November 4, 2011

Mikayla McDonald

 

 

The Trailbreaker Pipeline: A Summary of Issues Relevant to Vermont

 

 

What is the Trailbreaker Pipeline?

 

Enbridge Pipelines Inc., a Canadian petroleum transportation corporation operating pipelines in Canada and the United States, has plans to reverse the flow of a section of its pipeline (Line 9) currently transporting crude oil from the terminal in Montreal, Quebec west to the terminal in Sarnia, Ontario (see Figure 1)[1].

Figure 1. Map of Enbridge’s Line 9

 

In 2008, Enbridge first announced the Line 9 reversal project, calling it the “Trailbreaker Project” with the objective of transporting heavy crude oil from Alberta (i.e. tar sands oil) to refineries in the northeastern U.S. and the Gulf Coast[2]. The Trailbreaker is discussed as being one of the most expedient means to transport tar sands oil to refineries in Texas (via tanker from Portland), since the project does not require new pipelines to be laid and calls for minimal infrastructure improvements[3]. Its viability may be more relevant than ever, since the approval of TransCanada’s Keystone XL pipeline from Alberta to Texas was delayed by citizen opposition and the Obama Administration this November.

 

As a result of the economic turmoil since the financial crisis, Enbridge announced that the project was on hold until the economic situation improved[4]. However, on August 8, 2011 Enbridge began filing its application to the Canadian National Energy Board (NEB) for the first phase of the reversal[5].

 

The first step in the reversal project, called “Line 9 Reversal Phase 1” by Enbridge, would reverse the flow of a section of the pipeline from Sarnia to the terminal in North Westover, Ontario[6]. Environmental groups believe that breaking up the Line 9 reversal into multiple phases is an attempt by Enbridge to reduce oversight by the NEB, which would have to weigh the environmental and socio-economic impacts of the project as a whole [7].

 

The Canadian environmental groups Environmental Defense, the Pembina Institute, and Equiterre have joined the Natural Resources Council of Maine and the Vermont Natural Resources Council in sending a letter to the NEB in Alberta asking it to deny Enbridge’s request that Line 9 Phase 1 be exempt under Section 58 of the National Energy Board Act, a provision that would require a more extensive review of the project. North American environmental organizations are concerned not only about the possible negative environmental impacts of pipeline reversal on the lands the pipeline cuts through, but also about the devastating impact of Albertan tar sands oil extraction, refining and consumption on the global environment and on the climate.

 

 

The Portland-Montreal Pipe Line Reversal

 

Beginning in 2008, the Portland-Montreal Pipe Line (PMPL) company expressed plans to reverse its line to flow south in order to pump Albertan tar sands oil to refineries in the northeastern United States[8] as part of the Trailbreaker project. The PMPL connects to Enbridge’s Line 9 in Montreal, and runs through Vermont and New Hampshire to Maine. According to a February 2008 publication of Atlantic Northeast Rails & Ports, the “parent company Portland-Montreal Pipeline is studying the possibility of spending $100 million to reverse the flow of oil through [the pipeline], oil would move in both directions at the same time”[9]. An Enbridge Energy Partnership submission to the U.S. Securities and Exchange Commission on February 19, 2009 stated:

 

We and Enbridge initiated plans to provide access for western Canadian crude oil to refineries along the United States Eastern Seaboard and the United States Gulf Coast via the marine terminal at Portland, Maine. The Trailbreaker project contemplates the expansion and reversal of existing facilities to create a pipeline route to Portland. An open season process held by third-party owned Portland-Montreal Pipe Line did not receive sufficient commercial support for the reversal of one of its pipelines to transport crude oil from Montreal, Quebec to Portland. As a result, CAPP has exercised its right to withdraw support from the project at this time. Enbridge continues to engage in discussions with customers to determine timing and conditions for proceeding with this project.”[10]

 

In an August 26, 2011 article for the Montreal Gazette, David Cyr, Treasurer of the Portland Pipeline Corporation, confirmed that the PMPL company is discussing plans to revive the reversal project after several years of dormancy due to the economic situation: “We are having discussions with Enbridge on that topic and gauging the interest of the industry in having us resume work on that project”[11]. Cyr stated that permits were obtained in 2008 to allow the transport of oil to Portland[12]. The PMPL cuts through the Northeast Kingdom with oil currently flowing through the towns of Jay, Troy, Newport, Irasburg, Barton, Sutton, Burke, Victory and Guildhall[13] (see Figure 2)[14].

