Evidence of meeting #52 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pipeline.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Josée Touchette  Chief Operating Officer, National Energy Board
Jonathan Timlin  Director, Regulatory Approaches, National Energy Board
Robert Steedman  Chief Environment Officer, National Energy Board

4:10 p.m.

NDP

Linda Duncan NDP Edmonton Strathcona, AB

It was an Alberta one?

4:10 p.m.

Chief Environment Officer, National Energy Board

Dr. Robert Steedman

Yes. It was a very large spill, and otherwise as you described. I don't think that diminishes any of the concerns or learning that anyone may have, but it was not an NEB-regulated one. I think everything else, I would say, would apply anyway.

The Wrigley incident is an interesting one on the Norman Wells line that goes from the Norman Wells field down to Edmonton. It's a crude oil line from an oil field that has been in activity since the 1920s. The pipeline is from the 1980s. As I understand it and as you described it, these were not ruptures. They were pinhole leaks that, as I understand it as a biologist, turned out to have been quite a novel form of corrosion, and were initially related to the hydrostatic testing fluid that was used, which of course in northern Canada has to have antifreeze added or the water will freeze before they can complete the hydrostatic test. Typically, methanol is added, and the pipe is hydrostatically tested in sections.

My understanding so far is that there was an unusual form of corrosion initiated in certain sections of the pipe. That has been very carefully investigated and is much better understood now than it was at that time—

4:10 p.m.

NDP

Linda Duncan NDP Edmonton Strathcona, AB

My concern, though, is that it was not identified by the company or the NEB.

4:10 p.m.

Chief Environment Officer, National Energy Board

Dr. Robert Steedman

Yes, you are quite right about that.

The NEB assigned a member to then engage the communities, and we spent a lot of time with the communities along that section. The pipe has been repaired and all the sections of concern have either been repaired with a sleeve or cut out and replaced.

I should point out that our regulatory framework requires companies to anticipate any hazards that may apply to the facilities they operate. It requires them to prevent those through design features wherever possible and, through the management system requirements of the onshore pipeline regulations, it requires them to manage and mitigate any hazards that they can't eliminate through design.

4:10 p.m.

NDP

The Vice-Chair NDP Guy Caron

Thank you very much, Mr. Steedman. The time is up.

Thank you, Ms. Duncan.

Mr. Regan, the floor is yours for seven minutes.

March 26th, 2015 / 4:10 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

Thank you very much, Mr. Chair.

My thanks also to the witnesses for joining us today. We appreciate it very much.

Let me begin by asking you if, further to your comments, you have any recommendations to amend this legislation in order to strengthen it.

4:10 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

Thank you for the question.

We represent the board, and therefore it's an organization that really—

4:10 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

Just say no. It's okay.

4:10 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

The answer is no.

4:10 p.m.

Voices

Oh, oh!

4:10 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

Thank you very much.

According to the testimony we heard on Tuesday of this week from departmental officials, they said this bill would strengthen Canada's pipeline system by implementing new prevention measures, new preparedness and response measures, and new compensation measures.

With respect to the new prevention measures, what will this mean for the NEB? For instance, there have been reports that this legislation would require the NEB to increase the number of pipeline inspections by 50% and to double the number of yearly safety audits. Is that the case?

4:10 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

I'll turn to Mr. Timlin for the details, but let me say at the outset that the legislation contemplates a whole framework of measures and will require regulations to be passed. In terms of a lot of the detail as to how we're going to implement some of these things, this will have to come with the regulations, so that will be an ulterior process.

Mr. Timlin can probably answer your question more specifically.

4:10 p.m.

Director, Regulatory Approaches, National Energy Board

Jonathan Timlin

Thank you very much, Madam Touchette and Mr. Regan.

Specifically on your question around the number of inspections and audits, the board is required to conduct 150 inspections per year and 6 audits. We surpassed that. As I mentioned earlier, in 2014 we conducted over 350 compliance activities, of which audits and inspections were included.

With respect to the earlier point you made about the important measures with respect to prevention, I would point to two key aspects of the bill that do speak to prevention quite clearly.

One is on the improvements in the bill to the damage prevention regime. On damage prevention, of course, one of the big concerns around pipeline safety is ensuring that people who are working around a pipeline know the pipeline is there and are taking appropriate measures and steps to not damage the pipeline. Of course, if there is damage to a pipeline, this could cause a rupture or an explosion. We've worked very hard to ensure that the public is aware of the requirements in the legislation around that.

The second is on audits. An audit is a very important way that we go out and work with companies to understand their management systems.

4:15 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

I guess the question is about whether that's changing, whether or not there's been—

4:15 p.m.

Director, Regulatory Approaches, National Energy Board

Jonathan Timlin

The number of audits or inspections has not been mandated to increase as a result of Bill C-46.

4:15 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

According to the 2015-16 main estimates, funding for the regulation of pipelines, power lines, energy development, and so forth has decreased from $81.7 million—let's say $82 million— in 2013-14 to $77 million in 2015-16, which is a reduction of some $5 million, or about 6%.

Given that Bill C-46 gives the NEB a lot more responsibility and authority, I think, shouldn't your budget be increasing? It seems to me that Canadians want to see the NEB doing more of these kinds of things, not less of them, not saying, “Okay, we're mandated to do this number and that's what we're going to do, and it's not going to increase.” I think one of the big problems the industry has right now is a lack of confidence in the process.

In view of this, I think the real question is, how can Canadians have confidence you'll be able to effectively carry out these new regulatory functions if the budget for energy regulation is shrinking?

4:15 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

Thank you for your question.

I believe what you are referring to is the fact that we have sunsetting money. There's our basic budget, but then we have some sunsetting funding that refers to safety, and that is set to sunset in two years from now. Our budgeted allocation for fiscal year 2014-15 was in fact $89 million.

In terms of how we could deliver on our enhanced responsibilities that would come from Bill C-46, I would suggest that at this point it's too early to definitely say how the various measures are going to be implemented if they're passed by Parliament.

4:15 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

You're saying that money for safety is sunsetting two years from now, and that we're not going to need as much for safety, for some particular reason, two years from now as we need now.

4:15 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

That is not what I'm saying. What I'm saying is that we received some temporary funding in budget 2012 for five years, and once we get there, we'll go through the normal process of appropriations and seek extensions if required.

4:15 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

The main estimates say that funding for the regulation of pipelines, power lines, and energy development has decreased. They say that it was $81.7 million in 2013-14 and now will be $76.8 million in the coming year. That's clearly a $5-million reduction in terms of the funding for these particular purposes. You're telling me that's not correct? Because that's what's in the estimates.

4:15 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

I'm afraid I don't have the paragraph you're referring to, but our budget allocation for 2014-15 was $89 million, including the two sunsetting authorities that we have.

4:15 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

Let me put it this way. Is your funding for the regulation of pipelines, power lines, and energy development increasing or decreasing? What's going on with it? Isn't there a need for it to increase in view of all the responsibilities you have?

4:15 p.m.

Chief Operating Officer, National Energy Board

Josée Touchette

Currently, our budget allocation is not decreasing, and in estimating what the needs are going to be once Bill C-46 is passed—assuming that it passes, because we are not there yet—we will make sure we use the resources that are appropriated to us by Parliament in the best way possible for the safety of Canadians and the protection of the environment.

4:15 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

I'm going to ask a question now that's similar to the one you had a few minutes ago from Ms. Duncan. I'm looking for a written response. I'd like you to provide a written response—

4:15 p.m.

NDP

The Vice-Chair NDP Guy Caron

Mr. Regan, you have 15 seconds left.