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1 2 3 4 5 6 7 8 9 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 10 11 Contents 12 3. THE PUBLIC INTEREST AND SECTION 52 OF THE NATIONAL ENERGY BOARD ACT .................................. 4 13 4. THE ALBERTA FEDERATION OF LABOUR’S SUPPORT FOR LINE 9/9B .................................................... 5 1. INTRODUCTION ............................................................................................................................ 3 14 A. Canadian Energy Security.................................................................................................................... 5 15 B. Jobs for Canadians ................................................................................................................................ 6 16 C. Upgrading and Refining Jobs are Good Jobs ................................................................................. 7 17 18 D. A domestic market for SCO, meaning continued value-added processing jobs in Alberta and long-term jobs in Quebec........................................................................................................................ 7 19 5. THE AFL’s DISAGREEMENTS WITH ENVIRONMENTAL INTERVENERS ..................................... 8 20 21 6. AFL RECOMMENDATIONS FOR CONDITIONS UPON ISSUANCE OF THE CERTIFICANT OF APPROVAL ..................................................................................................................................... 11 22 23 24 1. INTRODUCTION 25 26 27 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. 28 29 30 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. 31 32 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. 33 34 35 36 37 38 39 40 41 42 43 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 44 2. THE ECONOMIC CONTEXT FOR THE LINE 9/9B PROJECT 45 46 47 48 49 50 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 51 52 53 54 55 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. 56 57 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 1 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 58 59 60 61 62 63 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. 64 65 3. THE PUBLIC INTEREST AND SECTION 52 OF THE NATIONAL ENERGY BOARD ACT 66 67 68 69 70 71 72 73 74 75 76 77 78 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. 79 80 81 82 83 84 85 86 87 88 89 90 91 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. 92 93 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 3 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 94 95 96 97 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. 98 99 100 101 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. 102 103 104 105 106 107 108 109 110 111 112 113 114 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. 115 116 4. THE ALBERTA FEDERATION OF LABOUR’S SUPPORT FOR LINE 9/9B 117 118 119 120 121 122 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. 123 124 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. 125 126 127 128 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. 5 129 130 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. 6 131 132 133 134 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. 135 136 137 138 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.”7 139 140 B. Jobs for Canadians 141 142 143 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. 144 145 Equiterre has filed evidence that there are 8700 direct jobs associated with Quebec’s two remaining refineries and the associated petrochemical industries.8 146 147 Equiterre’s socioeconomic evidence also downplays the number of jobs that depend on the Montreal and Quebec refineries: 148 149 150 151 152 153 154 “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.”9 155 156 157 158 159 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. 160 161 challenged the methods underlying that evidence in those hearings10 or in these Line 9/9B proceedings. 162 163 164 165 166 167 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.12 168 169 170 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. 171 172 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. 173 174 C. Upgrading and Refining Jobs are Good Jobs 175 176 177 178 179 180 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. 13 181 182 183 D. A domestic market for SCO, meaning continued value-added processing jobs in Alberta and long-term jobs in Quebec. 184 185 186 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. 10 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 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. 14 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 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. C. 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. 20 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 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. D. 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. 22 291 292 293 294 295 296 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.”25 297 298 299 300 301 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. 302 303 304 6. AFL RECOMMENDATIONS FOR CONDITIONS UPON ISSUANCE OF THE CERTIFICATE OF APPROVAL 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 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. 25 Equiterre Response to National Energy Board Information Request No. 1, page 5 of 15. 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 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. 347 348 349 350 Immediately after a catastrophic event, the sale of the Project's assets will not be eligible as 351 352 353 354 o Parental and other third party guarantors must be registered within a Canadian 355 (b) Financial assurance components and coverage levels 356 357 358 359 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: 360 361 362 363 364 o Ready cash: Within 10 business days after a large spill from any Project component, 365 366 367 368 369 370 371 372 - 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. 373 7. 374 375 376 377 378 The Alberta Federation of Labour urges the National Energy Board to approve the 379 380 All of which is respectfully submitted October 3, 2013, by the Alberta 381 382 383 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.