 

Figure 2. Map of the Portland-Montreal Pipe Line

 

 

Trailbreaker Revival, But Not “As Previously Contemplated”

 

Most recently, in response to an official information request by the NEB, Enbridge filed a letter on October 21, 2011 that stated: “The scope and objective of Trailbreaker, as previously contemplated, is no longer being pursued”[15]. In a separate letter submitted that same day in response to over 99 public comments, Enbridge made the following statement:

 

“Enbridge is currently assessing the market viability of a reversal between North Westover and Montreal… Should a project for the reversal of Line 9 from North Westover to Montreal receive commercial support, Enbridge would fully comply with the requirements of the NEB Act, its regulations and the Board’s Filing Manual and would include any required environmental, economic, and consultation analyses at that time.”

 

The letter also stated that the project currently under review (Line 9 Reversal Phase 1, or “The Project”) “is a standalone project; it is not in any way a manifestation of the former Trailbreaker Project”[16].

 

However, a report for the U.S. Departments of Energy and State on August 12, 2011 prepared by EnSys Energy and Navigistics Consulting explained that although the Trailbreaker Project “as previously contemplated” might be dead, there are a number of other ways to utilize a Line 9 and PMPL reversal. These options include pumping Bakken shale oil (a “light and sweet” conventional oil from North Dakota and Montana) through the reversed lines all the way to Portland, or transporting a combination of Bakken oil and Albertan heavy crude to Portland through the PMPL’s multiple lines. Another scenario foreseen in the report is that Line 9 is reversed to transport Bakken crude to Montreal, and the PMPL is reversed to transport that same crude from Montreal to Portland in addition to Albertan heavy crude (tar sands oil). The PMPL has greater capacity than Line 9 given its multiple lines, so Albertan heavy crude would be shipped from Alberta by tanker or rail to Montreal and then transported from there to Portland via the PMPL[17].

 

The EnSys report acknowledges resistance from the public on transportation of Albertan tar sands through the PMPL, thus suggests that “carriage of light, conventional crude oils would presumably [be met] with less opposition than carriage of oil sands streams”[18].

 

Regardless of the type of oil that would flow through them, it seems there is a revival of interest in reversing Line 9 and the PMPL. Valero, the largest independent oil refining company in the U.S., has expressed interest in the reversal of the PMPL to ship Bakken light crude oil to the east coast for processing in the region’s dying refineries. Enbridge’s CEO, Patrick Daniel, mentioned in early October that Line 9 reversal could happen as early as 2014[19].

 

 

Environmental Concerns of Pipeline Reversal

 

Environmental groups in New England and Canada are concerned about the environmental impacts of reversing the pipeline. The pipeline that would transport the Canadian oil is an 18-inch line that was laid in 1951[20]. The Vermont Natural Resources Council has expressed concern that the PMPL reversal would result in the flow of Canadian tar sands oil that is heavier and contains more caustic materials[21], which may compromise the structure of the pipeline and increase the possibility of spills and ruptures. This may be especially true given the pipeline’s age and that PMPL’s 2008 submission to the Vermont Natural Resources Board suggested only “minor valve and related improvements” would be made to the line[22].

 

Citizen groups and elected officials in Quebec have been fighting PMPL reversal since 2008. In addition to the enormous ecological devastation caused by tar sands mining in Alberta and the unparalleled amount of greenhouse gases released by tar sands extraction and refining, these Quebecois are concerned that the increased pressure needed in the pipe to cross the Sutton Mountains would add to the risk of spills and ruptures, especially given that the pipeline is 60 years old[23]. In the last 20 years there have been 20 breakages or leaks on the PMPL in Quebec. In 1999, the PMPL ruptured near St.-Cesaire spilling 12,000 gallons of oil into an adjacent marshland[24]. Citizen opposition to the Trailbreaker seems to have been successful in at least once instance. In December of 2010, the residents of Dunham defeated a proposal to construct a pumping station in their town as part of the Trailbreaker Project[25].

