Guidance Notes and Exemption Order - Decommissioning Provisions, Amendments to the Onshore Pipeline Regulations, 1999 (OPR) and National Energy Board Processing Plant Regulations (PPR)

Guidance Notes and Exemption Order - Decommissioning Provisions, Amendments to the Onshore Pipeline Regulations, 1999 (OPR) and National Energy Board Processing Plant Regulations (PPR) [PDF 92 KB]

Ad-GA-RG-OPR 01 and Ad-GA-RG-PPR 01
2 October 2008

To: All Companies under the National Energy Board's Jurisdiction,
and Other Interested Stakeholders

Amendments to the Onshore Pipeline Regulations, 1999 (OPR) and National Energy Board Processing Plant Regulations (PPR) and Guidance Notes and Exemption Order - Decommissioning Provisions

Decommissioning amendments to the Onshore Pipeline Regulations, 1999 and the National Energy Board Processing Plant Regulations have come into force as of their publication in the Canada Gazette Part II on 17 September 2008. These amendments create a requirement to apply to the Board when a company is planning to permanently cease operation of facilities where the cessation does not result in a discontinuance of service.

Guidance Notes and Exemption Order XG-XO-100-2008 that accompany the decommissioning amendments are attached. The Board developed the Guidance Notes and Exemption Order in parallel with the amendments to ensure clarity and consistency. During initial consultations on the amendments in 2003, the Board determined that many suggestions could be addressed in guidance notes or in a decommissioning exemption order. Draft guidance notes and an exemption order were prepared and discussed with stakeholders.

Subsequent to 2003, the Board made some important changes to its section 58 Streamlining Order [Folder 255376] and also issued the new Requirements for the Operations and Maintenance Activities on Pipelines Regulated under the NEB Act. The draft decommissioning guidance notes and an exemption order were revised in the spring of 2007 considering the new section 58 Streamlining Order requirements, and efforts have been made to avoid duplication.

Stakeholders were given a final opportunity to comment on the amendments over a thirty day period, when they were published in the Canada Gazette, Part I on 10 November 2007, and when the Board issued a letter on 14 November 2007 offering the same. The Board received two letters of comment which did not result in any changes to the amendments. Stakeholders also had a final opportunity to comment on the Guidance Notes and Exemption Order over the period 14 November 2007 to 15 January 2008. The Board received one letter of comment and some informal comments which resulted in some wording changes to clarify meaning in the Guidance Notes. No changes were made to the Exemption Order.

The Board intends to monitor compliance with the Regulations by reviewing specifications and procedures to be used by the regulated companies, by auditing their records and activities to determine their adequacy and effectiveness, and by performing inspections of onshore pipelines during their operating life.

The Board's Gas/Oil Pipeline Uniform Accounting Regulations require companies to retire from their books any assets which have been removed from service. Accordingly, the decommissioned assets should be removed from rate base for toll purposes. In their annual reporting, Group 1 companies are to advise the Board of the proposed accounting treatment in accordance with sections 39 (ordinary retirement) or 40 (extraordinary retirement) of the Gas/Oil Pipeline Uniform Accounting Regulations.

If you have any questions related to the decommissioning amendments or the Guidance Notes and Exemption Order, please contact the Regulatory Development Team at (403) 299-3628 or toll-free at 1-800-899-1265.

Yours Truly,

Claudine Dutil-Berry
Secretary

Attachments (2)

Guidance Notes for the Decommissioning Provisions under the Onshore Pipeline Regulations, 1999 (OPR)

Definitions

"abandon" means to permanently cease operation such that the cessation results in the discontinuance of service.

"decommission" means to permanently cease operation such that the cessation does not result in the discontinuance of service.

"operate" includes repair, maintain, deactivate, reactivate and decommission.

Decommissioning Provisions

45.1 (1) If a company proposes to decommission a pipeline or part of one, the company shall submit an application for the decommissioning to the Board.

(2) The company shall include in the application the reasons, and the procedures that are to be used, for the decommissioning.

GOAL (s. 45.1): To ensure that decommissioning of a pipeline, or part of a pipeline, is carried out in a safe, efficient, and environmentally responsible manner that respects landowners' rights.

Section 74 of the National Energy Board Act requires leave of the Board to abandon a pipeline. The Onshore Pipeline Regulations, 1999 (OPR) previously defined abandon as "to remove permanently from service". The Board interpreted the abandonment provisions to require an application only where there was a discontinuation of service to end users. Now abandon means to permanently cease operation of a pipeline or part of one such that cessation results in the discontinuance of service. In contrast, decommissioning is intended to capture the permanent cessation of operation of a pipeline, or part of one, that does not result in a discontinuance of service.

