LNG Marine Terminal and Multi-Purpose Pier EIA Review
Socio-Economic Impact Assessment
History
Irving Oil Limited, which is a privately business, was founded in 1927 by Kenneth Colin Irving, in Boutouche, New Brunswick (NB), Atlantic Canada. In 1931, the company moved to St John, (NB), and has been based there since then. Its main industry includes retail, distribution, and exporting oil and gas to some parts of Canada and North Eastern of United States of America.
In 1980, it bought out Chevron’s share of the refinery and expanded the facility to become Canada’s largest refinery. This refinery is capable of processing over 250,000 barrels per day (40,000 m3 per day). In the late 1990s, the refinery was upgraded in order to be able to produce some of the lowest-emission petroleum in North America.
Besides the energy-business industry, Irving has also established a system of chain retailers such as bulk furnace oil and propane outlets across Atlantic and central Canada (Ontario and Quebec), as well as in New England (U.S.A). Irving also owns a chain of convenience stores and “Big Stops” (truck stop and family type of restaurants).
Irving is also known for its concern in regards to global climate change i.e. it is “the only energy company in Canada to publicly support the Kyoto Accord.” In moving towards this, the company has decided to focus on Liquefied natural gas (LNG). This is part of the aim of this project proposal.
Impacts
Expansion of the energy business industry — is the main purpose of the project. Jacques Whitford Environment Limited describes the project as: adding LNG receiving and regasification, (i.e. a process of LNG being taken off from ship/ground, storing it at controlled cool temperature, then converting it back into natural gas, and send it to the market), capabilities at Irving Canaport which would improve the reliability of supply of natural gas for industries and facilities in the region.
To actualize this LNG project, Irving has to extend the boundaries of its infrastructures and a lot of new construction will be necessary; building LNG storage, LNG marine Terminal, and multipurpose pier, etc.
World-class LNG facilities and storages — (including ship-tanks) are very important due to properties of gas and its behaviour therefore safety and security measures need to meet “world class construction standards.” For example, tanks used in the storage and regasification of LNG are constructed using a double wall method (i.e. outer shell pre-stressed concrete and inner shell constructed of metal, nine percent of nickel alloy.
Additionally, world-class LNG facilities and storage can also be seen as an economic impact in terms of remaining competitive in technological strategy and commercial business.
Energy market: demand and supply — the target market for this LNG project is based on Irving’s current markets in Eastern Canada, Quebec, and the North Eastern United States.
Infrastructure development — existing roads for transportation around Canaport and Saint-John will be used. Economically, increased traffic may prove to be a benefit as it may attract other businesses and residents to come to the region.
Local well being — according to the study, the Irving’s expansion LNG project can bring many local benefits due to the degrees of contracting and employment which could increase investments of other companies in the region. Additionally, LNG is considered as a sustainable supply of clean and cheap energy to the people of New Brunswick.
Also, to carry out the project it would create more direct and indirect job and opportunities in the region including St. John, New Brunswick, and the Atlantic region of Canada. The estimated construction labours for the project would require approximately 100 to 150 employments on average and 300 to 500 persons during peak time. So, in terms of employment, the project will have positive effects in the area.
Important Economic Figures
According to the report, due to the expansion of Irving’s major fuel-project between 1991 — 2000, Irving contributed greatly to the growth of New Brunswick economy. In 2000, alone, it contributed 35% of Canada’s refined petroleum exports, 50% of Canada’s gasoline export in which equivalent to 31% of total New Brunswick exports. It is also has recently spent $1 billion Canadian dollars (CAD) to upgrade its own facilities. In context, the estimated budget for the proposed project expansion is about 500 Million CAD.
Main Economic Activities
The main economic activities in St. John (population of approximately 140,000) and its surrounding region within 81 km radius are: forestry, fishing aquaculture (i.e. farming freshwater or saltwater fish), and industries. Also, Saint-John Census Metropolitan Area (CMA), where most business offices are concentrated, includes Banks, Bell Canada, and IT (i.e. information technology) business, etc.
