PRINCE RUPERT, B.C. - The financial costs of a worst-case scenario tanker spill off the north coast of British Columbia could outweigh the economic rewards of the proposed Northern Gateway pipeline for the region, says a study by the UBC Fisheries Centre.
The study funded by World Wildlife Fund Canada looked at the potential losses to commercial fisheries, tourism, aquaculture and port activities in the area in the event of a tanker accident.
Using the 1989 Exxon Valdez spill as an example, researchers calculated various scenarios, from a spill with no impact to a high-impact spill of 257,000 barrels of crude, in winter, over 52 kilometres of coastline that includes Haida Gwaii and Porcher Island, near Prince Rupert.
"The study highlights that if a tanker spill occurs, the economic gains from the Enbridge (TSX:ENB) Northern Gateway project to the North Coast region would be wiped out by the costs of the spill," said Rashid Sumaila, director of the fisheries centre.
Ocean-based industries directly employ about 10 per cent of the population of the North Coast. When indirect benefits are included, they account for approximately 30 per cent of regional employment.
Total losses due to oil contamination could range from $90- to $300 million in lost output in other ocean industries, thousands of jobs and up to $200 million of lost gross domestic product, said the report released Wednesday by Sumaila and Ngaio Hotte.
That compares to total economic benefits from the project for the region of $628 million in direct output, up to 8,000 jobs and $293 million in GDP.
Overall, the project is expected to boost Canada's GDP by $270 billion over 30 years, $2.6 billion in tax revenues for local, provincial and the federal governments, and generate $81 billion in direct and indirect revenues to the federal and provincial governments.
Northern Gateway officials said the study was deeply flawed, including that it compares economic benefits that are certain to occur with spill costs that are highly improbable.
Enbridge's own assessments suggest a spill of such magnitude is "a one in 15,000 year event."
"Northern Gateway has put in place the most comprehensive suite of marine safety and emergency response measures ever proposed in Canada," Todd Nogier, company spokesman, said Wednesday.
"The reality is simply that, because of the preparedness and mitigation efforts of the project, these impacts would not be of such a scale as represented in this report."
Darcy Dobell, of WWF Canada, disagrees.
"All we have to do is look north to where the Exxon Valdez spilled happened. That was 23 years ago now and the fisheries there have not recovered; communities there have not recovered, and that's a spill from a tanker that was smaller than the projected tankers will be here," Dobell said.
"If you have a major spill like that, things are changed forever."
The loss estimates don't include the cost of spill response, clean-up and litigation, which could run as high as $9.6 billion, the researchers said. Northern Gateway pointed out that cleanup costs of a tanker incident at sea would be paid for by the responsible party, "not the fishing industry or the public."
In an area with a relatively high regional unemployment rate of 9.3 per cent, compared to 6.6 per cent provincially, ocean-based industries on the North Coast generate about $1.2 billion in output value and thousands of jobs, the report said.
Art Sterritt, executive director of the Coastal First Nations, said there are budding shellfish aquaculture businesses along the North Coast that would not survive a spill.
And Joy Thorkelson, a Prince Rupert city councillor and North Coast representative of the United Fishermen and Allied Workers Union, said she believes the costs to ocean industries would be even higher than estimated.
Thorkelson said the pipeline is a risk to salmon, in particular, in rivers and at sea.
"I'm quite sure that Prime Minister Harper has written off the commercial industry in favour of the oil industry. The fact that he wants to write off a renewable industry and a resource that belongs to the people of Canada in favour of oil is really criminal," Thorkelson said in Prince Rupert, where she is taking part in federal review panel hearings.
The spill scenarios all assumed no spill response — a scenario the researchers and Northern Gateway agree is unlikely. The report also notes that if the Exxon had been a double-hulled tanker like the ones that would be docking in Kitimat, the amount of oil spilled would have been half.
Whatever the review panel ultimately decides, Sumaila wrote in the report, "the outcome will have far-reaching consequences for Canada's environmental and socio-economic future."
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Robert Mansell, U of C School of Public Policy
(Sept. 4) - Robert Mansell, academic director of the University of Calgary School of Public Policy, argued the benefits the pipeline could have for Canada. "Just imagine a situation where, if not for Northern Gateway, you had shut in 525,000 barrels per day for one year. That loss works out to $40-million a day, or $14.4-billion per year," he said.
Leanne Chahley, lawyer for the Alta. Federation of Labour
(Sept. 4) - Leanne Chahley, a lawyer for the Alberta Federation of Labour, questioned the estimated economic gains. "It's still a social science that you're involved in, economics. How much degree of certainty should we give it?"
Gil McGowan, Alta. Federation of Labour President
(Sept. 4 ) - Albert a Federation of Labour argues the $6-billion line would mean 5% less refinery in Alberta and the loss of 8,000 jobs. "China is in the midst of a building boom in terms of refineries and refining capacity, so our fear is that if our policymakers allow this pipeline to be built we'll end up in a situation where our own homegrown refineries are no longer economic and they'll close down," federation president Gil McGowan said. "We'll end up in a situation where we're sending our raw bitumen oil to China and then buying back the refined product."