 

With regards to Enbridge, the corporation has had numerous pipeline ruptures and oil spills in recent years. According to the Polaris Institute, between 1998 and 2008 Enbridge facilities have had 610 spills in the U.S. and Canada that have released almost 132,000 barrels (5.5 million gallons) of oil into the environment. This amount is equal to approximately half the oil spilled in the Exxon Valdez disaster of 1998[26]. The company’s largest spill to date was in January of 2001 near Hardisty, Alberta, which resulted in 23,900 barrels (1 million gallons) of crude oil being released into the environment[27].

 

Several recent Enbridge oil pipeline leaks have made headlines in the U.S. On July 26, 2010, an Enbridge oil pipeline ruptured near Marshall, Michigan and spilled over 19,500 barrels (819,000 gallons) of Albertan tar sands oil into Talmadge Creek and into the Kalamazoo River, a Lake Michigan tributary. Heavy rains caused oil to flow over top of dams, allowing it to travel over 80 miles down river[28]. Four months before the spill, the U.S. Pipeline and Hazardous Materials Safety Administration cited Enbridge for inadequate corrosion monitoring on Line 6B, the line that ruptured[29]. The National Wildlife Federation cites the higher corrosive nature of the tar sands oil that was flowing through Line 6B as a major contributor to the rupture[30]. Over a year after the spill, the clean up is still continuing and has accumulated costs of over $33.9 million. This September, the EPA identified approximately 200 acres of submerged oil that still require clean up[31].

 

Enbridge’s most recent spill on September 25, 2011 released an estimated 20 barrels (840 gallons) of oil at the Berthold pump station in North Dakota, contaminating an adjacent marshland[32]. The spill - on Enbridge’s Line 26 that runs north from Berthold, ND to Steelman, Saskatchewan - comes less than five months after Enbridge reversed the flow of the pipeline to pump oil northward[33].

 

 

The Connection to the Proposed CVPS and GMP Merger

 

Green Mountain Power (GMP) and Central Vermont Public Service (CVPS), Vermont’s two largest electric utilities, filed a petition on September 2, 2011 to the Public Service Board for the acquisition of CVPS by Gaz Metro, and the merging of CVPS and GMP into one utility[34]. If the two utilities merge, Gaz Metro will own approximately 70% of Vermont’s electric utility market. Gaz Metro, a Montreal-based energy company, acquired GMP in 2007 and Vermont Gas Systems in 1986. Gaz Metro is co-owned by two Canadian corporations, Enbridge and The Caisse[35].

 

GMP currently provides electricity to 30% of Vermont’s ratepayers, and CVPS provides electricity to 40% of Vermonters. The merger would also grant Gaz Metro a majority share of VELCO (Vermont’s electric transmission company), 30% ownership of McNeil Power Plant in Burlington, and a continued partial stake in Vermont Yankee Nuclear Power Plant. Vermont Gas Systems Inc., acquired by Gaz Metro in 1986, is the only natural gas company in Vermont[36] and transports natural gas from Alberta via a TransCanada pipeline to the Canadian border, and through 650 miles of underground distribution lines in Vermont[37].

 

The proposed merger raises a number of concerns. There are concerns related to utility consolidation and consequences for Vermont’s network of predominantly small, municipal electric utilities. There are also concerns about the control of 70% of Vermont’s electricity market by a foreign company that itself is owned by Enbridge, the company that is attempting to bring Albertan tar sands oil through Vermont to Portland. In a 2009 report, Gaz Metro stated: “Vermont’s electricity market is still extremely fragmented. Accordingly, in Gaz Metro’s view, there are possibilities for consolidation. If this is the case, we are well positioned to assert our expertise”[38]. In addition, the merger raises questions about the interplay between the Enbridge’s Trailbreaker project and the company’s growing influence on Vermont’s energy sector through utility consolidation.

 

 

 

 

Questions of Vermont Jurisdiction and Oversight

 

If it is decided that the PMPL reversal project and/or the CVPS-GMP merger are not in Vermont’s (and the nation’s) best interest, what can be done to prevent them from going through? This section provides some information about Vermont’s jurisdictions related to these energy issues, but also raises some unanswered questions that need further investigation.