Service is defined as the ability of a pipeline, as a whole, to transport hydrocarbons to an end point. For clarification, when a company's actions result in one line in a series of looped lines (collectively the pipeline) being no longer able to transport hydrocarbons, this would generally be decommissioning rather than an abandonment since, as a whole, the other looped lines are still able to transport hydrocarbons and provide the same level of service. Companies are encouraged to consult with Board staff if additional guidance is required regarding the distinction between abandonment and decommissioning.

The requirement for companies to seek approval to decommission facilities would allow the Board to examine the application to ensure the continued safe operation of the pipeline and assess the environmental effects of the project, and this could entail the same level of information required as in an abandonment application. It is important to note that a decommissioning application does not require a public hearing (although the Board could hold one if necessary) and does not trigger the Canadian Environment Assessment Act.

Companies should consult the guidance material under the Filing Manual Guide B Abandonment and section 50 of the OPR, Application for Leave to Abandon.

Guidance Notes for the Decommissioning Provisions under the National Energy Board Processing Plant Regulations (PPR)

Definitions

"abandon" means to permanently cease operation such that the cessation results in the discontinuance of service.

"decommission" means to permanently cease operation such that the cessation does not result in the discontinuance of service.

"operate" includes repair, maintain, deactivate, reactivate and decommission.

Decommissioning Provisions

43.1(1) If a company proposes to decommission a processing plant or part of one, the company shall submit an application for the decommissioning to the Board.

(2) The company shall include in the application the reasons, and the procedures that are to be used, for the decommissioning.

GOAL (s. 43.1): To ensure that decommissioning of a processing plant, or part of one, is carried out in a safe, efficient, and environmentally responsible manner.

Section 74 of the National Energy Board Act requires leave of the Board to abandon a processing plant. The National Energy Board Processing Plant Regulations (PPR) previously defined abandon as "to remove permanently from service". The Board interpreted the abandonment provisions to require an application only where there was a discontinuation of service to end users. Now abandon means to permanently cease operation of a processing plant or part of one such that cessation results in the discontinuance of service. In contrast, decommissioning is intended to capture the permanent cessation of operation of a processing plant or part of one that does not result in a discontinuance of service.

The requirement for companies to seek approval to decommission facilities would allow the Board to examine the application to ensure the continued safe operation of the processing plant and assess the environmental effects of the project, and this could entail the same level of information required as in an abandonment application. It is important to note that a decommissioning application does not require a public hearing (although the Board could hold one if necessary) and does not trigger the Canadian Environment Assessment Act.

Companies should consult the guidance material under the Filing Manual Guide B Abandonment and section 50 of the OPR, Application for Leave to Abandon.

Exemption Order for Decommissioning Projects
under the Onshore Pipeline Regulations, 1999
AND
National Energy Board Processing Plant Regulations

Exemption Order XO/XG-100-2008

IN THE MATTER OF the National Energy Board Actand the regulations made thereunder; and

IN THE MATTER OF section 45.1 of the Onshore Pipeline Regulations, 1999 and section 43.1 of the National Energy Board Procession Plant Regulations; and

IN THE MATTER OF a National Energy Board initiative regarding exemptions in respect of the decommissioning of specified pipeline facilities under its jurisdiction pursuant to section 18 and subsection 48(2.1) of theNational Energy Board Act.

BEFORE the Board on 12 June 2008.

WHEREAS section 45.1 of the Onshore Pipeline Regulations, 1999 and section 43.1 of the National Energy Board Processing Plant Regulations require an application for the decommissioning of a pipeline or processing plant (or part of either);

AND WHEREAS the Board is satisfied the projects that can be decommissioned according to the criteria set out in Schedule A are routine in nature for oil and gas pipelines or processing plants for which an order or certificate has been issued by the Board; or which was exempt from the requirements of filing under the Operations and Maintenance Activities on Pipelines Regulated Under the National Energy Board Act or section 58 Streamlining Order and are not related to commodity pipelines or to pipelines transporting sulphur or sulphur compounds for sale or disposal beyond the property limits of a gas plant;

AND WHEREAS the decommissioning projects according to the criteria set out in Schedule A are not subject to environmental assessment pursuant to the Canadian Environmental Assessment Act;

AND WHEREAS the Board has considered environmental matters related to the projects exempted according to the criteria set out in Schedule A pursuant to Part III of the National Energy Board Act and is satisfied that there will be no adverse environmental effects;

AND WHEREAS the decommissioning projects according to the criteria set out in Schedule A are conducted in accordance with applicable regulations made pursuant to the National Energy Board Act;

