Download Written Final Argument of the Alberta Federation of Labour Line 9

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IN THE MATTER OF
NATIONAL ENERGY BOARD
HEARING ORDER OH-002-2013
ENBRIDGE PIPELINES INC.
LINE 9B REVERSAL AND LINE 9 CAPACITY EXPANSION PROJECT
Written Final Argument of the Alberta Federation of Labour
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Contents
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3. THE PUBLIC INTEREST AND SECTION 52 OF THE NATIONAL ENERGY BOARD ACT .................................. 4
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4. THE ALBERTA FEDERATION OF LABOUR’S SUPPORT FOR LINE 9/9B .................................................... 5
1. INTRODUCTION ............................................................................................................................ 3
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A.
Canadian Energy Security.................................................................................................................... 5
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B.
Jobs for Canadians ................................................................................................................................ 6
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C.
Upgrading and Refining Jobs are Good Jobs ................................................................................. 7
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D.
A domestic market for SCO, meaning continued value-added processing jobs in Alberta
and long-term jobs in Quebec........................................................................................................................ 7
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5. THE AFL’s DISAGREEMENTS WITH ENVIRONMENTAL INTERVENERS ..................................... 8
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6. AFL RECOMMENDATIONS FOR CONDITIONS UPON ISSUANCE OF THE CERTIFICANT OF
APPROVAL ..................................................................................................................................... 11
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1. INTRODUCTION
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This is the final written argument of the Alberta Federation of Labour in the matter of Enbridge
Application to the National Energy Board for Line 9 Capacity Expansion and Line 9B Reversal.
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The Alberta Federation of Labour represents 160,000 Albertans working in all sectors of the
province’s economy. Approximately 25,000 of our members work in the energy sector and energyrelated construction.
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The Alberta economy is heavily dependent upon petroleum exploration, extraction, and processing.
According to government figures, the energy sector accounted for 27.6% of Alberta’s GDP.
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Many of our members work in upgrading in Fort McMurray and Edmonton. Upgrading bitumen –
into a product called Synthetic Crude Oil – is a capital and labour-intensive process that yields a
number of petrochemicals in addition to SCO. There are markets for those petrochemicals that form
part of Alberta’s petrochemical processing cluster, which was built using public policy instruments
in the 1970s. Oil sands upgraders spur a chain of economic spinoffs throughout the entire Albertan
economy. Given the far-reaching consequences of these economic spinoffs and diversification,
including but not limited to more unionized employment in the Canadian energy sector, the Alberta
Federation of Labour has been a frequent intervener in pipeline proceedings at the National Energy
Board. In our previous interventions, which we recommend to the Board and have filed as evidence,
we oppose bitumen export pipelines on the grounds that they export good-paying, long-term,
unionized jobs.1
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2. THE ECONOMIC CONTEXT FOR THE LINE 9/9B PROJECT
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The Canadian economy is also increasingly dependent on commodity prices, particularly the price
of West Texas Intermediate and the price of bitumen, for economic development. The price of WTI
exhibits a very high level of correlation with the value of the Canadian dollar. Decline of
manufacturing employment in Canada is heavily correlated to WTI and the Canadian currency. The
AFL has entered these facts as evidence in the Line 9/9B proceedings; no intervener has disputed
them.2
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The Alberta Federation of Labour believes increasing reliance on simple extraction and export of
Canadian petroleum resources is detrimental to Canadians’ overall economic, social, and
environmental well-being. We believe this kind of economic development model puts our country
at greater risk of economic downturn, unemployment, and undermines funding for vital public
services such as education and health care.
