Community and industry resupply of oil on the North Coast of British Columbia

From Transport Canada

The Community and Industry Resupply of Oil on the North Coast of British Columbia is a report prepared by CPCS Transcom Limited for Transport Canada. It provides information about the types of vessels used and volumes of petroleum products transported to resupply communities and industries on the North Coast of British Columbia (BC).

CPCS wishes to thank Transport Canada and stakeholders on the BC North Coast for providing data and information in support of this report. However, unless otherwise stated, the opinions in this report are those of the authors and do not necessarily represent the views of Transport Canada or the Government of Canada.

This is the modified final report. The original (unmodified) final report was submitted by CPCS on December 14, 2016. It was modified to remove commercially-sensitive information pursuant to the Access to Information Act by Transport Canada on June 6, 2017. The report has been reformatted for publishing on our website.

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Executive summary

Background and purpose

The Government of Canada seeks a better understanding of the types of vessels used and volumes of petroleum products transported to resupply communities and industries on the North Coast of British Columbia (BC). The BC North Coast extends from the northern tip of Vancouver Island to the Alaska border, and includes Haida Gwaii. The purpose of this report is to provide a portrait of community and industry oil resupply on the North Coast of BC.

Communities and industries requiring marine resupply

Communities on the North Coast of BC that are connected by road or rail typically receive petroleum products via these modes, not by marine vessel. There are on the order of 10 to 20 communities on the North Coast of BC that we estimate receive petroleum products by marine vessel. Most of these communities, some of which are some shown in Figure 2-2, have less than about 1,000 inhabitants each. Industries on the BC North Coast that are not connected by road, including forestry (logging), aquaculture (fish farming), and tourism (i.e. remote fishing lodges), also receive petroleum resupply by marine vessels.

In general, with the exception of jet fuel and aviation gas (which are associated with community airports) most communities and industries noted would require some mix of diesel, gasoline, heating oil, liquid propane gas (LPG), and lubricants and greases to supply their transportation and/or other industrial needs.

In addition to these general resupply needs, BC North Coast ports receive petroleum products related to specific industrial processes. While Prince Rupert does not typically receive fuel or petroleum products by ship or barge for community use, the port receives vessels carrying slack wax, a mixture of oil and wax used in inland pulp and paper production. In addition, the Port of Kitimat receives “liquid pitch”, which is used in aluminum production. There are currently no crude oil shipments to/from the North Coast of BC,Footnote 1 though the Port of Kitimat has received refined hydrocarbons in the past, which are intended to dilute heavy oil shipped from Alberta.

A large number of energy related projects are in development in BC that would result in an increase in tanker vessel movements off the North Coast of BC, should they go ahead. These projects include crude oil terminals, refineries, and liquefied natural gas (LNG) terminals. It is not clear how many or if any of these projects will go ahead, not least because of the depressed state of the oil and gas industry globally. None of these projects has yet reached final investment decision.

Vessel types and capacity

For community and industry petroleum resupply on the BC North Coast, either dedicated fuel barges or general cargo barges carrying fuel tanks or fuel trucks on deck are used. Tankers are only used to ship specific industrial products from international origins (i.e. slack wax and liquid pitch).

Dedicated fuel barges can carry up to 10 million litres of petroleum products (approximately 8,000 tonnes depending on the product mix)Footnote 2, though the barges used to resupply communities and industries on the BC North Coast typically have a capacity less than 4 million litres (3,200 tonnes). For service to remote communities in southeast Alaska, stakeholders noted that the tank barges used typically have a capacity around 8 to 10 million litres (80,000 barrels or 6,400 to 8,000 tonnes).

General cargo barges carry fuel trucks that can be driven on deck or by on-deck tanks. Thus, the amount of fuel on board typically depends on the size of the fuel truck loaded on the barge (and any on deck tanks). According to stakeholders, truck capacity is typically between 18,000 and 43,000 litres (14 to 34 tonnes), though there is no “typical” shipment size.

Flow analysis and vessel activity

Petroleum product shipments on the BC North Coast generally include diesel, gasoline, jet fuel, aviation gas, as well as small quantities of lubricants and oils. There is on the order of 50 million litres per year (40,000 tonnes per year) of petroleum products shipped between or to communities and industries on the BC North Coast.

Though there are several refineries in central Alaska, Alaska also imports refined petroleum products. Stakeholders noted that communities in southeast Alaska are served by fuel barge shipments from the US Pacific Northwest and the Port of Vancouver and that in general, the vessels typically transit along the BC North Coast (inland waters). Based on commodity flow data, the southeastern Alaska communities of Ketchikan, Juneau, Craig, and Skagway, receive shipments of 195,000 tonnes of gasoline and 262,000 tonnes of distillate fuel oil (e.g. diesel).

Stakeholders noted that the Anchorage area is largely served by the existing refineries in South Central Alaska. However, a 2016 report notes that Anchorage receives large quantities of aviation gas, which originate at a Richmond, California refinery.Footnote 3 The commodity flow data indicate that approximately 484,000 and 222,000 tonnes of gasoline is received in Anchorage and Nikishka, respectively.Footnote 4 Some of this product may be handled by tugs and barge combinations; we have not been able to confirm whether or not these shipments transit the BC Coast.

Section 1: Introduction

1.1 Background and objectives

According to previous studies, “there are currently no crude oil tankers travelling to or from North Coast BC ports. . . [h]owever, a variety of vessels move oil in North Coast BC waters for community and industry resupply.”Footnote 5 The Government of Canada seeks a better understanding of the types of vessels used and volumes of petroleum products used to resupply communities and industries on the North Coast of British Columbia (BC). The BC North Coast extends from the northern tip of Vancouver Island to the Alaska border, and includes Haida Gwaii.

