Cost of worst-case tanker spill outweighs rewards of Northern Gateway: UBC study

The financial costs of a worst-case scenario tanker spill off the north coast of British Columbia could outweigh the economic rewards of the proposed Northern Gateway pipeline for the region, says a study by the UBC Fisheries Centre.

The study funded by World Wildlife Fund Canada looked at the potential losses to commercial fisheries, tourism, aquaculture and port activities in the area in the event of a tanker accident.

Using the 1989 Exxon Valdez spill as an example, researchers calculated various scenarios, from a spill with no impact to a high-impact spill of 257,000 barrels of crude, in winter, over 52 kilometres of coastline that includes Haida Gwaii and Porcher Island, near Prince Rupert.

“The study highlights that if a tanker spill occurs, the economic gains from the Enbridge (TSX:ENB) Northern Gateway project to the North Coast region would be wiped out by the costs of the spill,” said Rashid Sumaila, director of the fisheries centre.

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Ocean-based industries directly employ about 10 per cent of the population of the North Coast. When indirect benefits are included, they account for approximately 30 per cent of regional employment.

Total losses due to oil contamination could range from $90- to $300 million in lost output in other ocean industries, thousands of jobs and up to $200 million of lost gross domestic product, said the report released Wednesday by Sumaila and Ngaio Hotte.

That compares to total economic benefits from the project for the region of $628 million in direct output, up to 8,000 jobs and $293 million in GDP.

Overall, the project is expected to boost Canada’s GDP by $270 billion over 30 years, $2.6 billion in tax revenues for local, provincial and the federal governments, and generate $81 billion in direct and indirect revenues to the federal and provincial governments.

Northern Gateway officials said the study was deeply flawed, including that it compares economic benefits that are certain to occur with spill costs that are highly improbable.

Enbridge’s own assessments suggest a spill of such magnitude is “a one in 15,000 year event.”

“Northern Gateway has put in place the most comprehensive suite of marine safety and emergency response measures ever proposed in Canada,” Todd Nogier, company spokesman, said Wednesday.

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“The reality is simply that, because of the preparedness and mitigation efforts of the project, these impacts would not be of such a scale as represented in this report.”

Darcy Dobell, of WWF Canada, disagrees.

“All we have to do is look north to where the Exxon Valdez spilled happened. That was 23 years ago now and the fisheries there have not recovered; communities there have not recovered, and that’s a spill from a tanker that was smaller than the projected tankers will be here,” Dobell said.

“If you have a major spill like that, things are changed forever.”

The loss estimates don’t include the cost of spill response, clean-up and litigation, which could run as high as $9.6 billion, the researchers said. Northern Gateway pointed out that cleanup costs of a tanker incident at sea would be paid for by the responsible party, “not the fishing industry or the public.”

In an area with a relatively high regional unemployment rate of 9.3 per cent, compared to 6.6 per cent provincially, ocean-based industries on the North Coast generate about $1.2 billion in output value and thousands of jobs, the report said.

Art Sterritt, executive director of the Coastal First Nations, said there are budding shellfish aquaculture businesses along the North Coast that would not survive a spill.

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And Joy Thorkelson, a Prince Rupert city councillor and North Coast representative of the United Fishermen and Allied Workers Union, said she believes the costs to ocean industries would be even higher than estimated.

Thorkelson said the pipeline is a risk to salmon, in particular, in rivers and at sea.

“I’m quite sure that Prime Minister Harper has written off the commercial industry in favour of the oil industry. The fact that he wants to write off a renewable industry and a resource that belongs to the people of Canada in favour of oil is really criminal,” Thorkelson said in Prince Rupert, where she is taking part in federal review panel hearings.

The spill scenarios all assumed no spill response – a scenario the researchers and Northern Gateway agree is unlikely. The report also notes that if the Exxon had been a double-hulled tanker like the ones that would be docking in Kitimat, the amount of oil spilled would have been half.

Whatever the review panel ultimately decides, Sumaila wrote in the report, “the outcome will have far-reaching consequences for Canada’s environmental and socio-economic future.”