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The AFL’s belief that public sector leadership in pursuing a value-added industrial strategy is a
better way to develop the Canadian oil sands is borne out by the evidence. No intervener has
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Exhibit C5-2-2 Attachment 1 Keystone OH-1-2007, Written Evidence of the AFL A3J7K8; Exhibit
C5-2-3 Attachment 2 AFL Evidence Keystone XL OH-1-2009, AFAL Written Evidence – A3J7K9; C52-4 Attachment 3 AFL Written Evidence Northern Gateway OH-4-2011, A3J7L0
2 C5-2-11 Attachment 10 Manufacturing Employment – WTI-C$, AFL Written Evidence – A3J7L7;
C5-2-12 Attachment 11 WTI C$ Correlation Coefficient, AFL Written Evidence – A3J7L8
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disputed the evidence that value-added jobs are objectively better jobs than simple extraction or
short-term construction jobs, both in qualitative measures (proximity to family, hours of work,
accumulation of time off, income security)3 and quantitative measures (wages, salaries, benefits).4
An economy led by intelligent public policy and coherent industrial strategy is one way to smooth
out commodity price roller coasters and to ensure prosperity in more equally shared, both within
provinces and across provinces.
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3. THE PUBLIC INTEREST AND SECTION 52 OF THE NATIONAL ENERGY BOARD ACT
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Public policy and energy infrastructure should, in the view of Alberta’s 160,000 unionized working
people, serve three goals: good-paying, safe, and decent jobs for Albertans/Canadians, revenues to
provincial and federal treasuries, and a clear roadmap for a transition to a sustainable, green
economy. These are, in our members’ oft-repeated view, the three pillars of the ‘public interest’ and
we believe the three factors that ought to influence the National Energy Board in their decisions
governing energy infrastructure. We believe Canada can – and should – be an energy superpower.
We believe the wealth in our current stock of natural resources (the most valuable of which is the
Alberta oil sands) should be harnessed, invested, and converted into green energy, green
technology, and green communities. The AFL takes the position – like Unifor (CEP) – that climate
change is the most urgent issue of our time. As Canadians, with our current reliance on fossil fuel
production, there can be only one way to meet our international obligations, and that is to put a
premium on public policy that maximizes our returns to provincial and federal treasuries, so that
public solutions to the climate crisis might be achieved.
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In our thinking about how to address climate change as Canadians, we must deal with the facts
before us. First: the oil sands are currently producing oil, and we cannot shut them down
immediately or reasonably effect an immediate transition to renewables. It would be nice to have
an economy that runs on renewables, but we believe Albertans and Canadians must work within
the confines of the economy we have, not an imaginary one. It may well be possible to build the
green utopia of our dreams, but we cannot do that without money, and the way governments make
money – in the here and now – is, in large part, by extracting oil sands. The AFL’s position is that
approvals for new projects must be paced using appropriate regulatory instruments at the
provincial level, with the projects that generate the most jobs (those with associated upgraders, for
example), given priority over those that seek to ‘rip and ship’ Alberta’s raw bitumen. Similarly, we
believe the NEB has a role to play with respect to its public interest considerations. Energy
transportation projects that contribute to positive economics for value-added development should
be given priority and approval over those that do not.
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With respect to the above, we believe the National Energy Board ought to broaden its
interpretation of Section 52 of the National Energy Board Act, and take jobs and climate change into
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Exhibit C5-2-10 Attachment 9 The Bitumen Cliff CCPA February 2013, AFL Written Evidence –
A3J7L6.
4 Exhibit C5-2-6 Attachment 5 Conference Board of Canada 2011, AFL Written Evidence – A3J7L2
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consideration when issuing certificates of approval for energy infrastructure. Projects that can
clearly demonstrate how they are creating jobs, wealth, energy security, and the economic building
blocks of a transition to a greener economy – upon which, it is not an overreach to point out, the
future of the human race depends – should be given priority by the National Energy Board.
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We believe the Line 9/9B project fulfills these public interest criteria. The Alberta Federation of
Labour has filed extensive evidence with respect to jobs and economic spinoffs associated with
upgrading and refining. We rely upon and repeat that evidence here, and note that no intervener
has seriously challenged it.
