut down early Monday and the pumping station fenced in.

The pump station has been decommissioned and the pipeline has been reopened, Barter said.

Enbridge’s Athabasca pipeline spill is the third major pipeline break in Alberta in two months — breaks in a Plains Midstream line near Sundre and a Pace Oil and Gas Ltd. well in northern Alberta are also being cleaned up.

Having the incidents so close together is unusual and “not indicative of Alberta’s level of safety,” Barter said.

“Given the enormous amount of oil and gas infrastructure in this province, it’s a very safe system.”

He said the recent spills are “very different incidents.”

Mike Deising, press secretary for Alberta Energy Minister Ken Hughes, said the province has a “good” pipeline system.

“The problem is we have 400,000 kilometres of pipeline and occasionally, we will have a spill,” Deising said.

Premier Alison Redford said pipeline spills “happen sometimes” and are part of balancing social and economic factors.

“I think people have a pretty good appreciation of the fact that there does need to be a balance and it is unfortunate when these things happen,” Redford said.

The province is backing the construction of the controversial Enbridge Northern Gateway pipeline, intended to transport Alberta bitumen from Hardisty to Kitimat, B.C. If built, the pipeline would allow Alberta to sell its oil to booming Asian markets.

The project has faced fierce opposition and Art Sterritt, executive director of Coastal First Nations, said the latest spill underlines their concerns.

“We don’t like to say we told you so, but we did,” Sterritt said.

“Folks out here are not taking any great pleasure in the fact that there’s oil spills all over Alberta. However, the industry itself is demonstrating to British Columbians that they don’t have their act together and B.C.ers are not going to allow the same thing to happen here.”

Enbridge maintains such spills are rare, however. To critics who draw a link between the nearby spill and potential breaks in a future Northern Gateway pipeline, White noted this particular spill was quickly found, likely not related to pipeline integrity, and “appropriate, immediate and effective actions (were taken) to contain the product and mobilize response crews for cleanup, inspection and assessment.”

— With files from Trish Audette

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