Socio-Economic Impact / an EIA Review
Overview
Irving’s Canaport-LNG project-scale indicates that it will have an initial ability of regasification of 1 billion ft3 or 28 million m3 per day. The target supply markets are both within Canada and the US. In 2005, Irving signed a partnership agreement with Repsol YPF, S.A., making it a partner in the Canaport LNG project. It is a large Spanish international, Madrid based, company. It is the 5th largest oil company in the world and operating in 25 countries. In their agreement, Repsol holds 75 percent of shares, and other 25 per cent belongs to Irving Oil Limited. This demonstrates that the EIA prediction is correct in terms of attracting more investors into the region. Consequently, it has created a new positive economic impact as shown in the next section.
Economic Impact
In this EIA study, the socio-economic impacts are extremely important in determining the effects of the project. It is also an essential tool for decision making in terms of economic prediction, policy making, or local well-being, and sustainable development. Jacques Whitford and its team have confirmed that their EIA report on the impact of socio-economics is largely positive. This is demonstrable in terms of:
Direct Benefits —According to statistics Canada, a conservative economic multiplier demonstrates that every invested dollar spent on the project will have a net impact of two dollars. This will generate a benefit of $1.5 million CA for Saint John Economic.
In parallel with the investment cost of the LNG project, $26 million CA is estimated as the direct labour income with “indirect” expenditures of $14 million CA. There will also be a contribution of about $15 million CA additionally in revenue and income, taxes per year. Additionally, $3 million CA will be generated into the region from port fees each year. Similarly, about 750 temporary and construction jobs will be created during peak time and 50 to 55 jobs will be permanent.
Long Term benefits — LNG will reinforce Saint John as becoming a modern energy center with a sophisticated transport network. It will also have world-class new technology, as well as be a great place for multiple business investments including small businesses, restaurants, hospitality, and community services. It will also provide an environmentally friendly (i.e. clean) and low cost form of energy. Thus, it may not merely lead the Province of New Brunswick but also Canada toward the direction of sustainable development.
Conclusion
In terms of labour and economic impacts, they were very well investigated in the sense of cost and benefit analysis. However, there are weaknesses. For example, Whitford does not talk much about how Irving deals with property rights issues as well as the compensation program for those whose loose the land (e.g. Aboriginal land), the right to fish (e.g. commercial fisheries), and the right to do business in its new-expansion private-property for LNG project.
It seems that the Irving LNG expansion project will not only benefit the company itself, but also benefit the greater St. John area, the province of New Brunswick, and Canada as a whole because it will bring in a lot of foreign investment (e.g. Repsol).
Health and Safety
Similarly to economic impacts, health and safety are considered as key concerns of the EIA process. This project involves health and safety risks associated with LNG to the public and workers. In the summary of the EIA report by Whitford, malfunctions, unplanned events, accidents, and vehicle traffic-related accidents could cause health and safety concerns to workers as well as the public.
Whitford and its team have investigated these scenarios through model methodologies. In these models, they have constructed “the proposed design of the facility as well as local atmospheric and weather conditions.”They have predicted that the potential impacts on health and safety to the public and workers, due to noise, dust, hazardous materials, and combustible gas are not significant.
Quest Consultants (an engineering firm based out of Norman, Oklahoma) is the firm that is responsible for conducting the analysis of potential LNG accident scenarios for the environmental assessment.
They found that:
Clean and safe form of energy — [we are told], LNG is non-combustible in its liquid form, non toxic, odourless, non-corrosive, also when natural gas is liquefied to become LNG, impurities such as sulphur are removed”
Environmentally sound — as LNG releases lesser amounts of Carbon dioxide into the atmosphere than any other fossil fuel. Therefore it is considered environmentally friendly in terms of combating climate change.
Safe form of gas — LNG does not cause fire in it liquid state and “its vapour [is] only flammable within a limited range of concentration.” It does not cause explosions in an open area, or when it is stored at atmospheric pressure.
Safety storage — LNG storage tanks are designed with double layers (i.e. inner layer compound of 9% nickel alloy).
According to the U.S. Government Accountability Office (Feb 2007 # GAO-070316), the safety record for LNG receiving and regasification terminals around the world is excellent, with over 40,000 tanker cargoes LNG shipped worldwide since 1959 and no LNG spills resulting from cargo tank rupture.