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We share the views of many of the environmental groups intervening against the Line 9/9B
pipeline in the following respects: we are distressed at the gutting of environmental assessment
and monitoring legislation, the lack of meaningful federal or provincial action on climate change,
and an apparent lack of seriousness in pipeline safety, monitoring, and enforcement on the part of
some levels of government and some individual companies in some specific contexts. We believe
that energy infrastructure in Canada should not be left to a cavalier, industry-first, deregulated
approach, and that public sector environmental monitoring and enforcement ought to be stringent,
well-funded, and truly world-class. We share the view of many interveners that the federal
government’s recent suite of environmental legislation, coupled with a lack of federal leadership on
the question of climate change, undermines Canada’s international reputation and undermines
access to markets for Alberta’s oil sands.5 Therefore, we believe the NEB would be correct in
issuing an approval of the Line 9/9B project in the context of also issuing stringent environmental
conditions for the project.
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4. THE ALBERTA FEDERATION OF LABOUR’S SUPPORT FOR LINE 9/9B
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We understand why environmental and First Nations groups have intervened in these proceedings
to oppose the reversal of Line 9B. But on this occasion we disagree with them, because on a
reasoned and evidence-based analysis, the reversal of Line 9B will increase Canadian energy
security and support value-added processing of Canadian oil resources. Both objectives are
necessary, although certainly not sufficient, if Canada’s energy path is to be put on a sustainable
course.
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The following is the context in which the Alberta Federation of Labour supports the Line 9/9B
reversal. We believe the project accomplishes the following goals.
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A. Canadian Energy Security
No intervener has seriously challenged the notion that the Line 9/9B project contributes to
Canadian energy security. The Conseil du Patronat du Quebec deal with the question of energy
Exhibit C9-4-1. Written Evidence of the Communications, Energy, and Paperworkers Union (Unifor) Line 9.
A310Z6. paragraph 42, Adobe p 11.
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security in depth in their submission, finding current imported supplies to Quebec to be from
distinctly less secure sources than Canada - in particular, Angola, Nigeria, and Algeria. 6
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No intervener provided evidence to the Board that substituting imports from the Atlantic Basin, in
particular from Angola, Nigeria, and Algeria, diminishes Canadian energy security or the Canadian
public interest. Indeed, all economic analysis put before the Board either explicitly links the Line
9/9b project to Canadian energy security or ignores the issue.
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We share the concerns of the environmental interveners that Canada is not meeting its
international obligations with respect to climate change. However, we share the view of the CEP
that “Line 9B achieves import substitution goals that are essential to meeting Canadian energy
security needs, and is warranted on that account.”7
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B. Jobs for Canadians
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The number of direct and indirect jobs associated with the Montreal and Quebec City refineries, in
addition to the employment impacts of the spinoff petrochemical industry in Montreal, was not
challenged by any interveners.
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Equiterre has filed evidence that there are 8700 direct jobs associated with Quebec’s two remaining
refineries and the associated petrochemical industries.8
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Equiterre’s socioeconomic evidence also downplays the number of jobs that depend on the
Montreal and Quebec refineries:
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“Thus, Montreal production of chemicals and plastics is less than 0.4% of all employment in Montreal
and less than 0.2% of all employment in the entire province. Montreal production of all petrochemicals
(petroleum, chemical, and plastic products) is just slightly more than 0.4% of all employment in
Montreal and slightly more than 0.2% of all employment in the entire province. So even with the
employment for the Quebec City refinery added in, employment in the Quebec petrochemical industry
(refineries and potentially related chemical and plastics processing) is still less than 0.3% of the
provincial total.”9
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Equiterre did not file a full analysis of direct, indirect, and induced employment resulting from the
refining and petrochemical sectors in Montreal and Quebec, as is customary in most economic
models that use an Input-Output analysis, based on Statistics Canada’s multiplier tables. We note
that the AFL has filed analyses of the economic impact of the upgrading and refining sectors for our
interventions against the Keystone XL and Northern Gateway pipelines, and that no intervener
6Exhibit
C 10-2. Conseil du Patronat, Éléments de preuve soumis par le Conseil du patronat du
Québec, Aout 2013. A3J7R4. Adobe p. 31, lines 789-790.
7 Written Evidence of the Communications, Energy, and Paperworkers Union (Unifor), paragraph
45, Adobe p.11.
