2. THAT the City send a letter to Kinder Morgan acknowledging the City's receipt of Kinder Morgan Canada's April 12, 2012 correspondence; and,

Transcription

1 32 t~~ ABBOTSFORD Report No. EDP April 20, 2012 File No: COUNCIL REPORT Executive Committee To: From: Subject: Mayor and Council Rod Shead, Senior Sustainability Coordinator; and Carl Johannsen, Director of Community Planning Proposed Expansion of Kinder Morgan Canada's Trans Mountain Pipeline RECOMMENDATIONS 1. THAT Report No. EDP , dated April 20, 2012, from the Senior Sustainability Coordinator; and the Director, Community Planning regarding the proposed expansion of the Kinder Morgan Pipeline system, be received; 2. THAT the City send a letter to Kinder Morgan acknowledging the City's receipt of Kinder Morgan Canada's April 12, 2012 correspondence; and, 3. THAT the letter emphasize the City of Abbotsford's expectation that Kinder Morgan conduct extensive public consultation that includes dialogue with the community, regarding the proposed pipeline expansion, prior to the commencement of detailed engineering, environmental and socio-economic assessments, to ensure community concerns are identified and addressed. BACKGROUND Kinder Morgan's Trans Mountain Pipeline Kinder Morgan Canada owns and operates the Trans Mountain Pipeline that extends approximately 1150 kilometres between Edmonton, Alberta and the Westridge Marine Terminal in Burnaby, BC. The pipeline was constructed in 1952 and has the capacity to transport up to 300,000 barrels per day of crude oil and refined products. At the Westridge terminal, product is loaded to tankers for transport to the United States and overseas. Within the City of Abbotsford, the Trans Mountain pipeline is contained within an approximate 42 kilometre long, 30 metre wide right-of-way that traverses areas of Sumas Prairie, Sumas Mountain, Matsqui Prairie and Mt Lehman (see Appendix 1 Figure). Activities within, and adjacent to, pipeline right-of-ways are governed by the National Energy Board Act and National Energy Board Pipeline Crossing Regulations and require approval from the pipeline owner. A pipeline pump station and 103,000 cubic metre storage facility are also located in Abbotsford at 3434 McDermott Road and 4076 Sumas Mountain Road, respectively. These facilities are responsible for routing product to the United States.

2 EDP Page 2 of 3 Proposed Pipeline Expansion On April 12, 2012, the City of Abbotsford received correspondence from Kinder Morgan Canada announcing they would be proceeding with a proposal to expand the Trans Mountain pipeline system. Copies of the letter (2 pages), backgrounder (2 pages) and media release (3 pages) are attached as Appendix 2. Kinder Morgan Canada indicates the proposed expansion would increase the pipeline capacity from 300,000 to 850,000 barrels per day. The preliminary scope of the project includes: Twinning the existing line within the existing right-of-way, where possible; Adding new pump stations along the route; Increasing the number of storage tanks at existing facilities; and Expansion of the Westridge Marine Terminal. Kinder Morgan has committed to undertake "open, extensive and thorough engagement" with communities along the proposed route and marine corridor. Engagement activities are anticipated to commence this summer and continue for 18 to 24 months. Following engagement and detailed engineering, environmental and socio-economic assessments, Kinder Morgan Canada expects to file an application to the National Energy Board to initiate a regulatory review of the proposed expansion. The filing is expected to be in 2014 and, if approved, construction is forecast commence in 2016 with the proposed system operating in ANALYSIS The Trans Mountain Pipeline right-of-way through Abbotsford traverses a variety of land uses and features, including productive agricultural lands, sensitive terrestrial and aquatic habitats (including habitats that support populations of species-at-risk), valued recreational areas, and residential neighbourhoods. The scope of the project is preliminary and details regarding how the proposed pipeline expansion, and subsequent pipeline operation, may impact on the landscape, environmental resources (e.g. air quality, species-at-risk) and the community is currently unknown. Detailed engineering, environmental and socio-economic assessments should address these issues. In October 2011, the Union of British Columbia Municipalities (UBCM) passed a resolution that asked the National Energy Board and Port Metro Vancouver to ensure any application to expand the amount of oil transported by pipeline and tanker be subject to the highest degree of environmental assessment. The resolution also called for meaningful public consultation, including direct engagement with affected municipalities, regional authorities and B.C. First Nations. A copy of the resolution is attached as Appendix 3. While Kinder Morgan Canada's commitment to an environmental assessment and community consultation process is consistent with the UBCM resolution, it is recommended that Mayor and Council send a letter to Kinder Morgan highlighting their commitment to an "open, extensive and thorough engagement on all aspects of the proposed project". The letter should also emphasize the City of Abbotsford's expectation for Kinder Morgan Canada to consult with the community prior to the commencement of detailed engineering, environmental and socio-economic assessments to ensure community concerns are identified and addressed.