Employee safety management — is great. Irving has established a program for training its workers. Workers are well equipped, and have to meet guidelines and standard conditions for performance working. For instance, hard hat, safety glass, reflective vest and gloves, long sleeved shirts, and CSA approved safety boots, are required.
Fraser Forsythe, Canaport LNG’s Health, Safety, and Security & Environmental Manager, has stated that: “by the end of July, we’ve worked nearly one million hours with two lost-time accidents. That makes our lost time incidence rate about 0.41, whereas the industry average in New Brunswick for 2006 was 1.61. This means we are five to six times safer than the industry average.”
Red head secondary access road — will be paved. It will be used as an alternative to Red Head road. The road costs 10 million CAD. This was one of the major concerns expressed during public consultation.
Education Health Care & recreation — Irving supports schools, hospital, and sport recreation in Saint John by donating gifts, equipments, and funds. For instance, Canaport LNG donates “SMART Boards” to East Saint John school district.
Also, “Repsol and Canaport LNG, the joint energy project owned by Repsol and Irving Oil, announced today that they will donate a Full-Field Digital Mammography unit to St. Joseph’s Hospital. The unit, funded in partnership with the St. Joseph’s Hospital Foundation, will help improve breast health, an important healthcare concern for the Saint John community.”
Compensation program (mitigation) — Irving’s Canaport LNG facility has established a program for compensation for commercial fisheries and around local area which is affected by the project, but it will deal with issues case by case.
Potential Risks — some other potential risks, that need to be accounted for, include Natural disasters, as Canaport is located in a seismic zone. This could be linked to LNG spills and leaks but according to the EIA report it is not significant as the LNG storage tanks and LNG facilities are modern and built using new technology. Due to the strength and security of these facilities the level of risk is minimized and deemed as being low. “Some modeling done as part of Canaport LNG’s environmental approval process showed that during worst-case scenario of an LNG vapour cloud, there should not be danger to the community.”
Explosion is another risk factor due to the accumulation of gas in the confine, but this very rare, and will carefully be taken care of by Irving. “LNG is neither explosive nor combustible, only its vapours can be explosive”. Also, possible the risk of a terrorist attack is negligible due to “the design and security systems of liquefied natural gas tank are very difficult to breach.”
Public participation
People were concerned about a number of questions such as “adequate emergency response access” associated with Red Head Road, LNG tanks safety, and compensation for commercial fisheries due to exclusive zone during construction. However, these questions were selected as being significant by the Independent Review Panel and therefore do not paint the full picture. As time progressed and the public became more informed about the project, concerns about LNG greatly diminished though road safety concerns subsisted. Steps were taken in order to mitigate this concern.
Conclusion
The parts of the EIA report on Health and Safety were well investigated. However, the reports fail to mention anything about the long term health effects, or health risks of LNG to the local community around Canaport.
Political & Economic Critiques
Having about 7000 employees, more than 700 fuel outlets, and operating 13 marine terminals, Irving is one of the largest companies Saint John. This being the case, it undoubtedly has its own economic power. The company is sometimes viewed as a threat, or as being anti-competitive.
Irving has become the center of controversy since “its negotiation with the City of Saint John in regards to the Canaport LNG terminal and a behind-closed-doors tax deal negotiated with city mayor Norm MacFarlane, a politician in the province of New Brunswick, Canada. He currently serves as mayor of Saint John, New Brunswick.This deal perpetuated feelings among some in the community that Irving was more powerful than elected officials. This was only compounded when it was proposed that the LNG pipeline be constructed through a major municipal park, which poses a potential threat to local residents.”
Political patronage is also an issue as Irving has been involved in supporting Allan Rock and Claudette Bradshaw of Liberal Party. This has fostered distrust among the public. In spite of public skepticism “and general feelings of distrust toward the Irvings, the majority of New Brunswickers are closely tied to the company.” Norm MacFarlane
Last thought: “Rising costs, a shortage of gas supplies and global financial meltdown have led to delays in many LNG liquefaction projects.” And, “the LNG industry worldwide is expected to witness an LNG supply surge until 2012.” However, “investors still remain skeptical about the extent to which new project costs will decline.”