8 Exhibit C13-7-2. TGG Evidence NEB Line 9B. A3K0H3. Line 12, page 26 of 54.
9 Exhibit C13-7-2. TGG Evidence NEB Line 9B. A3K0H3. Lines 1-8, page 27 of 54.
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challenged the methods underlying that evidence in those hearings10 or in these Line 9/9B
proceedings.
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The Conseil du Patronat du Quebec does provide such an analysis, and indicates that
approximately 26,000 direct, indirect, and induced jobs are attributable to the Quebec refineries
and their associated petrochemical complexes.11 These direct, indirect, and induced employment
effects are not insignificant to the economy and roughly echo the evidence the Alberta Federation of
Labour has filed with the National Energy Board in previous proceedings concerning the full
economic impact of the upgrading and refining sector.12
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The Line 9/9B project ensures the long-term viability of existing jobs in the Quebec refining and
petrochemical sectors by providing a Canadian alternative for feedstock; one which is likely to be
priced at at least some discount to Brent for the foreseeable future.
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The Line 9/9B project also contributes to long-term viability of value-added jobs in Alberta, relying
as it does on upgraded Synthetic Crude Oil produced by unionized workers in Alberta.
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C. Upgrading and Refining Jobs are Good Jobs
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No intervener disputed the evidence put before the National Energy Board that jobs in the Canadian
refining sector are higher paying and provide more insulation from economic downturn and
recession than employment in many other sectors of the economy. Albertans and Canadians who
work in upgrading and refining enjoy higher average weekly earnings than the industrial aggregate,
and their weekly earnings increased during the recession when those of workers in other sectors
declined. 13
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D. A domestic market for SCO, meaning continued value-added processing jobs in Alberta and
long-term jobs in Quebec.
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No intervener disputed the evidence that the synthetic sweet crude coming from Alberta’s oil sands
contributes to positive economics for Alberta upgraders and therefore continued employment for
Albertans.
Exhibit C5-2-3 Attachment 2 AFL Evidence Keystone XL OH-1-2009, AFAL Written Evidence –
A3J7K9; C5-2-4 Attachment 3 AFL Written Evidence Northern Gateway OH-4-2011, A3J7L0
11Conseil du Patronat, Éléments de preuve soumis par le Conseil du patronat du Québec, Aout 2013.
“ L’industrie pétrochimique du Québec compte quelque 26 000 travailleurs dont 73 % se trouvent
dans la région de Montréal. Concentré dans l’Est de l’Île de Montréal, le pôle pétrochimique
s’approvisionne en matières premières auprès de la raffinerie locale. (Source : Société de
développement économique Rivière-des-Prairies—Pointe-aux-Trembles—Montréal-Est, Est
industriel info, édition spéciale Chimie Pétrochimie, 2011), Lines 1014-1018.
12 Exhibit C-5-2-3 Attachment 2, AFL Evidence Keystone XL OH-1-2009, AFL Written Evidence A3J7K9
13 Exhibit C-5-2-6 Attachment 5 Conference Board of Canada 2011, AFL Written Evidence - A3J7L2,
Adobe pages 36-37.
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5. THE AFL’s DISAGREEMENTS WITH ENVIRONMENTAL INTERVENERS
We respectfully disagree with the following arguments filed by some interveners against the Line
9/9B project.
A. The mix of products on Line 9/9B.
Some interveners have attempted to argue that the Line 9/9B project means the line will
significantly increase the transportation of dilbit.
