National Energy Board hearings halted

Kinder Morgan hearings up in air over conflict of interest

The national energy board hearing for the Kinder Morgan pipeline could be back on track soon, as the oil company is confident it can replace evidence removed over conflict-of-interest concerns.

The NEB put the hearing on hold last Friday, because Steven Kelly, the Conservative government’s latest appointment to the board, is an oil industry consultant who filed evidence in support of Kinder Morgan’s Trans Mountain pipeline expansion. The NEB is now striking that evidence, but Kinder Morgan will have a replacement plan by Friday, as requested by the NEB.  

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“We are confident we can meet requirements outlined by the NEB and that the regulatory process can proceed in a timely manner without material delay,” said Kinder Morgan Canada president Ian Anderson in a media release. Kinder Morgan commissioned Kelly to provide an opinion on the supply and demand for oil in the future, and his evidence was filed in December 2013.

Marc Eliesen, a former deputy energy minister in Ontario and Manitoba, described Kelly’s work as the primary economic evidence in the pipeline case, and said other experts were basing their arguments on it.

Eliesen, an intervenor who withdrew from the hearing in protest, also raised concerns about Kelly’s evidence, stating he used a netbacks analysis based on one scenario: that oil would stay at roughly US$100 a barrel for the next couple of decades, something that’s already changed.

“In my professional judgment, Kelly’s evidence left a lot to be desired,” Eliesen said. “It didn’t have the usual disclaimers; it didn’t have the sensitivity analysis.”
(A sensitivity analysis would have accounted for alternate scenarios, not just the $100-a-barrel projection.)

No one from Kinder Morgan was available to comment further on what evidence the company was using to replace Kelly’s analysis. Kelly’s NEB appointment takes effect Oct. 13, and he will not be part of the three-person panel that makes a final recommendation on the pipeline proposal.

Kelly is listed as a vice-president of IHS, a Calgary-based consulting firm, and he’s held senior positions with Shell Canada.   

According to Tara O’Donovan, a spokeswoman for the NEB, the board’s chairman, Peter Watson, was involved in the appointment process, but it’s the Governor in Council (advised by cabinet) that makes the final call on appointments.

When asked if Kelly would have any influence on the NEB’s decision on the Trans Mountain file, O’Donovan said the panel reviewing the pipeline expansion will make its decision independently of the rest of the board.

The appointment and delay have been further frustrations for North Shore NOPE, one of the local groups granted intervenor status for the NEB’s hearings into the project.

The group’s founder, Janice Edmonds, said she had purchased flights to Calgary so she could be present for Trans Mountain’s arguments before the board and her group has been counting on a Sept. 24 hearing date.

“People have arranged their whole summer. We’ve had this deadline of Sept. 3 for preparing our written argument. We’ve been working really, really, really hard, giving up our summer holidays to prepare this evidence and final argument and all of that is now cancelled,” she said.

Edmonds said Kelly should not have been appointed in the first place. “Why would he be appointed to an organization that’s supposed to be independent and neutral and make good decisions that are supposed to be in the best interest of Canadians?” she asked. “It’s obvious, even to somebody like me that it’s a conflict of interest.”

Edmonds also questioned the timing of the announcement and speculated that the Oct. 19 federal election may have been a factor. “I’m sure they didn’t want to have the hearings when they knew there’d be lots of protesting and lots of media coverage of the hearings,” she said.

— with files from Brent Richter. Jennifer Moreau is a reporter at Burnaby Now.

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