Canada's Pipeline Regulator Under Fire From New Liberal Government
Canada's National Energy Board has failed to monitor the construction and maintenance activities of the nation's top pipeline shippers and enforce safety mandates, said Julie Gelfand, commissioner of environment and sustainable development in the office of the auditor general. In a report released in January, Gelfand said the regulator struggled to track companies' compliance with pipeline approval requirements, lacked emergency-response preparedness and needed more skilled engineering capacity.
The release of the audit comes at critical point for pipeline development efforts in Canada. Supporters say pipelines could help lower the nation's trade deficit and diversify markets for oil and natural-gas resources, but environmentalists and an increasingly skeptical general public question the government's ability to regulate the oil-and-gas industry. When the audit was released, the National Energy Board (NEB) was conducting hearings on Kinder Morgan's proposed $5.8-billion Trans Mountain Pipeline expansion project in Burnaby, British Columbia, while hundreds of local residents and environmentalists protested the project.
Opponents have said the approval process has been tainted by the appointment of a former Kinder Morgan consultant to the board and the fact that public intervenors were not allowed to cross-examine Kinder officials. In a January letter to newly elected Liberal Party Prime Minister Justin Trudeau, Burnaby Mayor Derek Corrigan accused the NEB of “systematic unfairness” in failing to respond to public inquiry and asked Trudeau to suspend Trans Mountain's application. “It is evident that the NEB process is broken,” Corrigan said. Shortly after, Trudeau promised opponents of TransCanada's $15.7-billion, 4,600-kilometer Energy East Pipeline that he would move to implement an additional climate test—not administered by NEB—to forecast a pipeline's life-cycle greenhouse-gas emissions before the pipeline could be approved. This step could add a year to the approval process, Trudeau said.
Adding more time to pipeline reviews can't be good news for an oil-and-gas industry hard-hit by falling prices. The proposal demonstrates the Canadian public's uneasiness about the oil-and-gas sector. Scrutiny of the NEB is at an all-time high. Last summer, the Canadian Energy Pipeline Association publicly criticized NEB for its lack of technical expertise, and the agency itself admitted to having problems recruiting and retaining enough engineers to inspect existing pipelines and examine applications for new projects.
In July, ENR reported that two of NEB’s senior engineers, Ian Calhoun and Jim Paviglianiti, were under investigation by the Association of Professional Engineers and Geoscientists of Alberta (APEGA) for the handling of a 2014 safety probe of pipeline operator TransCanada. Evan Vokes, one of two TransCanada whistle-blowers who brought the complaint against NEB to APEGA, said it addressed “unskilled practice.” Vokes said the environment commissioner's audit of the NEB echoed what he has been telling Canadian officials for years—that the NEB is too business-friendly and composed of too many lawyers and not enough engineers; further, it does not do enough to inspect pipelines and enforce penalties for safety violations.
“They should have acted on the evidence I brought them. They have a duty of care to protect the public. My testimony to the senate was true—that the NEB is the root of the problem,” Vokes says. With a case before the Canadian Supreme Court, the question of regulator accountability for industry malfeasance is a major issue in Canada at the moment. In Jessica Ernst v. Alberta Energy Regulators, a Rosebud, Alberta, landowner is suing Alberta Environment and Sustainable Resource Development, “claiming [the agency owes] her a duty to protect her water supply and had failed to address her complaints about EnCana,” a natural-gas producer and distributor, said the Canadian Supreme Court in an online case summary.
“NEB isn't directly involved, but they have a lot at stake in this case because it could set a precedent of holding regulators accountable for negligence in protecting the public,” Vokes says. “I think APEGA is waiting on the ruling in this case before it concludes its investigation of NEB's engineers.”
In an statement mailed to ENR, Canada's pipeline regulator said it made no secret of its problems recruiting and keeping engineers and notes that it already is working to improve its oversight of the oil-and-gas industry. Further, the NEB said it welcomed Trudeau's plan to supplement its pipeline approval process.
"The government has added measures to supplement the rigorous regulatory reviews that the NEB conducts. NEB project reviews will continue within the current legislative framework. The NEB welcomes the clarity that this announcement brings,” said Craig Loewen, spokesman for the board. “These additional measures will provide confidence for Canadians who are more engaged than ever in the discussion about energy infrastructure. The NEB remains committed to a rigorous environmental assessment and regulatory review of projects and will implement the interim measures.”
The Canadian Energy Pipeline Association (CEPA) says 122 liquids and natural-gas spills and releases occurred between 2010 and 2015—with four being categorized as "significant." The industry, however, maintained a 99% safe delivery record and spent $2.9 billion to maintain and monitor member pipeline systems, the association said. CEPA added that 45,306 km of pipeline were inspected in 2014.