“the Project’s proposed changes in crude slate, especially dilbit, that substantially...increase crack
growth rates;...”14
“We are concerned about the risks created by the risks created by the age of the pipeline, the plan to
use the pipeline to transport diluted bitumen…”15
The applicant has indicated, in response to Information Requests, approximately 37,700 bpd of the
Line 9/9B capacity is anticipated to be heavy crude, based on the heavy crude slate currently being
run by refineries in Quebec and Montreal. Furthermore, there is no evidence before the Board that
refineries in Quebec and Montreal are considering adding cokers to their existing refinery
operations. In fact, Valero has filed evidence with the Board that their refinery is configured for a
light, sweet crude slate, and there is “not a scenario which would justify the addition of a coking
unit.”16 Suncor has not ruled out the possibility, but can only run approximately 25,000 bpd of
heavy crude at its Montreal facility under the current configuration.17 As we have seen on the
United States Gulf Coast, the addition of coking capacity at simple cracking-configuration refineries
is a labour and capital intensive process, requiring multi-year timelines, the attraction of new
investors, many years of planning.18 Refiners do not undertake them on a whim. The heavy crude at
the Montreal refinery yields mostly fuel oil, a product that fetches far lower prices than gasoline,
which can only be produced in a cracking-configuration refinery such as the Montreal facility from a
light, sweet crude slate. Therefore, the Line 9/9B Project cannot be characterized as a dilbit line.
Calling it a dilbit line, given that it is actually forecast to be delivering primarily a mix of SCO and
Bakken light sweet crude, underestimates the economic impact the Project may have on upgrading
employment in Alberta.
August 6, 2013 OH-002-2013 Written Evidence of TGG for Équiterre (Coalition) Page 13 of 54,
Attachment 2.
15 C17-6-1 Preuve Ecrite par les Citoyens au Courant A3J9A3
16Translation by the AFL. Original French version, Valero Energy, Réponses d’Énergie Valero Inc. à
Durham Citizens Lobby for Environmental Awareness & Responsibility, Information Request 1.
“Même si Valero (Ultramar) a étudié la possibilité d’y ajouter une unité de cokéfaction au cours des
années 90, la raffinerie a été redéveloppée de façon à maximiser le traitement de bruts légers à
faible teneur en soufre. Il n’y a pas de scénario qui justifierait l’ajout d’une unité de cokéfaction.
17 RESPONSE OF SEMI TO HEARING ORDER OH-002-2013 DurhamCLEAR INFORMATION REQUEST
NEB File OF-Fac-Oil-E101-2012-10 02 September 5, 2013
18 Exhibit C5-2-5 Attachment 4, Lost Down the Pipeline AFL Written Evidence. A3J7L1.
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B. Claims that employment impacts are small
“Processing of crudes at refineries is not a labour-intensive activity, and refineries are a very small
portion (far less than 1%) of total economic activity in Quebec.”19
We do not believe that 8700 direct jobs the figure cited by Equiterre - is an insignificant number of
jobs in the refining and petrochemical sector in Quebec. Furthermore, we do not believe that 26,000
direct, indirect, and induced jobs in the Quebec petrochemical industry, a plurality of which rely on
proximity to the Montreal refinery and the associated feedstock produced by that refinery, to be an
insignificant number of jobs.
Further, we believe Equiterre does not take into account the jobs in Alberta that are associated with
this project. Maintaining markets for SCO, and ensuring Canadian petroleum is refined in Canada,
means thousands of jobs at upgraders in Alberta.
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Claim that there is no risk of Montreal an Quebec refineries closing
Equiterre has argued that there is no risk of losing the refineries in Montreal and Quebec. They
make this argument, in part, based on the fact that other refineries have closed.
“…the viability of Quebec refineries (and thus the continuation of related employment, other economic
activity, and spinoff effects) is not contingent upon the Project. Quebec refineries can remain open and
competitive even without the Project for the following reasons:…the two refineries have survived and
expanded when others have closed, so these are the most profitable and viable survivors.”
With respect, this is a misunderstanding of the economics of upgrading and refining in Canada. We
are increasingly at the mercy of integrated oil companies with an economic model that encourages
integrated oil companies to extract raw resources and ship them elsewhere for processing. Save
one small program in Alberta (the Bitumen-Royalty-In-Kind Project), Canada currently has no
public policy in place to keep value-added bitumen jobs in Canada.
