Tar sands cause heated environmental, economic debate in Maine

By Whit Richardson, BDN Staff
Posted Feb. 01, 2013, at 7:20 p.m.

SOUTH PORTLAND, Maine — Since 1941, oil tankers have been a common sight in Casco Bay. They arrive at Portland Head Light sitting low in the water, heavily laden with crude oil from the Middle East or Africa’s offshore oil rigs and destined for refineries in Quebec and Ontario.

For most of that time, the tankers have come and gone without much notice. Recently, however, they’ve become the center of a fierce debate about oil and the 236-mile pipeline that carries it from South Portland northwest, through Westbrook, past Sebago Lake, across the Crooked River, through Raymond and toward Bethel, where it then turns west and enters New Hampshire on its way to its ultimate destination, Montreal.

Portland Pipe Line Corp. has operated the pipeline for 70 years, creating hundreds, if not thousands, of jobs in Maine, Larry Wilson, the company’s CEO, told the Bangor Daily News on Friday.

But markets change, and the Canadian refineries that Portland Pipe Line has delivered oil to now are looking elsewhere. Instead of the crude oil from abroad, they’re looking west toward much more inexpensive oil sands crude, 170 billion barrels worth, coming from northern Alberta. As a result, the Portland-Montreal pipeline has been operating under capacity, Wilson said.

Oil sands, commonly referred to as “tar sands,” consist of bitumen, which is a solid or semisolid petroleum deposit, mixed with sand, water and clay. Getting more of the oil sands to refineries has been a challenge because of limited transportation infrastructure, however, and has sparked much controversy. A case in point: TransCanada’s proposed Keystone XL pipeline, which would pump oil sands from western Canada to refineries along the U.S. Gulf Coast. President Barack Obama is still determining whether to approve the project.

Wilson said Friday his company is aggressively looking at opportunities to replace revenue, including the possibility of reversing the flow of the pipelines to pump oil sands crude from Montreal to Portland, where tankers would carry it to refineries around the world.

That’s not simple, Wilson said.

“For us to be able to reverse [the pipelines] and move this oil, they have to bring enough oil into Montreal to connect to our pipeline and put enough oil on our pipeline to make a project economically feasible. That’s not available today. That’s why we keep saying we don’t have a project. And if we do …we’ll be excited … because we can move this material safely and effectively.”

Portland Pipe Line Corp. is a fully owned subsidiary of Montreal Pipeline Ltd., which itself is owned by three Canadian companies: Imperial Oil, Shell and Suncor Energy, Wilson said.

While Wilson’s company examines alternative sources of revenue, the prospect of pumping oil sands through Maine has become the flashpoint for an aggressive campaign by groups such as the Natural Resources Council of Maine, which maintains oil sands are the “dirtiest fossil fuel on the planet.”

On Jan. 26 in Portland, more than 1,000 people protested the possibility of the Portland-Montreal pipeline pumping oil sands from Canada to Portland.

Dylan Voorhees, the council’s clean energy director, says Portland Pipe Line Corp. is actively looking at that possibility.

Wilson doesn’t deny it.

“The economy is difficult … it’s impacted these refineries that we serve, and the market is changing. If we do nothing, it’s going be a very difficult environment for this company,” Wilson said Friday. “So what we’re doing is we’re aggressively looking for every opportunity — and that could involve a reversal …. We’re looking for every opportunity, and I’ve been very open and honest about that.”

The company pursued a reversal project in 2008, doing preliminary work on required permits. It eventually was scrapped because of economic conditions, but the company still maintains some permits that would be needed if it returned to the project, Wilson said.

The fact remains, however, that the company isn’t currently working on a plan to reverse its flow. So why the protests?

Voorhees said the protests are important now because any future decision to reverse the pipeline flow would not trigger an environmental review.

Unlike the Keystone XL pipeline, which would be newly constructed, the Portland-Montreal pipeline will not need a permit — called a “Presidential Permit” — to cross the U.S.-Canada border because it already has one. Wilson confirmed that in 2008 when the company pursued a possible reversal project, the U.S. Department of State said reversing the pipeline’s flow to carry oil sands crude was not a change of use significant enough to warrant a new review and permitting process.

U.S. Rep. Chellie Pingree disagrees. Pingree, a Democrat who represents Maine’s 1st District, came out to support the Jan. 26 protest, saying she would lobby the president to require, if a reversal of the pipeline is pursued, a new Presidential Permit and environmental review.

In a letter Pingree is expected to deliver to the president next week, “She also points out that pumping tar sands through the pipeline is riskier than conventional oil and a spill would cause more significant environmental damage,” according to Willy Ritch, a spokesman for the lawmaker.

Samantha Depoy-Warren, a spokeswoman for the Maine Department of Environmental Protection, said she receives calls daily on the oil sands issue.

“It’s a travesty, the misinformation out there,” she said. “When you see a U.S. congresswoman out there protesting a project that doesn’t exist… She’s protesting a business with an impeccable record.”

Ritch countered that, “Chellie went out of the way to not criticize the pipeline company. They have done a good job.”

Reversing the flow of the Portland-Montreal pipeline to bring oil sands crude from Canada to Portland would make economic sense, given high market demand for it, said Tom Kloza, chief oil analyst for Oil Price Information Service. The price of crude coming out of Alberta is about $60 a barrel, compared with a barrel of crude from traditional foreign sources that’s closer to $118, Kloza said.

The demand for the Canadian oil is there, he said. It’s just a matter of how it reaches market, and pipelines are the best option and are “very safe,” he said.

Voorhees disagrees, contending oil sands are closer to coal than oil and, because the bitumen is too thick to flow without being diluted with chemicals and heated, are much more corrosive than other grades of crude, making them more detrimental to pipelines.

“The most important difference is tar sands pipelines have leaked and spilled three times more per mile than traditional pipelines,” he says, citing a 2012 study from Cornell University’s Global Labor Institute that said between 2007 and 2010 pipelines transporting diluted bitumen in the northern Midwest spilled three times more oil per mile than the national average for conventional crude oil. “Even brand-new tar sands pipelines are leaking and spilling at inordinate rates, and nobody can guarantee a pipeline won’t have a spill or leak.”

Wilson and John Quinn from the New England Petroleum Council disagree.

“The oil sands are no different in terms of moving it through a pipeline than Nigerian or Venezuelan heavy crude,” Quinn said. “It’s a demonizing campaign, and it’s based upon falsehoods.”

Quinn pointed out that Mainers daily use gasoline coming from the Irving refinery in New Brunswick, which most likely was derived from oil sands crude.

While Quinn is paid to support the oil industry, neutral organizations support the argument that oil sands are not more harmful to pipelines than other forms of crude.

ASTM International, an organization that develops international standards, determined that “Bitumen-derived crude oil is no more corrosive in transmission pipelines than other crudes,” according to Natural Resources Canada.

Wilson said the Portland-Montreal pipeline is in “excellent condition” and would not need extensive upgrades to reverse the flow and carry oil sands crude.

He said Portland Pipe Line Corp., which employs 38 people in Maine, provides $4 million a year to the state in taxes and fees.

“We still do well, we’re thankful for the business we have, but there’s a limited need on the other end, and one of the pipelines is empty,” Wilson said.

Filling those pipelines and meeting whatever the market demands for petroleum products will be his task going forward. Whether that’s oil sands, the company will have to wait and see.

http://bangordailynews.com/2013/02/01/business/tar-sands-cause-heated-environmental-economic-debate-in-maine/ printed on November 28, 2014