The purpose of this report is thus to provide a portrait of community and industry oil resupply on the North Coast of BC. Specifically, it addresses the following key questions:

  • What communities and current (and future) industrial facilities on or near the BC North Coast rely on marine resupply services for oil and other fuels, and what are their relevant characteristics, including their fuel and oil storage facilities?
  • What are the characteristics of oil and other fuel marine resupply services to communities and industries on or near BC’s North Coast, including but not limited to the types and volumes of oil and fuels, related origins and destinations, vessel characteristics and activity?

In addition, the report also describes characteristics of marine resupply of oil and fuels to communities and industries in Alaska to the extent that they originate or may transit in proximity to the BC North Coast.

1.2 Methodology and limitations

The methodology for this work included desk research and analysis, in particular using the following data sources:

  • Statistics Canada Marine Origin-Destination Survey, which provides historical data on vessel movements and tonnage handled domestically and internationally from the 1980s through 2011; this data has not been updated since 2011 and is less useful as a result
  • Canadian Register of Vessels, which is a summary of commercial vessels in the Pacific Region
  • Canadian Coast Guard’s INNAV service, which tracks port-to-port movement of vessels in Canadian waters, with limited information on commodities handled
  • The United States Army Corp of Engineers Waterborne Commerce of the United States (WCUS), which identifies US domestic and foreign marine shipments by port

In short, these data sources on their own are not sufficient to develop an accurate and up to date portrait of community and industry oil resupply on the North Coast of BC and related petroleum product flows in Canadian waters off the BC North Coast.

We have sought to address this limitation though consultations with carriers serving the BC North Coast and Alaska to understand the nature of shipments and volumes of products being shipped. While in some cases, the data sources above provided some validation, notably with respect to vessel movements, the accuracy of the estimates provided are based on the information from third parties. We cannot warrant the accuracy of this information though have sought to bolster and validate it to the extent possible.

1.2.1 Information on units

Stakeholders reported volumes of petroleum products shipped in litres. These volumes have been converted to tonnes using a density of 0.0008 tonnes per litres. This density represents approximately a 65:35 ratio of diesel (0.00084 tonnes per litre) to gasoline (0.00073 tonnes per litre). The densities are based on information provided by Innovation, Science and Economic Development Canada of densities at 15 degrees Celsius. Values in tonnes are shown in parentheses.

Section 2: Oil and industry resupply characteristics

There are several communities and industries along the BC North Coast, as well as Alaska that are dependent on or could potentially receive marine shipments of oil and petroleum products. Before identifying these communities and industries (section 2.2), the typical products handled are described in section 2.1.

2.1 Types of petroleum products shipped

Figure 2-1 summarizes the types of products supplied or shipped by communities and current and planned industrial facilities on the BC North Coast. Where known, the Standard Classification of Transported Goods (SCTG) code used in the Statistics Canada Marine Origin Destination data, is also provided.

In general, with the exception of jet fuel and aviation gas (which are associated with community airports), most communities and industries would require some mix of diesel, gasoline, heating oil, liquid propane gas (LPG), and lubricants and greases to supply their transportation and other industrial needs. The remaining six products in the figure (i.e. liquid pitch, slack wax, diluent, crude oil, and liquefied natural gas [LNG]) are associated with specific current or planned industrial facilities. There are currently no crude oil or LNG shipments to/from the North Coast of BC.Footnote 6

Figure 2-1: Current and potential petroleum products shipped on the BC North Coast

Previously/currently shipped on the BC North Coast
Product Description and use Standard Classification of Transported Goods (SCTG)
Gasoline A refined petroleum product primarily used for transportation. 17100 gasoline
Aviation Gas (AvGas) A refined petroleum product used in aviation piston engines (e.g. seaplanes). 17100 gasoline (includes aviation gasoline)
Jet Fuel A refined petroleum product used in aviation turbine engines. 17200 aviation Turbine Fuel (types A And B)
Diesel A refined petroleum product used for transportation and electricity generation. Specific products noted as shipped include ultra-low sulphur diesel and “CP-43.” 18000 fuel OilsFootnote *
Heating Oil A fuel oil used to heat homes and buildings. 18000 fuel OilsFootnote *
Lubricants and Greases Lubricants for machinery and engines, etc. 19100 lubricating Oils And Greases
Liquid Propane Gas (LPG) A liquefied hydrocarbon used as fuel in heating appliances, cooking equipment, and vehicles. There is also a planned export facility in Prince Rupert. 19321 propane
Liquid tar and/or bitumen (“liquid pitch”) Liquid pitch (coal tar) used in aluminum production at Rio Tinto Alcan. 19990 other Products Of Coal And Petroleum Refining
Slack wax Mixture of oil and wax, used in pulp and paper production in the northern interior of BC and received in Prince Rupert. 19990 other Products Of Coal And Petroleum Refining
Diluent Diluents are petroleum product mixed with heavy oil to allow for pipeline shipments. Diluents that can used include products such as condensate or naphtha. 19209 other Refined Petroleum Oils
Potentially shipped on the North Coast
Product Description and use Standard Classification of Transported Goods (SCTG)
Crude Oil Oil in its raw form after extraction, which can vary in density. Crude oil from Alaska is typically lighter densityFootnote ** whereas crude oil from Alberta can be heavier density. 16000 Crude Petroleum Oil And Bituminous Mineral Oil
Liquefied Natural Gas (LNG) Natural gas that has been liquefied typically for the purposes of transport and storage. Not currently transported on the North Coast, but would be shipped by planned liquefaction facilities. 19310 Liquefied natural gas

Source: CPCS analysis of Statistics Canada Standard Classification of Transported Goods (SCTG) and stakeholder information.

2.2 Communities and industries potentially receiving marine oil shipments

Though the largest communities and industries on the BC North Coast are connected by road (and in some cases rail) access, several communities and industries do not have road or rail access and must receive petroleum products through marine shipments.

2.2.1 Communities

There are on the order of 10 to 20 communities on the North Coast of BC that we estimate receive petroleum products by vessel. Most have less than 1,000 inhabitants. These communities are shown in the figure below, and then described (from north to south). The population of each community and any information on the terminal or storage facilities are noted.