3 EDP Page 3 of 3 FINANCIAL PLAN IMPLICATIONS No financial plan implications are anticipated at this time. COMMUNICATION PLAN Staff will work with Kinder Morgan to ensure public consultation opportunities regarding the pipeline expansion are advertised widely in the newspaper (City Page), City and Kinder Morgan websites and other means (such as social media) to maximize community awareness of the consultation process. CONCLUSION Kinder Morgan Canada announced it will be proceeding with a proposal to expand their Trans Mountain pipeline system. Within the City of Abbotsford, the Trans Mountain pipeline system includes 42 kilometres of pipeline right-of-way, a pump station (3434 McDermott Road) and a 103,000 cubic metre storage facility (4076 Sumas Mountain Road). The proposed expansion will increase pipeline capacity from 300,000 to 850,000 barrels per day and increase storage capacity at existing facilities. Pipeline expansion will be accomplished, where possible, by twinning the line within the existing right-ofway. The City has received correspondence from Kinder Morgan Canada summarizing the proposed Trans Mountain pipeline expansion and outlining their consultation process. It is recommended that Mayor and Council send a letter to Kinder Morgan acknowledging receipt of correspondence and highlighting Kinder Morgan's commitment to an "open, extensive and thorough engagement on all aspects of the proposed project". Additionally, the letter should emphasize the City of Abbotsford's expectation for Kinder Morgan Canada to undertake public consultation with the community prior to the commencement of detailed engineering, environmental and socio-economic assessments t nsure community concerns will be identified and addressed. ~+-~+----* RO~ ~ Carl Johannsen Director of Community Planning Senior Sustainability Coordinator Community Planning Attachments: Appendix 1: Figure showing Trans Mountain pipeline right-of-way through Abbotsford Appendix 2: April 12, 2012 Correspondence from Kinder Morgan Canada Appendix 3: UBCM Resolution

4 EDP APPENDIX 1 Trans Mountain Pipeline Right-of-Way

5 EDP April 12, 2012 Mr. Rod Shead Environmental Coordinator City of Abbotsford South Fraser Way Abbotsford BC V2T 1W7 Dear Mr. Shead: Today we announced that Kinder Morgan Canada had strong binding support from its customers and will take next steps in a proposal to expand our existing Trans Mountain Pipeline system - a process that could take five years to complete (2017). As we embark on this early stage of our planning, I want to take the opportunity to provide you with an update; for your reference, today's media release and backgrounder are attached. We understand that you and your constituents have questions about our proposed plans. We share many respectful relationships with local communities interested in our business and we will undertake open, extensive and thorough engagement on all aspects of the proposed project along the pipeline route and marine corridor with communities, First Nations and Aboriginal groups, environmental organizations and all who are interested. We value the input and advice and regard it to be critical to our planning. We anticipate commencing the engagement this summer and will continue to meet with elected officials, staff and others interested in our plans and take the time needed to consider the input received during the 18 to 24 month dialogue. Following extensive engagement, detailed engineering and environmental and socio-economic assessments, we will file a comprehensive facilities application with the National Energy Board, initiating a regulatory review. Our proposal must meet regulatory and permitting requirements of all levels of government in order to proceed. The submission of the application is anticipated in If our application is approved, construction is currently forecast to commence in 2016 with the proposed project in operation The preliminary scope of the project includes: PrOjected capital cost $5.0 billion; Twinning the existing pipeline, where possible, within the existing right-of-way; Adding new pump stations along the route; Increasing the number of storage tanks at existing facilities; and, Expanding our Westridge Marine Terminal. Kinder Morgan Canada Suite 2700,300-5th Avenue SW, Calgary, AB T2P 5J2 Phone: (800) Fax: (403) over

6 EDP We know that building and operating infrastructure like pipelines affects many along the route and we are respectful of those communities where we have facilities. Kinder Morgan Canada and its predecessor companies have safely operated a critical piece of British Columbia's energy infrastructure for almost 60 years. The pipeline system provides the only existing west coast access for Canadian oil products, including about 90 per cent of the gasoline supplied to Be's interior and south coast. We are proud of our long history, demonstrated commitment to safe and reliable operations, and relationships with everyone affected by our business. The pipeline industry's safety record is first class compared to any other way of moving large quantities of energy that people need to use every day. \ In addition to our stipulations, the stringent regulations and requirements of Transport Canada, Port Metro Vancouver and other regulators ensure that oil tankers navigate local waters safely. AI/ tankers in local waters are double-hulled and guided by BC Coast Pilots. Recent Port Metro Vancouver-led changes have improved the navigational safety of ai/local marine traffic. We believe that thoughtful, factual and open-minded engagement at the local level is critical to the project's design and our decision making process. I want you to know that as our plans develop we will be in touch with you to openly discuss the proposed project, answer your questions and receive your advice and input. In the meantime, we would be happy to meet with you or discuss on the phone the proposed project. Sincerely, Ian Anderson President Attachments (2) Kinder Morgan Canada Suite 2700,300-5th Avenue SW, Calgary, AB T2P 5J2 Phone: (800) Fax: (403)

