Monday, July 21, 2014

Maine town fights plan to use pipeline to export oil sands crude

As oil and gas boom spreads, towns call for limits, even in places long friendly to oil and gas
Maine community is the latest front in the battle over developing Canada's vast oil sands deposits
'One [pipeline] break, and hundreds of thousands of people are going to be drinking ... bottled water'
Tom Blake, like thousands of his neighbors in this coastal town, is used to living alongside the oil industry. Tank farms cluster in neighborhoods, by the park where families watch the movie "Frozen" on a summer night, next to schools and senior citizens apartment buildings. As a child, Blake, the town's former mayor, used to jump into high snow drifts from the massive oil tank next door.
Now, after decades as a New England hub for importing crude oil and distributing fuel, South Portland is enmeshed in a dispute with the oil industry that echoes far beyond southern Maine.

"This isn't an anti-Portland pipeline company measure," Blake said. "It's anti-dirty oil."
The fight over granting Keystone XL a federal permit and the questions it raised about the oil's environmental impact has fed the opposition here. But South Portland itself is now the latest front in the battle over developing Alberta's vast oil sands deposits. The Canadian government is pushing to build multiple export routes. Towns and environmentalists along the proposed routes want to seal them off.

The South Portland ordinance, if passed, would be "very significant" to efforts to thwart oil sands crude exports, said Danielle Droitsch, Canada Project director for the Natural Resources Defense Council.

That has not been lost on the oil sector, from the regional players in South Portland to the American Petroleum Institute, the industry's top lobby, which sent a letter to town officials saying the law "would face strong legal challenges." No company in South Portland currently exports crude oil, but some say the ordinance signals a willingness to restrict all businesses unfairly.
"A very vocal minority initiated a groundswell of concern in the community, and the City Council adopted this ordinance without addressing, through independent study, the issues that were initially brought up about public health and safety," said Taylor Hudson, head of investor relations for Sprague Energy, a New England energy wholesaler. "There was such a rush to judgment without input from state, federal or local regulators. We see it as a very dangerous precedent for any business that wants to innovate."
PMPL got local and state permits with little notice five years ago to make infrastructure changes to reverse the flow. But local residents homed in on the proposed change in late 2012 as oil sands crude became a bigger issue with Keystone XL. Communities along the pipeline route, from Vermont to Maine, also grew alarmed by spills of oil sands crude into Michigan's Kalamazoo River in 2010 and then in a subdivision in Mayflower, Ark., in 2013.

"All of those things — Keystone, Kalamazoo — people woke up to them," said Mary-Jane Ferrier, 82, a spokeswoman for Protect South Portland, the citizens group championing the ordinance. "When people considered that it could happen in their backyard, they got very concerned."

The Portland-Montreal pipeline six times crosses the watershed for a major tributary into Sebago Lake, the drinking water source for the greater Portland area. Oil sands crude is a tarry substance called bitumen extracted through strip mining and diluted with chemicals to reduce its viscosity. The bitumen and diluents contain carcinogens. While oil usually floats when spilled into water, bitumen sinks, making cleanup harder.

"That's tap water," Bob Foster said, picking up a half-full plastic bottle from the picnic table after weed-whacking his backyard one recent morning.

He and his wife, Judy, both in their 60s, back the ordinance. They live in a trim, white clapboard house with a picket fence and flagpole out front, across the road from two huge sage-green tanks owned by PMPL. "All you need is one break, not even a huge break, and hundreds of thousands of people are going to be drinking and bathing in bottled water."
Built in 1941 to speed crude oil to Montreal refineries to support Canada's war effort, the Portland line consists of two pipelines that can move 600,000 barrels a day. But over the last three decades, its business has dropped from serving about one tanker a day to about one a week, locals say.

Reversing the line to tap Alberta's oil sands boom would also reverse the company's flagging fortunes, Wilson said in Vermont. PMPL, the umbrella for Portland Pipe Line Corp. and Montreal Pipe Line Ltd., is owned by a Canadian subsidiary of Exxon Mobil Corp. and Suncor Energy Inc., both heavily involved in extracting petroleum from oil sands.
Canada sells nearly all its oil sands crude to the U.S. at a steep discount to global petroleum prices. Exporting to other countries would spur further oil sands extraction and boost prices, generating more money and jobs for Canada. Pipeline companies and the Canadian government are eager to build routes to the East and West coasts. As a result, Canadian officials have repeatedly voiced their concern to South Portland over the ordinance.

"As an oil-producing jurisdiction, Alberta is following the situation," said Jeannie Smith, spokeswoman for the government there. "Just last week, our Alberta representative in Washington, David Manning, was in South Portland to provide information to local officials and stakeholders."
Approved 6 to 1 by the City Council in a preliminary vote two weeks ago, the export ordinance grew out of a broader, highly divisive referendum that local citizens put on the ballot in November. The oil industry spent nearly $650,000 against the measure, four times more than the opposition, and defeated it by 200 votes. The narrow defeat and continued pressure from the community prompted the City Council to hire a committee to write an ordinance that would be legally defensible, a move that stunned the industry.

"If you're concerned about tar sands, look into it, have a good open dialogue about it. That didn't happen," said Jamie Py, president of the Maine Energy Marketers Assn., a trade group of fuel wholesalers and retailers. "Instead, you have another process going down the path here with the goal in mind to ban something. It prevents terminals from taking advantage of big national oil revolution going on.

Amid this fight, PMPL let its permits lapse, but locals remain wary because the company could get new permits. In Canada, Enbridge Inc., the biggest shipper of oil sands petroleum to the U.S., got permission to reverse a pipeline to transport oil sands crude that would tie into the Portland-Montreal system.
"If they're not planning a reversal, why is industry fighting the ordinance so hard?" Blake asked. "I'm convinced if we let our guard down, industry will slip through the back door in a minute."

Blake says he has gotten support from other communities. As the North American oil and gas boom spreads, towns are calling for limits and moratoria, even in places long friendly to oil and gas. The small town of Dryden, N.Y., for example, has successfully defended in court its ban on hydraulic fracturing, or fracking. Several Colorado towns have instituted fracking bans, too. Denton, Texas, where fracking has happened for a decade, plans to hold a referendum on issuing new permits.
"We have a very powerful municipal tool in home rule that lets us stop projects that are adverse to the community," said Crystal Goodrich, 40, an occupational therapist and member of Protect South Portland. "I think every community should have something like it. It's become so that corporations can go to planning board meetings and get everything they ask for. But we are the ones that have to live here."

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