Figure 2-2: Communities on the BC North Coast and Alaska
An estimated 10-20 communities on the North Coast of British Columbia receive petroleum products by vessel, including Kitimat and Prince Rupert.
Prince Rupert

Prince Rupert is a community with a population of 11,838. It has year-round road and rail access from Highway 16 and CN’s BC North Line, respectively. Fuel products to the community are thus largely received by road,Footnote 7 unless there were a road block (such as caused by a landslide) that would prevent the community from receiving fuel. Prince Rupert is also an origin point for marine shipments of petroleum products to communities on the North Coast.

While Prince Rupert does not receive fuel or petroleum products by ship or barge for community use, the port does receive vessels carrying slack wax, a mixture of oil and wax used in pulp and paper production. In 2015, 9,139 tonnes was received at Fairview Terminal and held in nearby tanks.Footnote 8

In addition, as the Prince Rupert Airport (which supplies Jet A-1 fuel on site) is located across the harbour from Prince Rupert without road access, jet fuel shipments must be made by barge.Footnote 9 In the past, this has been done using large 52,000 litre (42 tonne) capacity, “B-Train” tanker trucks on board.

Communities north of Prince Rupert

Figure 2-3 summarizes the population of towns located north of Prince Rupert – Stewart and Gingolx – both of which have road access. As a result, again, our understanding is that they receive no fuel by vessel, unless there is an emergency (e.g. a landslide causing a roadblock). In addition to these inhabited places, there are three abandoned towns that were once the site of or planned site of mining activities: Anyox, Kitsault, and Alice Arm. Recent reports indicate there are conceptual plans for activity in Anyox and Kitsault.Footnote 10

Figure 2-3: Communities north of Prince Rupert
Community Population Road/Rail Access from Mainland
Stewart (District Municipality) 494 Road
Gingolx 408 Road

Source: CPCS summary of Statistics Canada and Aboriginal and Northern Affairs Canada data.

Communities near Prince Rupert

There are several First Nations communities located around Prince Rupert (i.e. north of Douglas Channel), as summarized in Figure 2-4. None of these communities have road or rail access from the mainland suggesting they would receive fuel by marine vessel.

Figure 2-4: Communities near Prince Rupert
Community Population Road/Rail Access from Mainland
Lax Kw’alaams 678 No
Metlakatla 85Footnote ** No
Kitkatla (Gitxaala Nation) 490 No
Gitga’at First Nation (including community of Hartley Bay) 138Footnote * No
Communities on Haida Gwaii

Figure 2-5 summarizes the population of communities on Haida Gwaii, which is composed of two main islands, including the two unincorporated regional districts on the island (Skeena-Queen Charlotte D and E). Though all the communities noted may not be directly resupplied by ship, all communities must be resupplied through marine shipments to Haida Gwaii. Also located on the island is the Sandspit Airport, which would likely require supplies of jet fuel to service commercial airline traffic.

Figure 2-5: Communities on Haida Gwaii
Community Population Road/Rail Access
Skeena-Queen Charlotte D 524 No
Skeena-Queen Charlotte E 317 No
Village of Masset 884 No
Masset 1 Indian ReserveFootnote * 614 No
Queen Charlotte City 944 No
Port Clements 378 No
Skidegate Indian Reserve 709 No
Total 4370 No

Based on INNAV data and other stakeholder comments, shipments are received in Skidegate and Masset, then trucked to other communities on the island. In Masset, North Arm Transportation maintains a stationary fuel barge (Grizzly Fueler 2020). ITB Marine also supplies Haida Gwaii.

Communities in Douglas Channel

Figure 2-6 summarizes the population of communities in Douglas Channel: Kitimat and Kitamaat Village. Both have road access and Kitimat is also served by a CN branch line, so petroleum products are not shipped by marine mode to the communities there.

Figure 2-6: Communities in Douglas Channel
Community Population Road/Rail Access

Source: CPCS Summary of Statistics Canada data (2011)

Kitimat 7,046 Road/Rail
Kitamaat 514 Road

Kitimat is home to the Rio Tinto Alcan aluminum smelter. It is also the location of a number of planned industrial projects in development. These are discussed further in section 2.2.2.

Communities on Central Coast (South of Douglas Channel)

Figure 2-7 summarizes the populations of communities on the Central Coast. In addition to these specific communities, there are several other smaller communities around Bella Bella, including Ocean Falls, Waglisha, Namu, and Shearwater.Footnote 11 Though Bella Coola has road access, it is nonetheless noted that they receive marine shipments of fuel oil, based on previous survey work conducted by Transport Canada. Its facilities can accommodate a 6000 gross register tonnage (GRT) vessel.

Figure 2-7: Communities on Central Coast
Community Population Road/Rail Access

Source: CPCS Summary of Statistics Canada data (2011)

Bella Coola (Unincorporated Place) 95 Road
Bella Coola (Indian Reserve 1) 852 Road
Bella Bella (Indian Reserve 1) 1,095 No
Kitasoo (Klemtu, Indian Reserve) 322 No
Katit 1 Indian Reserve (Rivers Inlet, Wuikinuxv Nation) 63 No
Central Coast Regional District A 129 Road
Central Coast Regional District D 384 No
Anticipated community growth

In general, most communities identified are not experiencing population growth; in fact, the population of most communities declined between the 2006 and 2011 census. Looking forward, the communities around Prince Rupert and Kitimat could be expected to have significant population growth, particularly in the shorter-term, should the construction of LNG and other petroleum related industries go ahead; however, both communities are served by truck and rail, so this population growth is unlikely to significantly alter the marine shipments of oil and petroleum products on the North Coast. The likely greater impact is from new industrial facilities, which are described in section 2.2.4.

2.2.2 Current industries on the BC North Coast

The primary industrial activities on the BC North Coast receiving petroleum shipments are related to the aluminum smelter in Kitimat, as well as forestry (logging), aquaculture, and tourism (fishing lodges). The major generators of vessel traffic of petroleum products are summarized below.