 

Portland-Montreal Pipe Line (PMPL) Reversal

 

On September 4, 2008, Kirsten Sultan of the Vermont Natural Resources Board wrote to Colen Peters, a wetland scientist with TRC, an engineering consulting firm out of South Portland, ME. In the letter, Sultan stated that since the PMPL was in existence as of the passage of Act 250 in 1970, a permit would not be required under the law unless there is a “substantial change” to the pre-existing development. After review of the relevant criteria, it was determined that the line reversal did not constitute a substantial change, and thus does not need an Act 250 permit[39].

 

However, these questions need to be addressed:

 

CVPS-GMP Merger

 

The CVPS-GMP merger (docket 7770) is currently under review by the Public Service Board (PSB). The PSB has begun taking public comments on the merger, and a public hearing was held on November 1. A series of discovery responses and rebuttals will continue until February of 2012, and during the week of February 13 technical hearings will be held. In March briefs must be submitted[40]. On September 29, 2011, CVPS shareholders overwhelming approved the merger[41].

 

Questions to be considered:

 

 

Conclusion

 

While the Trailbreaker project as previously envisioned seems to be discontinued, the major pieces of the project may be slated for revival, namely the Line 9 reversal and the PMPL reversal. Given the enormous public outcry over the TransCanada’s Keystone XL pipeline and the negative public opinion of tar sands oil extraction, Enbridge will likely be increasingly cautious to avoid a popular backlash similar to what TransCanada is experiencing currently. Breaking the Line 9 reversal into multiple stages may be a tactic to delay or avoid public scrutiny of the Line 9 reversal in its entirety and of the ultimate goal of the reversal (i.e. transporting oil to Portland). To fulfill the goal of oil transportation from Line 9 to Portland, Enbridge is entirely dependent on the reversal of the PMPL. Thus, if the environmental, social and economic impacts of both proposed pipeline reversal projects are to be completely and thoroughly analyzed, their assessments must be done in concert as one comprehensive analysis.

 

Given that part of the PMPL runs through Vermont, the state may have significant influence on the ability of the project to be completed, and could act as a barrier to shipment of Albertan tar sands oil to the eastern U.S. and markets across the Atlantic. Citizens and policy makers in Vermont should consider how they could play a critical role in combating tar sands oil production and its consumption in the eastern U.S. and beyond.


[1] http://london.actforclimatejustice.org/campaigns/oil-pipeline-campaign/

[2] Enbridge. (2011). https://www.neb-one.gc.ca/ll-eng/livelink.exe/fetch/2000/90464/90552/92263/706191/706437/739010/A2G0L1_-_Enbridge_Response_to_NEB_Information_Request_No._1?nodeid=739014&vernum=0

[3] Climate Justice Montreal. (2010). Breaking the Trailbreaker.

[4] Montreal Gazette. (2011). http://www.montrealgazette.com/business/Pipeline+plan+back+opponents/5309345/story.html

[5] National Energy Board. (2011). https://www.neb-one.gc.ca/ll-eng/livelink.exe/fetch/2000/90464/90552/92263/706191/706437/706045/A2C0W8_-_Receipt.html?nodeid=706017&vernum=0

[6] Stantec/ Enbridge. (2011). https://www.neb-one.gc.ca/ll-eng/livelink.exe/fetch/2000/90464/90552/92263/706191/706437/706045/A2C0V3_-_L9_Reversal_Phase_I_ESA.pdf?nodeid=705999&vernum=0

[7] Natural Resources Council of Maine. (2011). http://www.nrcm.org/documents/NEBtarsandsletter.pdf

[8] National Energy Board. (2008). http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/trnsprttn/trnsprttnssssmnt2008/trnsprttnssssmnt2008-eng.html#s3_1

[9] Atlantic Northeast Rails and Ports. (2008). http://www.atlanticnortheast.com/onl/iss/08_01B.pdf

[10] http://www.wikinvest.com/stock/Enbridge_Energy,_Limited_Partnership_%28EEP%29/Filing/10-K/2009/F2417598