Canada does not intervene in petroleum markets as other jurisdictions do, a fact that has been
pointed out as having a negative impact on our economic well-being by members of the
Government of Alberta.20
As we have seen in the case of the Burnaby refinery, competition for feedstock is fierce, where a
Canadian refinery - the only one on Canada's west coast - has recently been outbid by China's stateowned oil companies for feedstock. The Burnaby refinery was indeed at severely reduced capacity
for several months in 2012.21
19Exhibit
C13-7-2. TGG Evidence for Equiterre Coalition, NEB Line 9B. Adobe Page 22.
C5-2-8 Attachment 7 Alberta MLA Jeff Johnson, AFL Written Evidence – A3J7L4
21 Exhibit C5-2-13 Attachment 12 AFL China’s Gas Tank December 2012, AFl Written Evidence
A3J7L9.
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In evidence filed by Enbridge Northern Gateway partnership in support of the Northern Gateway
pipeline, the company forecast a stagnation of refinery throughput in Western Canada, while raw
bitumen exports are forecast to skyrocket.22
The Conference Board of Canada report on refining economics in Canada - filed by several
interveners as evidence - raises the spectre of further shuttering of Canadian refineries and even
models the economic impact of a 10% reduction in refining capacity on the Canadian economy.23
There is every indication, as Canada's oil sands are either outright controlled by, or only developed
as a consequence of joint venture partnership with, China's state-owned oil companies, that
Canadian petroleum is going to be increasingly exported in its rawest form to heavy crude
refineries under construction in Northeast China. Integrated state-owned oil companies in China
enjoy far lower environmental and labour standards than those we maintain in Canada. These
lower costs are a form of subsidization for overseas refiners and make it very difficult for Canadian
refineries to compete; almost impossible, we would argue, without appropriate public policy in
place to guarantee jobs and energy security.24
Only appropriate public policy in tandem with appropriate transportation infrastructure can
reverse the trends cited above.
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The claim that shippers can instead use the proposed Energy East pipeline.
“TransCanada’s proposed Energy East project would provide both Quebec refineries (as well as
Irving Saint John) with direct, high capacity access to the same North American crude production
regions that would be accessed via the proposed Project (notably Western Canadian and US
Bakken).”
We respectfully request the Board reject this suggestion outright. Energy East, as it is currently
proposed, is a bitumen super-highway designed to ship raw bitumen right past jobs and
refineries in Canada; locking in a ‘rip and ship’ model of raw bitumen export.
E. The claim that refiners can import crude from the United States for the Montreal and Quebec
refinery, rather than using Line 9/9B.
Citation of Enbridge Northern Gateway Reply Evidence, cited in Exhibit C5-2-13 Attachment 12
AFL China’s Gas Tank December 2012, AFL Written Evidence A3J7L9.Adobe Page 15.
23 C5-2-6 Attachment 5 Conference Board of Canada 2011, AFL Written Evidence – A3J7L2.
24 A full discussion of China’s state-owned oil companies, their interest in bitumen export
infrastructure like the Northern Gateway project, their significant investments in the oil sands, and
the impact on Canadian energy security and sovereignty can be found in Exhibit C5-2-13
Attachment 12 AFL China’s Gas Tank December 2012, AFL Written Evidence A3J7L9.
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Equiterre has suggested the Board has many options as alternatives to the Line 9/9B project,
including importing crude from the US.
“Pipelines: Suncor Montreal already has some pipeline access to crude supply. This refinery now
receives most of its crude via the Portland Montreal Pipeline/Montreal Pipe Line, which flows from
Portland north to Montreal, and is used to access marine deliveries into the Port of Portland.”25
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Given the clear benefits of the Line 9/9B project with respect to import substitution and
Canadian energy security, the Board should not give any weight to this suggestion, particularly
as it appears to favour extraction jobs in the United States over mining/in situ and upgrading
jobs in Alberta.
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6. AFL RECOMMENDATIONS FOR CONDITIONS UPON ISSUANCE OF THE CERTIFICATE OF
APPROVAL
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A. The mix of Bakken on the line.