Rio Tinto Alcan aluminum smelter (Kitimat)

The town of Kitimat was developed as an industrial city in the 1950s to service the Rio Tinto Alcan aluminum smelter. The location was chosen in part due to ready availability of hydroelectric power (Kemano hydro power plant) and its location as a deep water, weather protected port with minimal tidal influences.

Currently, the smelter is the only major industrial facility in Kitimat. It was recently upgraded to double capacity (to 420,000 tonnes/year) and is expected to be operational for at least another 60 years. Two former industrial facilities in Kitimat are no longer operational and not expected to be re-started, though new industry associated with LNG are in development.Footnote 12

Though Kitimat is serviced by road and a CN branch line, the smelter receives some international shipments of input products, notably liquid pitch.

Rio Tinto Alcan Kemano hydro power plant (Kemano, BC)

Rio Tinto Alcan owns an 896 megawatt capacity hydro power plant near Kemano. Power from the plant is primarily used for its Kitimat smelter, with the remainder provided to BC Hydro. There is no road access to the generating station, so any petroleum products must be transported to the site by marine transportation. We understand from consultations that recently this resupply has been done using general cargo barges from Kitimat, with fuel trucks on deck.

Stewart bulk terminals and Stewart world port (Stewart)

Stewart Bulk Terminals has a concentrate dock where they ship copper or zinc concentrates from mines in northern BC. Activity at the terminal has slowed down due to a couple of the mines shutting down. Stewart has road access. Fuel products are transported by truck from Prince George (unless there is an exceptional circumstance, such as a road blockage, in which case supplies are brought in by barge).

Forestry

Based on previous analysis conducted by CPCS, there are no operating forestry product manufacturing facilities located on the BC North Coast and supplied by vessel (i.e. sawmills, pulp and paper mills, etc.). However, some of the tug and barge operators consulted noted that they supply petroleum products to logging camps along the coast. Though it is not possible to isolate specific locations on the coast, there was approximately 14 million cubic meters of forest products harvested in 2012 (down from 23.5 million cubic meters in 1993) confirming that logging activities are ongoing.Footnote 13 One US-based study finds that fuel consumption (in the situations considered) was on average 2.1 litres per tonne of wood (0.51 US gallons per short ton).Footnote 14 Assuming an average density of 0.51 tonnes per cubic meter of wood, the approximate fuel consumption could be on the order of 15 million litres per year, though this estimate is for the entire BC Coast (not just the North Coast). Recent reports indicate that the Government of BC has agreed to protect 85% of the region’s old growth forests from logging, suggesting that logging activity is not expected to significantly grow in the future.Footnote 15

Aquaculture

Tug and barge operators serving the BC North Coast indicated that they supply fuel to aquaculture sites along the coast. Though most aquaculture sites are located along Vancouver Island, as shown in the figures in Appendix A, there are on the order of 10 to 20 aquaculture sites located along the North Coast of BC.

Fishing lodges

There are many fishing lodges located along the North Coast of BC. While none of the stakeholders consulted were willing to provide details on specific facilities, we estimate there are dozens of these facilities, offering unique remote experiences to tourists (typically with no road access). Some examples of these types of facilities – all of which are small-scale operations – are listed below.

2.2.3 Future industries

A large number of energy related projects are in development in BC that would result in tanker vessel movements off the North Coast of BC, if they go ahead. These are described below, and include crude oil terminals, refineries, and LNG production facilities. It is not clear how many or if any of these projects will go ahead, not least because of the weak state of the oil and gas industry globally. None of these projects have yet reached final investment decision.

LNG Canada (Kitimat)

LNG Canada was announced in May 2012. Project partners Shell Canada, Korea Gas, Mitsubishi Corp, and PetroChina Co. Ltd. The partners are proposing to build and operate a two billion cubic feet/day LNG export terminal.

In the first phase of work, the project would produce 6 million tonnes (MT) of LNG per year. A second optional phase could bring annual capacity to 12 MT LNG / year. Assuming a vessel size of 166,000 m3, this would equate to approximately 80 to 161 vessels / year.Footnote 16,Footnote 17

In June 2015 the project was granted Environmental Assessment Approval with 24 conditions. A final investment decision on the $12 billion project was expected in 2016 but has since been deferred.

Figure 2-8 illustrates the proposed shipping route into the Douglas Channel up to Kitimat.

Figure 2-8: Proposed LNG Canada Route to Kitimat
The proposed shipping route for the LNG Canada liquid natural gas pipeline passes through the Douglas Channel up to Kitimat.

Source: LNG Canada

Kitimat LNG

A Joint Venture of Chevron and Woodside Petroleum are proposing to develop and operate an LNG export terminal at Bish Cove near Kitimat (land has been leased from the Haisla First Nation since 2010). The terminal would include LNG loading, storage, natural gas delivery, liquefaction and export facilities. Kitimat LNG has 20-year, 10 MT / year export license from the National Energy Board (NEB). If the project goes ahead and this volume is shipped by marine mode, it would result in approximately 134 LNG vessels / year. Subject to final approval, development will require 4–5 years. It remains unclear if the project will proceed.Footnote 18

Pacific NorthWest LNG Project (Prince Rupert/Lelu Island)

The Pacific Northwest LNG project, backed by Malaysian-government owned Petronas, comprises construction and operation of a new LNG facility and terminal on Lelu Island, 15 km south of Prince Rupert. At full production, the facility would produce up to 20.5 MT of LNG per day over 30 years.Footnote 19 This would be equivalent to approximately 274 LNG vessels / year. In September 2016, the federal government conditionally approved this project, with 190 legally binding conditions. However, a final investment decision has not yet been made.