[11] Montreal Gazzette. (2011). http://www.montrealgazette.com/business/Pipeline+plan+back+opponents/5309345/story.html

[12] Orleans County Record. (2011). http://orleanscountyrecord.com/main.asp?SectionID=7&SubSectionID=32&ArticleID=12962

[13] Vermont Natural Resources Board. (2008). http://www.state.vt.us/nrb/lup/jo/2008/jo7-265.pdf

[14] http://4.bp.blogspot.com/_AmpWpI9jcHE/RwkGtsGWZGI/AAAAAAAACz0/3iVAi2N9Q2o/s400/pmplmap.jpg

[15] Enbridge. (2011). https://www.neb-one.gc.ca/ll-eng/livelink.exe/fetch/2000/90464/90552/92263/706191/706437/739010/A2G0L1_-_Enbridge_Response_to_NEB_Information_Request_No._1?nodeid=739014&vernum=0

[16] Enbridge. (2011). https://www.neb-one.gc.ca/ll-eng/livelink.exe/fetch/2000/90464/90552/92263/706191/706437/739020/A2G0L3_-_Letter_to_NEB_regarding_Environmental_Defence_August_26_Letter_and_Interested_Parties__Comments.pdf?nodeid=739021&vernum=0

[17] EnSys. (2011). http://www.cardnoentrix.com/keystone/xl/feis/FEIS02a_Appendix_V_EnSys_2011.pdf

[18] Ibid.

[19] Bloomberg News. (2011). http://mobile.bloomberg.com/news/2011-10-06/enbridge-talking-with-valero-on-east-coast-pipeline-reversal

[20] Vermont Natural Resources Board. (2008). http://www.state.vt.us/nrb/lup/jo/2008/jo7-265.pdf

[21] Orleans County Record. (2011). http://orleanscountyrecord.com/main.asp?SectionID=7&SubSectionID=32&ArticleID=12962

[22] Vermont Natural Resources Board. (2008). http://www.state.vt.us/nrb/lup/jo/2008/jo7-265.pdf

[23] The Dominion. (2010). http://www.dominionpaper.ca/articles/3402

[24] Climate Justice Montreal. (2010). Breaking the Trailbreaker.

[25] The Media Co-op. (2010). http://www.mediacoop.ca/newsrelease/5308

[26] Polaris Institute. (2010). http://www.polarisinstitute.org/polaris_institute_statement_regarding_enbrige039s_michigan_oil_spill

[27] The Tyee. (2010). http://thetyee.ca/News/2010/07/31/EnbridgeDirtyDozen/

[28] EPA. (2011). http://www.epa.gov/enbridgespill/

[29] The Tyee. (2010). http://thetyee.ca/News/2010/07/31/EnbridgeDirtyDozen/

[30] National Wildlife Federation. (2011). http://www.nwf.org/Global-Warming/Policy-Solutions/Drilling-and-Mining/Tar-Sands/Michigan-Oil-Spill.aspx

[31] EPA. (2011). http://www.epa.gov/enbridgespill/

[32] Reuters. (2011). http://www.reuters.com/article/2011/09/26/enbridge-idUKS1E78P18720110926

[33] Enbridge. (2011). http://www.enbridge.com/PortalLinkReactivationandReversal.aspx

[34] VT Digger. (2011). http://vtdigger.org/2011/09/02/cvps-and-gmp-file-merger-petition-with-public-service-board/

[35] VT Digger. (2011). http://vtdigger.org/2011/07/07/gaz-metro-green-mountain-power/

[36] Ibid.

[37] Vermont Gas Systems. (2011). http://www.vermontgas.com/about/about.html

[38] VT Digger. (2011). http://vtdigger.org/2011/07/07/gaz-metro-green-mountain-power/

[39] Vermont Natural Resources Board. (2008). http://www.state.vt.us/nrb/lup/jo/2008/jo7-265.pdf

[40] Public Service Board. (2011). http://psb.vermont.gov/http%3A/%252Fpsb.vermont.gov/docketsandprojects/electric/CVPS_GMP_Merger

[41] VT Digger. (2011). http://vtdigger.org/2011/09/29/cvps-shareholders-overwhelmingly-approve-sale-to-gaz-metro/