7 EDP TRANS MOUNTAIN EXPANSION RECEIVES STRONG BINDING COMMERCIAL SUPPORT Customers Submit Binding Bids for 660,000 Barrels per Day Next Steps - Extensive Engagement and Regulatory Review CALGARY, April 12, Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today announced it will proceed with its proposed plans to expand the existing Trans Mountain pipeline system following the receipt of strong binding commitments through the recently concluded open season. A diverse group of existing and new shippers submitted 660,000 barrels per day (bpd) of binding commercial support for the open season. All commitments are for a 20- year term. When completed, the proposed expansion will increase capacity on Trans Mountain from the existing capacity of 300,000 bpd to 850,000 bpd. "We are extremely pleased with the strong commercial support that we received through the open season, which reinforces the appeal of our project and our approach," said Ian Anderson, president of Kinder Morgan Canada. "This strong commercial support shows the market's enthusiasm for expanding market access for Canadian crude by expanding an existing system." This support from the market better defines the project and enables Kinder Morgan Canada to fully engage the local communities. "We are still early in the engagement process of the project," Anderson said. "We share respectful, open relationships with many communities and organizations interested in our business. We are committed to an 18 to 24 month inclusive, extensive and thorough engagement on all aspects of the project with local communities along the proposed route and marine corridor, including First Nations and Aboriginal groups, environmental organizations and all other interested parties. We will also consider providing financial support to local communities for environmental initiatives. We have been planning for this day for many years and we are keen to start in depth engagement this summer." The preliminary scope of the proposed project includes: Projected capital cost of approximately $5 billion. (more)

8 EDP KMP - Trans Mountain Page 2 Twinning the existing pipeline within the existing right-of-way, where possible. Adding new pump stations along the route. Increasing the number of storage tanks at existing facilities. Expanding the Westridge Marine Terminal. Anderson added, "We anticipate filing a facilities application initiating a regulatory review with the National Energy Board in If our application is approved, construction is currently forecast to commence in 2016 with the proposed project operating by 2017." In addition to extensive engagement, the company will conduct traditional land use and environmental and socio-economic studies, and undertake detailed engineering and design studies. Preceding a facilities application, the company will file a commercial tolling application to review the company's proposed commercial structure for the expansion. This filing, which is anticipated in summer 2012, will seek National Energy Board approval on how the company will charge its customers for transporting their product through the proposed expanded pipeline. For almost 60 years, the 1,150-km Trans Mountain pipeline system has been safely and efficiently providing the only west coast access for Canadian oil products, including about 90 percent of the gasoline supplied to the interior and south coast of British Columbia. Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates approximately 29,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, C02 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMP is also the leading provider of C02 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP and Kinder Morgan Management, LLC (NYSE: KMR) have an enterprise value of over $40 billion. The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI). Combined, KMI, KMP and KMR constitute the largest midstream energy entity in the United States with an enterprise value of over $65 billion. For more information please visit This news release includesforward-iooking statements. Although Kinder Morgan believes that its expectations are based on reasonable assumptions, it can give no assurance that (more)

9 EDP KMP - Trans Mountain Page 3 such assumptions will materialize. Important/actors that could cause actual results to diffor materially/rom those in the /onvard-iooking statements herein are enumerated in Kinder Morgan's Forms IO-K and JO-Q as filed with the Securities and Exchange Commission. CONTACTS Andrew Galamyk Media Relations (403) andy galamyk@kindermorgan.com Mindy Mills Thornock Investor Relations (713) mindy thornock@kindermorgan.com ###