Triton LNG (Prince Rupert or Kitimat)

The Triton LNG proposal was announced in October 2013 and would include a floating liquefaction storage and off-loading (FLSO) vessel in one of two possible sites, Prince Rupert or Kitimat, along with support facilities. The NEB approved (in 2014) application for a 25-year licence to export LNG. The application envisages a facility capable of procession 2.3 MT of LNG/year.Footnote 20 This level of production would be equivalent to approximately 31 LNG vessels/year. There have been no recent announcements as to whether the project remains active. It remains unclear if the project will proceed.

Cedar Exports LNG Ltd. (three locations on Douglas Channel)

In August 2014, Cedar LNG Export Ltd., an economic development arm of the Haisla First Nation, filed applications with the NEB for three 25-year licenses. The applications seek approval to export varying quantities of LNG to Asian markets from either barge-based or floating LNG vessels to be located at up to three locations along the west side of the Douglas Channel. The filings with the NEB envision construction starting in 2017-2020 subject to a final investment decision.Footnote 21 LNG production is anticipated as 6.4 MT/yearFootnote 22, or equivalent to approximately 85 vessels/year. It remains unclear if the project will proceed.

Enbridge Northern Gateway (Kitimat)

Northern Gateway Pipelines Limited Partnership proposes to build two 1,176km (731 miles) pipelines between Bruderheim, AB and Kitimat, BC. A 36" diameter pipeline flowing west will carry up to 525,000 barrels of oil per day. A 20" diameter pipeline flowing east will carry 193,000 barrels of condensate per day, a product used to thin heavy oil for pipeline transport. As part of the project, a Kitimat marine terminal is proposed with two tanker berths and a tank farm to be located on the west side of Douglas Channel north of Bish Cove. According to the Northern Gateway website, the terminal “will have capacity to serve 220 ship calls per yearFootnote 23 which would include oil tankers (export) and condensate tankers (import). In June 2014 the Canadian government granted approval for the project subject to 209 conditions recommended by the Joint Review Panel of the NEB.Footnote 24 However, the future of the project remains uncertain. In June 2016, the federal Court of Appeal overturned approval of Enbridge’s Northern Gateway pipeline project because Ottawa failed to consult adequately with First Nations. In September 2016, Northern Gateway announced it will not appeal that decision, but rather will support the path outlined by the Federal Court of Appeal for re-engagement with First Nations and Métis communities.Footnote 25 It remains unclear if the project will proceed.

Kitimat Clean Refinery

Kitimat Clean Ltd has proposed to build a heavy oil refinery near Kitimat. It would be one of the ten largest refineries in the world, capable of processing 400,000 barrels/day of bitumen from the oil sands into gasoline, jet fuel and diesel fuel, primarily for export. According to the Kitimat Clean website, “One VLCC [very large crude carrier] sized tanker will carry the gasoline, diesel and jet fuel down the Douglas Channel to Asia every four days”Footnote 26. This would be approximately 90 vessels per year. An environmental project description was submitted to the BC and Canadian governments on . Further environmental analysis and permitting will take two years, during which time detailed engineering design will be completed and funding raised. If the project gets final investment decision, construction would then take 5 more years.Footnote 27

Pacific Future Energy (Between Terrace Bay and Kitimat)

This project involves construction of a refinery to process a form of bitumen transported by rail (not pipeline) from Alberta to an industrial area called Dubose Flats (hallway between Terrace and Kitimat). The refinery would have an input capacity of 200,000 barrels/day of “NEATBIT” a processed form of bitumen the consistency of peanut butter which requires rail transportationFootnote 28. The project will produce diesel and gasoline primarily (with more limited amounts of kerosene, liquid propane gas, butane and sulphur). The anticipated refined production levels are not clear, though the combined storage capability would yield combustion greater than 3 Petajoules of energy (equivalent to approximately 76 million gallons of diesel oil). Transportation of the refined products will be the responsibility of third purchasers or offtakers.Footnote 29 No decisions have been made on this, though the latest summary from the Project states that “Early third party studies suggest a marine terminal could be situation along the Portland Inlet”. This option would require construction of a pipeline (275km) connecting the refinery to the marine terminal.

Pacific Future Energy submitted an updated project description to the federal and provincial government regulators in June 2016, which set in motion a government and public review process that will take up to two years (including environmental assessment).

Other LNG Projects on North Coast of BC

The Government of BC “LNG in BC” website lists a number of additional LNG export projects under considerationFootnote 30. These are summarized in the table below along with anticipated production capacity (all of the proposed projects have received export licences from the NEB, though this is just a first of many steps in project progression).

Figure 2-9: Additional LNG projects under consideration in BC
Project Name Description Potential LNG Production (MT)

Source: CPCS Analysis and LNG in BC.

Canada Stewart Energy Group Ltd Floating and land-based natural gas liquefaction plants 30
Kitsault Energy Project LNG export facility 20
Grassy Point LNG (near Prince Rupert) Woodside Energy Holdings LNG export facility on provincially administered Crown Land at Grassy Point 20
WCC LNG Limited (north of Prince Rupert) LNG export project on the eastern shore of Tuck Inlet on the Tsimshian Peninsula near Prince Rupert 33
Orca LNG (Prince Rupert) LNG export terminal of 6 floting liquefaction storage and offloading vessels 24
New Times Energy Ltd (Prince Rupert) Up to three floating liquefied natural gas (FLNG) trains 12
Aurora LNG (Digby Island) LNG export terminal 24
Prince Rupert LNG (Ridley Island/Prince Rupert) LNG export facility 20
AltaGas liquid propane gas export terminal

AltaGas is proposing to build an LPG export facility on Ridley Island, adjacent to an existing coal export terminal. According to AltaGas, the facility is expected that “the proposed Facility will offload approximately 50 to 60 rail cars per day and deliver by marine transport approximately 20 to 30 cargos of propane per year to market,” or approximately 1.2 million tonnes of propane per year.Footnote 31 It has been reported that the vessels would be very large gas carriers (VLGCs).Footnote 32 The project is subject to environmental assessment and final investment decision.

