Irving Oil faces questions about pipeline at Canaport LNG

Irving Oil Ltd. is facing more questions about its use of a pipeline that was built on the property designated for the Canaport LNG facility.

Saint John struck a 25-year property tax deal in 2005 that was intended to encourage the development of the Canaport LNG facility.

The deal slashed the property tax bill for the LNG terminal by about 90 per cent, based on its assessment, but the agreement was only intended to apply for liquefied natural gas activity.

But Irving Oil Ltd. built a pipeline on the property and a CBC review of Port of Saint John records shows the oil company is doing three times the business of the LNG facility.

Four crude oil tankers are anchored in the Bay of Fundy waiting to unload their cargo and six more crude oil ships are scheduled to arrive in the next four weeks.

It's a constant parade of tanker traffic that is needed to supply the Irving Oil refinery's daily needs. It is also why the oil company decided to build a backup oil unloading facility at the LNG wharf.

Irving converted the LNG wharf to receive oil last year. Since September 2014, six oil tankers have unloaded at the LNG wharf.

That's triple the number of LNG tankers that used it in the same period. The disparity could be a problem for the wharf's significant property tax discount, according to one lawyer..

Matthew Pearn, a Fredericton lawyer, said the oil tanker traffic could pose a problem for the LNG tax deal.

"It's not so different from asking if you have a residential home and you start running a business out of it whether that change use violates some of the zoning regulations and whether reasonably the municipality should be looking at the owners for new revenue or restricting their uses of the property,” Pearn said.

The LNG wharf sits on a piece of property owned by Irving Oil, which is one of three included in a municipal property tax discount that was supposed to apply for LNG activity exclusively

Former Saint John mayor Norm McFarlane, who negotiated the tax deal in 2005, said other users of the property would pay full tax.

Complicating the issue, Irving Oil never actually got final permission to build the new oil pipeline.

The company is before the Energy and Utilities Board applying for retroactive approval to construct it,  even though it has already been used to unload six crude oil tankers at the LNG facility.

The controversial tax deal has fallen under fresh scrutiny in recent weeks.

Saint John Mayor Mel Norton has ordered city staff to investigate what is happening at the Canaport LNG facility and see if the company is abiding by the terms of the 2005 tax deal.

The provincial legislation that created the tax deal says it applies to property "solely for receiving" LNG. There are discussions underway at Canaport to convert the facility to manufacture and export LNG instead.

Canaport carries the highest property tax assessment in New Brunswick at $299.4 million.

Under the tax deal, however, its annual property tax bill is frozen at $500,000.

That's a 91 per cent discount on the $5.3 million in annual property taxes the facility would owe Saint John without the deal, an arrangement that does not expire until 2030.