10 EDP BACl<GROUNDER - APRIL 12, 2012 The Trans Mountain Pipeline System was first built in Since that time, the pipeline capacity has been increased a number of times by twinning parts of the line and adding associated facilities. On April 12, 2012 Kinder Morgan Canada announced it will proceed with its proposed plans to expand the existing Trans Mountain system following receipt of strong commitments from its commercial customers. PROPOSED EXPANSION PROJECT The preliminary scope of the project includes: Projected capital cost $5.0 billion Twining the existing pipeline within the existing right-of-way where possible, minimizing Greenfield construction Expanding to result in a dual line operation: a Legacy (existing) line for refined products, iso-octane, synthetic crude oils, light crude oils a Heavy oil line Adding new pump stations along the route Additional storage capacity Expanding Westridge Marine Terminal Increasing capacity between Burnaby Terminal and West ridge Marine Terminal By THE NUMBERS Existing Trans Mountain Pipeline was built in 1952 and is 1,150 kms Over 2,200 landowners Over 20 Municipal and Local Governments Over 80 First Nation and Aboriginal groups interests Approximately 890 km of new pipeline for the proposed expansion project Almost 30 per cent of system has been previously expanded through twinning the pipeline; most recent was the award winning Anchor Loop in 2008 Current capacity of the Trans Mountain Pipeline system is 300,000 barrels per day Expansion will increase the capacity to 850,000 barrels per day KEY PIPELINE COMMUNmES All communities along the proposed route, the existing line and marine corridors within British Columbia and Alberta. NEXT STEPS Late Spring/Early Summer 2012: June 2012 to Fall 2013/Spring 2014: Meetings and discussions with regulators to the define process and determine federal, provincial and regulatory requirements needed for the facilities application. Commence open and transparent First Nation/Aboriginal groups, landowner and stakeholder engagement. Undertake comprehensive pipeline routings, traditional knowledge studies, environmental and socio economic assessments.

11 """"""'... _--_... _ EDP BACKGROUNDER - APRIL 12, 2012 Summer 2012: Preceding the facilities application Kinder Morgan Canada will file a tolling application that outlines the Company's proposed tolling structure for its customers. This will not be an approval for the project but is intended to have the National Energy Board endorse/approve how the Company will charge its customers for moving product through the proposed pipeline. 2014: File a comprehensive facilities application with the National Energy Board initiating a regulatory project review. 2016: Pending approval, construction to commence. 2017: Proposed project to commence operating. WITH OUR COMMITMENT TO OPEN AND TRANSPARENT ENGAGEMENT, WE: Believe thoughtful, factual and open minded engagement at the community level is critical to the project's design and our decision making process. Value the input and advice from local interests to be critical to our planning. Respect the relationships we have built with communities interested in our business. Will undertake an 18 to 24 month open, extensive and thorough engagements on all aspects of the proposed project along the route and marine corridor with local communities, Aboriginal groups, environmental organizations and all other interested parties and citizens commencing this summer (2012). COMMITMENT TO SAFETY The pipeline industry's safety record is first class compared to any other way to move large quantities of energy that people need and use every day. Kinder Morgan Canada and its predecessor companies have safely and efficiently operated a critical piece of British Columbia's energy infrastructure for almost 60 years. The stringent regulations and requirements of Transport Canada, Port Metro Vancouver and other regulators ensure that oil tankers navigate local waters safely. Kinder Morgan Canada also has stringent requirements for vessels coming to our marine facility. All tankers in local waters are double hulled, guided by BC Coast Pilots, and recent Port Metro Vancouver led changes have benefited all local marine traffic by improving navigation safety. FOR MORE INFORMATION: If you would like further information please tmx@kindermorqan.com. Page2of2

12 EDP APPENDIX 3 EXCERPT source www civicnet bc ca/assets/llbrary/publicatlons/member-and-medla-releasesl Member-Release/2011 /Resolutlons%20Dlsposltlon% pdf UBC~ MEMBER RELEASE October 4, 2011 TO: FROM: RE: Mayor & Council I Chair & Board I Senior Staff Union of Be Municipalities Secretariat 2011 Resolutions Disposition & UBCM Executive List The following is a preliminary summary of the resolutions and positions adopted at the 2011 Convention, as well as policy discussion outcomes. The full and exact wording of all resolutions, amendments and policy papers will appear in the Convention Minutes. RESOLUTIONS RECEIVED AFTER THE DEADLINE One late resolution, lr6, was deemed to be emergency in nature and was admitted for debate. No other late resolutions were admitted for debate. In keeping with UBCM procedures, the late resolutions wil l be forwarded to the appropriate Area Associations for consideration in the 2012 resolutions cycle, pending sponsor approval. LR6 Oil Pipelines & Tanker Traffic in Be Endorsed THEREFORE BE IT RESOL "ED that UBCM request that the National Energy Board, Port Metro Vancouver, and all appropriate federal ministers ensure that any applic.ltions to expand the amount of oil transported by pipeline or tanker in British Columbia undergo: a. the highest degree of environmental assessment; and b. meaningful public consultation, including direct engagement with <lffected municipalities, regional alithorities and British Columbia First Nations.