Vessel movements associated with LNG and energy related projects

Figure 2-10 below provides a summary of the potential vessel movements associated with each project. It is impossible to say how many of the projects described above will go ahead, though it is very unlikely that most of them will be approved and commercially viable, at least in the short to medium term. A recent Conference Board of Canada report which estimated the economic impact of the LNG sector in BC used an assumption that three projects of the LNG projects could come into service between 2021 and 2025, depending on market and regulatory conditions, for a total of 30 MT per annum of LNG productionFootnote 33. This would likely generate approximately 400 vessel movements per year, using 166,000 m3 capacity LNG vessels.

Figure 2-10: Estimated maximum production and LNG vessel traffic
Project Million Tonnes /Year of LNG Number of vessels /YearFootnote *
Aurora LNG (Digby Island) 24 321
Canada Stewart Energy Project 30 402
Cedar 6 86
Grassy Point LNG (near Prince Rupert) 20 268
Kitimat LNG 10 134
Kitsault Energy Project 20 268
LNG Canada (Maximum) 12 161
New Times Energy Ltd 12 161
Orca LNG (Prince Rupert) 24 321
Pacific NorthWest LNG 20 274
Prince Rupert LNG (Ridley Island/Prince Rupert) 20 268
Triton LNG 2 31
WCC LNG Limited (north of Prince Rupert) 33 442

2.2.4 Alaska communities and industries

Crude oil

There are three refineries in Alaska (Figure 2-11). The largest is a Tesoro refinery near Anchorage, which has a capacity of approximately 72,000 barrels of oil per day.Footnote 34,Footnote 35 Unlike the other two refineries, which are located along the Trans-Alaska Pipeline,Footnote 36 this refinery receives shipments by ship. It primarily receives crude oil from domestic, Alaskan sources (Valdez and Cook Island), though also receives shipments from other continental US and foreign sources “via marine tanker”.Footnote 37 According to Statistics Canada Marine OD data, there was crude oil shipped from the Port of Vancouver, BC, to Alaska (in 2011), though more recent data (from 2014) from the US Army Corps of Engineers Waterborne Commerce in the US do not indicate that these are continuing.

Figure 2-11: Alaska refineries
Crude oil refineries in Alaska are located in the far Northern section of the state, the interior of the state and the Southcentral part of the state.

Source: Econ One Research, 2015.

Refined products

Though there are several refineries in south central Alaska, Alaska also imports refined petroleum products.

Communities near Anchorage are supplied with products from local refineries, supplemented by imports from Asia, and to a lesser extent Canada and the US. A recent study noted that jet fuel is shipped into the Port of Anchorage from international markets and aviation gas is shipped from California.Footnote 38

Stakeholders noted that communities in southeast Alaska are not served via transhipments in Alaska. Rather, these communities are served by fuel barge shipments from the Pacific Northwest and the Vancouver (BC) region and that in general, the vessels typically move along the BC coast in Canadian waters (only in exceptional circumstances would they move out of inland waters). Based on commodity flow data discussed in chapter 3, the southeastern Alaska communities of Ketchikan, Juneau, Craig, and Skagway, receive shipments from the continental US and/or Canada. This includes all types of refined petroleum products: ultra-low sulfur diesel, regular gasoline, jet fuel / kerosene and premium gasoline.

Section 3: Flow analysis

This chapter provides information on the magnitude of product flows to communities and industries on the BC North Coast and Alaska. Before discussing these flows in sections 3.2 and 3.3, we provide information on vessel types and capacities in section 3.1.

3.1 Vessels, carriers, and receiving facilities

3.1.1 Vessel types and capacities

Figure 3-1 summarizes the vessel types used for community and industry resupply on the BC North Coast, as well as Alaska.

Figure 3-1: Vessel types used for community and industry resupply on the North Coast and Alaska
Vessel Type Description Typical capacity
Tankers A vessel with fuel within hold Varies (see discussion).
Tug and fuel barge combinations Dedicated fuel barges propelled using a tug. These can include towed barges and articulated-tug barges (ATBs). ATBs are tug-barge combinations where the tug is connected to the stern of the fuel barge with a hinged connection.Footnote *

Domestic service: Ranges from 2 million litres (1,600 tonnes) to 10 million litres (8,000 tonnes).

Remote-Alaska service: Typically, barges have a capacity up to about 10 million litres (80,000 barrels, 8,000 tonnes) according to stakeholders.

The Nathan E. Stewart/DBL-55 ATB, which recently sank off of the BC coast, had a capacity of 8.3 million litres (6,600 tonnes).Footnote ***

Tug and general cargo barges General cargo barges with the capability of carrying fuel trucks and tanks on deck.

Varies, includes on-board tanks and as well as fuel trucks. Typical tanker truck capacity is from 18,000 to 43,000 litres (14 to 34 tonnes).

Depending on barge size, may carry more than one at a time.

Motorized barges A self-propelled barge with on-board diesel engines; one vessel used on the North Coast is 45 meters in length.Footnote ** One vessel noted has on-board tank capacity of 136,400 litres (115 tonnes of diesel) and 68,200 litres (50 tonnes of gasoline), with additional capacity on board for tanker trucks.

On the BC North Coast, tankers are typically used to ship specific industrial products from international origins, rather than used for remote community and industry resupply. Figure 3-2 identifies the tanker vessels that called on Prince Rupert and Kitimat in 2015 based on data reported in INNAV and vessel characteristics from MarineTraffic.com. No vessels were identified as entering Stewart Harbour. Within the time-sample, the largest identified vessel to call at these ports was the Cedar, at 36,634 deadweight tonnes.

