Landowner principles

NATIONAL GROUP PREPARES FOR PIPELINE NEGOTIATIONS

TRANSPORTING OIL COULD soon be added to your land’s job description through a proposed pipeline project by TransCanada. From Alberta to New Brunswick, impacted landowners are currently being notified, but before negotiations progress, farm groups are joining forces to ensure the industry is prepared to face potential concerns.

“As rural landowners, the Energy East Pipeline Project challenges us with permanent encroachments that impact future expansion,” says Humphrey Banack, Canadian Federation of Agriculture (CFA) Vice President and National Pipeline Committee Chair.

PROPOSED PROJECT
The projected cost of this national project is $12 billion; and like the figure suggests, the impact will be significant from coast to coast. The planned pipeline is 4,500 kilometres (km) in length and will span from Hardisty, Alberta to Saint John, New Brunswick. It is estimated to carry 1.1 million barrels of crude oil to Eastern Canadian refineries each day.

TransCanada’s initial step was an open season of discussions with producers and refiners held earlier this year. The season confirmed market support and now the development company is contacting landowners and preparing plans for formal regulatory approval.

While 1,400 km of the total length will need to be constructed, the Energy East Pipeline Project also involves converting 3,000 km of existing natural gas pipeline to an oil transportation line.

“The gas pipeline was constructed in the late 1950s and early 1960s and since it is currently sitting empty, the development companies plan to re-use it,” says Leo Guilbeault, Grain Farmers of Ontario’s District 1 (Essex) Director and a member of the Pipeline Committee.

The project development period is underway and the final plan is estimated to reach the North American Energy Standards Board in 2015. Post construction, the pipeline is expected to be in service for deliveries to Quebec by late 2017 and to New Brunswick in 2018.

AGRICULTURE’S VOICE
Due to the significant number of Canadian farmers who will be impacted by the project, the CFA has partnered with provincial organizations to form the committee. Banack and his team are dedicated to not only analyzing the risk to the agriculture sector but also to sharing strategies and preparing landowners for development negotiations.

“Farmers across Canada face many of the same issues and it’s a great opportunity for each province to participate and share ideas in an open forum,” explains Banack, who farms in central Alberta. 

Guilbeault says their immediate goal is to develop and distribute a draft standard compensation agreement and land code of conduct. “We’re not looking to develop a pile of paperwork that landowners will have to fill out but an agreement that is as simple and fair as possible.”

The committee’s results, expected to be unveiled at the CFA annual meeting in February, will be shared publically so landowners can be more informed about the process.

While Guilbeault says they are taking small steps at this point, they are crucial ones to ensure agriculture’s voice is represented in the planning process.

“We will first be looking at the national gas infrastructure to be sure it is safe to convert to oil pipeline and then making sure that the companies do their due diligence along the way,” he says.

LANDOWNER RISKS
Both Banack and Guilbeault are well-suited candidates for CFA’s committee as they themselves own farm land impacted by existing pipelines.

“The pipeline on my farm was built in the 1970s and we have experienced some issues that have lasted 30 years,” says Guilbeault. “The construction technology has really improved since that time but there are still concerns that we need to look out for over the life of the project.”

The committee is working towards a standard compensation agreement structure to emphasize the importance of fair payment for all landowners involved.

“Depending on how deep and wide the pipe is laid, equipment will need to be brought in and land will need to be moved,” explains Guilbeault. “Landowners need to be fairly compensated for that.”

In addition to the initial digging, he knows from personal experience that as the land resettles tile drainage repairs will likely be required.

TransCanada will be implementing pipeline easements, or a set of rights across a designated piece of land, as part of the project. This means that pipeline employees have the right of way to access or inspect the land at any time. Easements are the basis of the committee’s code of conduct initiative.

“Landowners are obligated to give access to the farm and depending on season and location, this could potentially damage land and crops,” says Guilbeault. “Owners and their land need to be respected and the compensation needs to be fair. We are drafting a code of conduct so that the right of way is treated with professionalism.”

Banack echoes Guilbeault’s passion and says he is glad the committee provides an opportunity for Western farmers, some of whom have been dealing with pipeline policies for decades, to share their experiences so those impacted by new projects can learn from their past.

His main concerns involve the impact the pipelines have on future development. “In Alberta there are some areas that farm machinery cannot drive over due to the pipelines, meaning growth of farms is severely handicapped,” he says.

“I’m also concerned with the fact that it has been a past practice to abandon the lines after a project is completed. It’s the landowners who then have to live and work with scrap metal in their property and the inability to build and develop those areas in the future.” 

With that in mind, the CFA committee will also be working to put a contingency plan in place suggesting that owners receive long-term compensation for any damage the pipeline causes in the future. This could include land damage from any pipeline repairs but also covers any unforeseeable problems that may arise as the pipes age.

OPPORTUNITY OR THREAT
While TransCanada is receiving some negative media attention from political and environmental groups throughout the country, the company has released a report by Deloitte & Touche LLP (Deloitte) that examines the economic benefits of the project.

Because an estimated 75 percent of the oil refined in Eastern Canada is imported, the Energy East Pipeline Project is referred to as an energy independence initiative.

Deloitte reports that throughout the six-year development and construction phase, the pipeline will create 10,000 full-time jobs and will maintain 1,000 of these jobs over the 40-year operation period. The project is also expected to generate 35 billion dollars in additional gross domestic product while in operation.

Regardless of lobbies for and against, the opportunity at hand for impacted Grain Farmers of Ontario farmer-members is to stay updated on the work of Banack’s group as they discuss and develop resources to better equip rural landowners as the project moves forward. •