John Carruthers, Northern Gateway President
(Sept. 4) - Northern Gateway president John Carruthers on the Enbridge's committment to environmental responsibility: "It involves assessing, in the same objective fashion, and according to the same standards, the information or evidence that has been presented by those who are opposed to the development of our project. And it culminates in approving the project under a framework of conditions that will promote reconciliation over division, and fact over rhetoric."
John Risdale, B.C. First Nations Chief
(May 2012) - B.C. First Nations leaders travel to the step of the Alberta Legislature to voice their concerns on the environmental damage. "The pipeline route that they have proposed is following the most major river system that we have and when the river is ruined, the people are ruined, the land is ruined," said Hereditary Chief John Ridsdale of the Wet'suwet'en First Nation.
Terry Lake, B.C. Environment Minister
(Sept. 4) - B.C. Environment Minister Terry Lake on how Enbridge plans to exceed world standards in spill prevention. "We certainly want to clarify with Enbridge some of the comments made over $500-million more of safety improvements and what exactly will that mean," Lake says. "In terms of monitoring, in terms of response capability, how can we ensure that any proponent would have to live up to what we consider world class response and mitigation measures."
Economist Robert Mansell, U Of C School Of Public Policy
(Sept. 5) - <strong>On the chance that the proposed Nothern Gateway pipeline would have a negative effect on central Canada's manufacturing sector</strong>: "It is not credible that one could argue this would cause Dutch disease." "Would it do, as has been alleged -- cause the rate of inflation to go up and then force the monetary authorities to tighten the money supply and thereby shrink the economy? The answer is no. "Monetary policy is based on what's called the Core Inflation Rate, which excludes the price of food and energy."
Texas-Based Energy Consultant Muse Stancil
(Sept. 5) - <strong>In a report submitted to the hearing, Texas-based energy consultant Muse Stancil said the Northern Gateway will have an effect on oil pricing in North America:</strong> "It can be expected to have a material effect on the distribution patterns and pricing dynamics for Western Canadian crude, as crude producers for the first time will have a high-volume alternative to their historical markets within North America," said the Muse Stancil report. "Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport."
Richard Johnston, UBC Political Scientist
Sept. 5 - <strong>On the chance the federtal Tories could lose ground in B.C. due to unfriendly policies such as support of pipelines to the west coast:</strong> "Among the risks to their base, I would put Northern Gateway highest," Johnston said. "The risk/benefit ratio (for B.C.) is massively unfavourable in itself and if the government were to force the issue pre-emptively, they would add an additional dimension to the debate, singling out one province for ill-treatment, rather like the NEP and Alberta. I expect Conservative MPs are worrying about this aloud."
Elisabeth Graff, B.C. government lawyer
(Sept. 7) - "Are you willing to acknowledge this is a complex organizational structure that limits the liability of a corporate giant that definitely would have sufficient funds?" she asked. "What we're left with is an entity which you tell us has the financial resources necessary to cover any type of spill, but we're still doubting whether that is possible." "No, I just fundamentally can't accept that," replied Mr. Carruthers. "Because of the investment, everyone would want to make sure there's proper funding available in case of a spill," he said.
Janet Holder, Enbridge senior executive
(Sept. 7) - "We're doing everything in our power to mitigate against a spill." "Believe me, Enbridge doesn't want a spill. It's not what we're in the business for. We're in the business of moving very safely, environmentally sound and in a sustainable way, product from one spot to another."
Geoff Plant, B.C.'s head lawyer for the hearings
(Sept. 7) - "The question [is] whether Enbridge is actually capable of getting the kind of insurance to ensure against the risk of liability," on whether the insurance is there should an oil spill happen.
Barry Robinson, lawyer for three environmental organizations
(Sept. 8) - "If free market economies aren't at play, where's the economic benefit?" asked Robinson about the economic effects of the hypothetical possibility of Chinese interests buying control of the Northern Gateway pipeline.
Kelowna resident James MacGregor
(Spet. 6) - The Avaaz petition <a href="http://www.avaaz.org/en/petition/Stop_Enbridges_Northern_Gateway_pipeline/?whtizcb" target="_hplink">"No Enbridge Tankers/Pipeline in BC Great Bear Rainforest"</a> was started by James MacGregor and has since passed 10,000 signatures. "BC's entire Great Bear Rainforest, its wildlife and the livelihoods of coastal First Nations are all at great risk if Enbridge's Northern Gateway pipeline is approved," he said. "I know I'm not the only one out there speaking up about the pipeline, but I felt like I couldn't sit back and do nothing." (Source: <a href="http://www.vancouverobserver.com/blogs/earthmatters/petition-opposing-northern-gateway-pipeline-clears-10000-signatures" target="_hplink">Vancouver Observer</a>)
Hana Boye, lawyer for Haisla First Nation
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Terry Lake, B.C. Environment Minister
(Sept. 17) - In the worry that in the event of a spill, Enbridge won't have tge insurance to cover the clean-up costs: "Enbridge and Northern Gateway are very aware of that concern now, so we'll look to their response. But we've made it clear that taxpayers will not be left on the hook," Lake said. "I think that the company would argue they have the resources necessary. What British Columbians want to see is an ironclad guarantee that they do have the resources necessary, that the structure and the insurance in place will protect British Columbians from the cost of any adverse event," he added.