Figure 3-2: Characteristics of tanker vesselsFootnote * calling in Prince Rupert and Kitimat in 2015
Port Vessel number (IMO) Vessel name Size
(Length overall x breadth extreme)
Size
(deadweight tonnes)
Cargo reported by INNAV
Prince Rupert 8919049 Cedar 182.3m × 32.05m 36,634 Hazardous Cargo
9459539 Stolt Ocelot 155m × 24.8m 23,324 Hazardous Cargo
9505998 Greenwich Park 146.19m × 24.2m 19,998 Hazardous Cargo
Kitimat 9276898 No vessel information could be located Hazardous Cargo
9323821 Sunbird Arrow 144m × 23.53m 15,002 Coal Tar
9400382 Sakhara Lotus 170m × 26.6m 32,107 Hazardous Cargo

For other community and industry petroleum resupply on the BC North Coast, either dedicated fuel barges or general cargo barges carrying fuel tanks or trucks are generally used. Dedicated fuel barges can carry up to 10 million litres of petroleum products (approximately 8,000 tonnes depending on the product mix), though most are in the 2 to 4 million litre capacity range (1,600 to 3,200 tonnes). The vessel with the capacity of 10 million litres is not currently used for BC North Coast, so vessels re-supplying the North Coast have a capacity of 4 million litres or less. The 4 million litre barges are operated by Island Tug and Barge with deadweight tonnages up to 3,700 tonnes.

For service to remote communities in southeast Alaska, stakeholders noted that the tank barges used typically have a capacity around 8 to 10 million litres (80,000 barrels or 6,400 to 8,000 tonnes). In the case of both BC North Coast and Alaska-destined shipments, some of the barges are towed and some are articulated-tug barges (ATBs); the larger fuel barges are ATBs.

For general cargo barges, the amount of fuel on board typically depends on the size of the fuel truck loaded. According to stakeholders, these can typically vary between 18,000 and 43,000 litres (14 to 34 tonnes), though there are some larger trucks. Stakeholders further noted that particularly for these types of shipments, there is no “typical” shipment sizes.

3.1.2 Carriers

According to our stakeholder consultations there are at least five companies providing community and industry resupply using tugs and barges on the BC North Coast. Two of these companies have dedicated fuel barges in their fleets, including ATBs. There are at least three carriers providing tug and barge service to communities in Alaska from the mainland US and Canada.

3.1.3 Receiving facilities

With some exceptions, specific information on the types of reception facilities available at the community and industry level was not available from consultations. Where products are received in remote locations with a general cargo barge, we heard that the barge will often lower a ramp onto the shore above the High Water Mark and drive the trucks before delivering the fuel product into the receiving facilities tanks. We heard from one stakeholder that these tanks at the receiving facility range in size from 1,000 litres to 50,000 litres (less than 1 tonne to 50,000 tonnes) and are often fastened to large skids (sled type frames). Other stakeholders noted that the product they ship is transferred to tank farms in some of the larger communities.

3.2 North Coast shipments of petroleum products

Section 3.2.1 describes domestic shipments of petroleum products along the BC North Coast, which are predominantly to smaller communities and isolated industries. Section 3.2.2 then describes international receipts of petroleum products, which are typically specific products consumed in industrial processes.

3.2.1 Domestic shipments

As a starting point for our investigation, we reviewed Statistics Canada Marine Origin-Destination (OD) data up until 2011 (the last year the data is available). While some product flows are reported, based on stakeholder input, this data set does not provide a comprehensive portrait of current petroleum products transported to communities and industries on the BC North Coast. For example, the only reported flow of fuel products in the domestic database on the North Coast is from Vancouver to Bella Coola, which was reported in 2000 and 2001 in the 2,300 tonnes per year, respectively. Based on previous work, we understand that that the survey sometimes does not capture small tug and barge movements, particularly on the West Coast.

Petroleum product shipments on the BC North Coast generally include diesel, gasoline, jet fuel, aviation gas, as well as small quantities of lubricants and oils. Some general cargo barges might also transport tanks or trucks containing propane.

As many communities are only served by one provider, stakeholders did not provide a detailed disaggregated report on the flows to all communities and industries on the BC North Coast for confidentiality reasons. However, as shown, communities on Haida Gwaii (notably Masset and Skidegate) receive larger volumes of products using dedicated fuel barges. Communities, fishing lodges, aquaculture sites and logging operations on the central and North Coast receive smaller volumes typically completed done by smaller delivery services (e.g. tank trucks on barges).

The larger fuel shipments using dedicated fuel barges typically originate at refineries and terminals in Vancouver. For example, one stakeholder noted that fuel from Vancouver is loaded from a Chevron refinery (Stanovan Terminal), as well as from other rail terminals in Burrard inlet.Footnote 39 Other smaller shipments using fuel trucks on board are picked up in communities closer to their ultimate destination (e.g. Prince Rupert and Port Hardy).

3.2.2 International shipments and receipts (other than Alaska)

Figure 3-3 summarizes the international receipts of petroleum products at North Coast ports up until 2011, the last year the data was available. As shown, most petroleum products are received at Prince Rupert or Kitimat.

Figure 3-3: International receipts of petroleum products at North Coast ports, 2008-2011 (Tonnes)
Port Product 2008 2009 2010 2011

Source: CPCS analysis of Statistics Canada Marine OD data.

Prince Rupert Total petroleum 7,111 5,921 7,355 8,680
Prince Rupert 19990 Other Products Of Coal And Petroleum Refining 7,111 5,921 7,355 8,680
Kitimat Total petroleum 400,679 39,338 28,235 59,070
Kitimat 19990 Other Products Of Coal And Petroleum Refining 101,905 39,187 28,235 24,143
Kitimat 19209 Other Refined Petroleum Oils 298,774 151
34,927

The receipts of “Other Products Of Coal And Petroleum Refining” in Prince Rupert are slack wax shipments. The receipts of “Other Products Of Coal And Petroleum Refining” and “Other Refined Petroleum Oils” in Kitimat are liquid pitch (coal tar) and possibly diluent, which can include products such as condensate or naphtha, respectively. Liquid pitch is used in aluminum production, and diluent (condensate or naphtha) is used to dilute bitumen shipped from Alberta.Footnote 40 Vessel movement data from INNAV confirms that there was a receipt of at leastFootnote 41 one vessel carrying “coal tar” in 2015, confirming that liquid pitch shipments are ongoing. We have not been able to confirm whether diluent shipments are continuing to Kitimat (though they are planned as part of projects such as the Enbridge Northern Gateway Project).