Given the recent risks identified with the transportation of super-light crude from North Dakota,
concerns that Enbridge themselves have expressed, we recommend the NEB adopt a condition
for the approval of this pipeline – a higher mix of SCO on the line and a full investigation as to
the safety of transportation of super-light crude via pipeline. Until that is completed, the NEB
should ask that only Alberta-based crude be transported on Line 9/9b.
B. The future – though still notional – transportation of dilbit.
Given that refineries in Quebec and Montreal have not announced intentions to build cokers at their
operations, and given that cokers are multi-billion dollar projects that take years to build, it is clear
the transportation of significant volumes of diluted bitumen on this line remains fairly far into the
future. Still, if shippers want to transport dilbit on the line, and if Enbridge wants to allow them to
do so, then at least the three- layer composite coating condition applied to the Northern Gateway
pipeline should apply here.
The NEB condition #7 for the Northern Gateway Pipeline reads:
Composite coating: Northern Gateway must use a three-layer composite coating or High Performance
Composite Coating for the entire pipeline.
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Equiterre Response to National Energy Board Information Request No. 1, page 5 of 15.
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C. The insurance coverage.
We agree with the other interveners that sufficient insurance must be present for the project,
and recommend similar conditions to those recommended for the Northern Gateway pipeline.
We make this recommendation based on the evidence filed by many interveners that
documents the Project’s close proximity to urban centres, water, and landowners.
The NEB Condition #147 for the Northern Gateway Partnership reads in part:
o Third party liability insurance must be stand-alone, current, and broad respecting the
scope of environmental damages covered by the policy (i.e., only exceptional/non-standard perils,
taking into account the nature and scope of the Project, would be excluded from coverage). Such
insurance must be structured on a multi-year basis, recognizing potential loss of income by
persons sustaining damage caused by Northern Gateway, over a reasonable number of years
after the event.
o A portion of cash reserves or a portion of future cash flows of the Project may be
included as instruments in the financial assurance plan, provided they are secured by a
commitment letter from a senior officer of the general partner confirming that the funds will
be dedicated to the financial assurances plan without restrictions for the period specified by
the officer.
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Immediately after a catastrophic event, the sale of the Project's assets will not be eligible as
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o Parental and other third party guarantors must be registered within a Canadian
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(b) Financial assurance components and coverage levels
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Northern Gateway's financial assurances plan must provide a total coverage of $950
financial assurance instruments in Northern Gateway's financial assurances plan unless
Northern Gateway intends to abandon the facilities rather than continuing to use them as
part of the operating Project.
jurisdiction and should have financial strength that is demonstrated in balance sheet values
and ratios and credit ratings. For example, total assets less total liabilities of the guarantor
should be several multiples of the liability assumed in the Northern Gateway guarantee.
million6 for the costs of liabilities for, without limitation, clean-up, remediation, and other
damages emanating from Project operations, and the plan should include the following
components and minimum coverage levels:
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o Ready cash: Within 10 business days after a large spill from any Project component,
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Northern Gateway should have unfettered access to at least $100 million of funds that are
available to cover costs, including compensation to third parties for losses and damages in
the near term, while insurance claims are being processed. Once used, this source of cash
must be replenished immediately to cover the costs of a potential future spill;
Core coverage: Put in effect and maintain current at all times a core financial coverage
of at least $600 million that includes third party, stand-alone liability insurance and
other financial assurance instruments deemed appropriate.
- Financial backstopping for costs that exceed the payout of all other components in the
plan: Financial backstopping arrangements, such as parental and other third party
guarantees and no fault insurance, must be in place for a minimum capacity of $250
million. The intent of this arrangement would be to fill any shortfall in the core
coverage.
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7.
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The Alberta Federation of Labour urges the National Energy Board to approve the
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All of which is respectfully submitted October 3, 2013, by the Alberta
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CONCLUSION
Enbridge Line 9/9B Project. We believe the Project satisfies the Section 52 public
interest criteria by contributing to jobs for Albertans and Canadians and Canadian
energy security. We thank the National Energy Board for accommodating our
participation in this hearing process and considering our submissions.
Federation of Labour.