[All] Further info re: current status of Line 9

Mon Feb 9 09:52:05 EST 2015

  Hi folks
I just finished doing an interview with a reporter about Line 9 and I'm networking with various groups on this issue and I want to provide this to you to keep everyone in the loop. 
I was not particularly bothered by Enbridge's acceptance of the recent filings because this is just one of many steps along the process. The NEB confirms that Enbridge has yet to apply for Leave to Open  (on page 4 of letter)  and that the other conditions of approval still need to be met so there is lots of work they must do still. 
I am glad to see the two new conditions applied. It makes sense to do multi-year surveys and monitoring particularly in light of the major climate change swings we are currently experiencing in Ontario. Storm runoff issues are a major concern at this point and that does impact valve placement issues.  At the hearing I stated how we are seeing trends of drought and flood year cycles so as a precautionary approach, it's best to approach it this in a way that will have regard for changing water levels year to year. 
In October, the NEB cited Canadian Standards Association Z662-11, Clause 4.4 ("valves should be placed on both sides of the both sides of major water crossings and at other locations appropriate for the terrain in order to limit damage from accidental discharge") as a justification for denying the adequacy of Enbridge's fillings. Enbridge had proposed the placement of 17 new valves to address this clause, and the Board maintained that this amount of valves did not appear to meet the standard.
As of the February 5th decision, the NEB seems content with the same amount of shut-off valves that Enbridge originally suggested, 17, now saying that the Board notes "that valves do not prevent pipeline failures and valves alone cannot appropriately mitigate the consequences of a failure". What's more, the Board  now says that "the 17 additional valves are a significant improvement to the existing and operating pipeline and reflect an evolving response in identifying and addressing concerns associated with pipelines."
I agree adding 17 is better than staying status quo but as they suggest it is still an evolving response. Still room for improvement. What we do know is that Enbridge is going to try to do the bare minimum they have to in order to save money.  That's the nature of business. These correspondences between the NEB and Enbridge is like horse trading. They are negotiating positions but this does not reflect the end result yet.  This project has a very long way to go.

Enbridge must still apply for leave to open which includes hydrostatic testing and as the Accufact report, presented as evidence at the NEB by Equiterre, states there is a 90% chance that pipe will fail. The NEB already denied Enbridge the right to skip Leave to Open at the LIne 9 phase B hearing so I'm confident the NEB will hold firm to making sure that condition is met. If they don't they will loose all credibility as an industry regulator and that sends a bad signal to investors and to the international community doing business with Canada. 
At this point we have a major elephant in the room that nobody is looking at.  We just experienced a global drop in oil prices of 50-60%.  This entire approval was based on values of $100 per barrel oil values. Global banks including Goldman Sachs, Citi Bank, Barclays, the Bank of England all admit we're not going to be seeing those costs again anytime soon. The economic feasibility of this project should be re-examined. I don't know if there is a procedure to allow us to do that.

Imperial Oil is the one who wants Enbridge to get Line 9 done but their Fourth Quarter reports show they lost 36% in their share values due to fourth quarter losses. http://www.theglobeandmail.com/report-on-business/imperial-oil-profit-drops-36/article22743599/
Imperial is now looking into selling 500 or so Esso Stations to make up for it. http://www.cbc.ca/news/business/imperial-oil-may-sell-company-owned-esso-stations-1.2936815
Enbridge's finalized fourth quarter report was supposed to be released first week of Feb. That report is the one that captures the 50-60% drop in oil and share values from Oct to Dec . The day it was to be released, notice was put on the Enbridge website saying the date of the Q4 release was switched to Feb. 22nd. The stall tactic allowed the time for this letter to get to the NEB and for news stories to be released that the "NEB approved Line 9". They approved it back in March which isn't news and Enbridge hasn't even applied for Leave to Open yet but that doesn't matter. What we do have is Enbridge and the media trying to build as much confidence as possible from investors now because when the 4Q numbers roll in, the truth of their fiscal loss will be released and investors will be far less confident when they see the result. 
Here are the current Nasdaq prices for West Texas Crude. Dilbit does not produce as much gasoline or diesel as other crudes. The value of all the products refined from a barrel of Athabascan oil is significantly lower than the value of all the products from a barrel of West Texas Intermediate or other light crude. It used to be a $30 difference between the two oil types per barrel. Not sure what is is now but we know Alberta is taking a loss ever barrel they pull out. New projects require a value of $115 per barrel to break even.  Existing in-situ oil sands projects in Alberta are produced at a break-even cost of US$63.50 per barrel on average. Factor in the losses in compound interest too associated with lost revenues. http://www.nasdaq.com/markets/crude-oil.aspx
With the decline of oil prices and the year long delay we've already created by way of the NEB conditions we all secured, not to mention the costs of lawsuits with First Nations and with Forest Ethics, we're costing Enbridge lots of money every single day the oil isn't flowing in that pipe. We're costing Imperial oil money too. The days of $100 per barrel of oil is not coming back so that means the economic losses of the delay are going to be hurting a larger portion of their bottom line more and more. Everything is working at the same time, eroding what funds they have left day after day like waves breaking down a sand castle. 
I believe the NEB correspondences to and from Enbridge was just a marketing ploy and a short lived one at best. Wait for the Q4 report on Feb. 22nd.  
By the way! This is VERY important. Ontario is considering a carbon tax. If they go for CAP AND TRADE: It is NOT GOOD. The reason being: funds gathered usually benefit oil and energy sectors. In Alberta for example, the funds went to reduce emissions at refineries which also reduced costs for oil production. They might use Cap and Trade funds to support a PIPELINE saying it reduces emissions associated with trains. 
The Carbon pricing model Ontario should go for is called FEE AND DIVIDEND. That's a tax at the pump or source of purchase and revenues gathered go back to tax payers at the end of the year by way of refund. This "revenue neutral" system was used in BC and it reduced the use of fossil fuels associated with this tax by 19% over a 4 year period in BC. It worked to change consumer behavior and created enough price incentives for industries to go green and for manufacturers to ramp up efficiency standards. That is the system we need to support: Carbon fee and Dividend. 
Feel free to share this through your networks. If you want to know if this project is going to happen, just follow the money or lack thereof. 

Louisette Lanteigne 

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