Though different products cannot typically be mixed onboard a vessel, in general, a vessel can have more than one type of hold coating and possibly carry more than one product type.

3.3 Alaska Transit Flows

3.3.1 Flows from Canada to Alaska

The only petroleum product shipments originating on the BC North Coast destined to Alaska are LPG shipments on board of CN’s Aquatrain rail car ferry to Whittier, Alaska.Footnote 42 Based on Port of Prince Rupert data, in 2015, 8,275 tonnes of LPG were shipped by the ferry, along with “Chemicals” and “General” cargo. Our understanding is that these shipments do not include any other petroleum products (other than the liquefied propane).Footnote 43

Figure 3-4 summarizes the petroleum products loaded at the Port of Vancouver and destined for Alaska, which is the predominant origin of petroleum products destined to Alaska from BC. As shown in the figure, there are shipments of gasoline, fuel oils (including diesel) and jet fuel. The data also suggest that there are occasional shipments of crude oil between the Port of Vancouver and Alaska.

Figure 3-4: Marine shipments of petroleum products from port Metro Vancouver to Alaska, 2008-2011 (Tonnes)
Product 2008 2009 2010 2011

Source: CPCS analysis of Statistics Canada Marine OD data.

17100 Gasoline 11,786 17,699 52,527 23,324
18000 Fuel Oils 56,446 170,548 177,122 79,246
17200 Aviation Turbine Fuel (types A And B) 1,877 21,259 31,509 17,922
16000 Crude Petroleum Oil And Bituminous Mineral Oil 0 0 0 26,726

3.3.2 Flows from other regions to Alaska

There is an established refinery sector in South Central Alaska, however, it does not produce adequate outputs to supply all of Alaska’s needs. As noted above, communities in the Anchorage area are largely supplied by local production with supplementation from petroleum products arriving from Asia, the continental US and Canada. The communities in South East Alaska do not receive transshipped products from Anchorage. Rather they receive products in tug and barge combinations of up to 10 million litres (approximately 8,000 tonnes depending on the product mix) arriving directly from Vancouver and the continental US.

Consultations suggest that petroleum products moving by vessel between Alaska and Canada and the continental US transit via Canadian waters. Figure 3-5 summarizes the refined petroleum products from the continental USFootnote 44 and Canada in thousand tonnes received in Alaska, based on data from the US Army Corps of Engineers, Waterborne Commerce of the United States (WCUS). As shown, the predominant receipts to Alaska from Canada and the continental US are gasoline and distillate fuel oil (e.g. diesel).Footnote 45

Figure 3-5: Alaska imports of refined petroleum products, 2014 (Tonnes)
Product Canadian Origin US-Origin Total

Source: CPCS analysis of US Army Corp of Engineers, Waterborne Commerce of the United States.

Gasoline 71,000 1,069,000 1,140,000
Distillate Fuel Oil 106,000 603,000 709,000
Residual Fuel Oil 0 47,000 47,000
Lube Oil & Greases 0 7,000 7,000
Liquid Natural Gas 4,000 1,000 5,000
Kerosene 2,000 0 2,000
Petro. Products Not Otherwise Classified 0 1,000 1,000

Of the totals above, approximately 195,000 tonnes of gasoline and 262,000 tonnes of fuel oil are destined to the following communities in southeastern Alaska: Ketchikan, Juneau, Craig and Skagway. Using product densities of 0.73 kg/L and 0.84 kg/L for gasoline and diesel, respectively, this amounts to approximately 270 and 310 million litres each of product. A previous study on vessel movements in southeast Alaska indicates that there is typically on the order of 24 vessels per year supplying these southeast communities.Footnote 46

Stakeholders noted that the Anchorage area is largely served by the existing refineries in South Central Alaska, with some imports from Asia, Vancouver and the Pacific Northwest. A 2016 report noted that Anchorage receives large quantities of aviation gas, which originate at a Richmond, California refinery, which is then distributed throughout the state.Footnote 47 To this end, commodity flow data suggest that approximately 484,000 and 222,000 tonnes of gasoline is received in Anchorage and Nikishka, respectively.Footnote 48 Some of this product may be handled by tugs and barge combinations; we have not been able to confirm whether or not these shipments transit the BC Coast.

Appendix A: Maps of aquaculture sites on the BC Coast

The following figures show the location of aquaculture sites on the BC Coast, as of 2014.

Figure A-1: Finfish Aquaculture Sites (as of 2014)

As of 2014 marine finfish aquaculture facilities are concentrated in Clayoquot Sound, the Queen Charlotte Strait and the Campbell River.

Figure A-2: Shellfish aquaculture sites in BC (as of 2014)

As of 2014, shellfish aquaculture facilities in British Columbia are concentrated along the Campbell River, Courtenay, Barkley Sound and Nanaimo with other facilities scattered throughout the province.

Figure A-3: Freshwater/land-based aquaculture sites in BC (as of 2014)

As of 2014, the location of freshwater and land based aquaculture sites in British Columbia are spread out evenly across the Southern Coastal region.

Appendix B: Acronyms and abbreviations

AB
Alberta
ATBs
Articulated-tug barges
AvGas
Aviation gas
BC
British Columbia
CN
Canadian National (railway)
WCUS
Waterborne Commerce of the United States
DWT
Dead weight tonnes
FLNG
Floating liquefied natural gas
FLSO
Floating liquefaction storage and off-loading
GRT
Gross register tonnage
kg/L
Kilogram per litre
Km
Kilometre
LNG
Liquefied natural gas
LPG
Liquid propane gas
MT
Million tonnes
NEB
National Energy Board
OD
Origin-destination
SCTG
Standard classification of transported goods
ULSD
Ultra-low sulfur diesel
US
United States
VLCC
Very large crude carrier
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