AND WHEREAS the Board is satisfied that the decommissioning projects according to the criteria set out in Schedule A would not likely affect the interests of persons other than those to which the respective order or certificate was issued;

IT IS ORDERED pursuant to section 18 and subsection 48(2.1) of the National Energy Board Act that the decommissioning projects listed according to the criteria set out in Schedule A, attached to and forming part of this Order are exempt from the requirement of filing an application for decommissioning, upon the following conditions:

  1. Unless the Board otherwise directs, pipeline companies and persons under the Board's jurisdiction shall, for those projects satisfying the criteria set out in Schedule A::
    1. Advise the Board in writing 10 business days prior to the decommissioning of any planned projects on the eligible projects list (Step 1 of Schedule A) for which the anticipated expenditure is greater than $1,000,000. Such reports must include a statement describing the project(s), including locations(s), and the estimated cost;
    2. Report annually, on or before 31 March of each year, all decommissioning projects commenced pursuant to this Order, as well as the total number and total cost of the listed projects; and
    3. Report immediately, in writing, to the Board on any air, soil or surface/ground water contaminants, or any hazardous wastes, as defined in section 2 of the Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations under the Canadian Environmental Protection Act, that are found during activities related to the decommissioning of the project(s), and provide a detailed description of the proposed containment, handling and/or disposal methods.
  2. Unless the Board otherwise directs, this Order shall expire in respect of the decommissioning of any specific project on 31 December in the year following the date on which the work related to the project has commenced.

NATIONAL ENERGY BOARD

Claudine Dutil-Berry
Secretary

Attachment (Schedule A)

Exemption Order for Decommissioning Projects
under the Onshore Pipeline Regulations, 1999
AND
National Energy Board Processing Plant Regulations

Schedule A
Process for Identifying Projects Subject to
Exemption Order XO/XG-100-2008

Preface

Schedule A is to be used to determine whether a project under the Act is subject to Exemption Order XG-XO-100-2008 (the Order), in which case, an application to the Board is not required.

Copies of Schedule A are not required to be physically completed, filed, or retained for those projects undertaken pursuant to the Order. However, companies and persons may be required, either upon request of the Board or during a Board audit, to demonstrate that projects undertaken pursuant to the Order were properly subject to this Order.

In determining whether a project under the Act is subject to Exemption Order XG-XO-100-2008, companies shall ensure that the project is within the list of eligible projects listed in Step 1.

It is important to note the following:

  • The Order only applies to projects related to the decommissioning of an existing oil or gas pipeline or processing plant for which a Board certificate or order is in place or which was exempt from the requirements of filing under the Operations and Maintenance Activities on Pipelines Regulated Under the National Energy Board Act or the section 58 Streamlining Order and does not apply to commodity pipelines or those pipelines transporting sulphur or sulphur compounds beyond the property limits of a gas plant for sale or disposal;
  • Projects which are captured under the Order may also be subject to other regulatory requirements which are not within the purview of the Board and it is incumbent upon the applicant to be aware of and comply with these requirements; and
  • For projects listed in Step 1, the Order applies only if the project(s) required meet ALL of the criteria set out in Steps 2 and 3 of Schedule A.

Schedule A

STEP 1: ELIGIBLE PROJECTS
1.1 The proposed project meets the requirements of the Operations and Maintenance Activities on Pipelines Regulated Under the National Energy Board Act;
1.2 The proposed project meets the requirements of the section 58 Streamlining Order;
1.3 Existing service, overall pipeline system capacity and processing plant capacity will remain unchanged.
NO
An application pursuant to Onshore Pipeline Regulations,1999 section 45.1 or National Energy Board Processing Plant Regulations section 43.1 will be required, please refer to respective Guidance Notes

If YES to ANY criteria in Step 1

   
STEP 2: THIRD PARTY INTERESTS AND LAND CONSIDERATIONS
2.1 Any concerns identified by shippers have been resolved (e.g. increase in toll, access to transportation services, impacts on service);
2.2 Public concerns about local nuisance potential (e.g. noise, odours, traffic) have been resolved; and,
2.3 Located on existing company-owned or leased land.
If NO to ANY criteria in Step 2
An application pursuant to Onshore Pipeline Regulations,1999 section 45.1 or National Energy Board Processing Plant Regulations section 43.1 will be required, please refer to respective Guidance Notes
If YES to ALL criteria in Step 2
   
STEP 3: ENGINEERING CONSIDERATIONS
3.1 The project would not involve an increase in operating pressure; and,
3.2 The project would not involve a decrease in storage capacity.
If NO to ANY criteria in Step 3
An application pursuant to Onshore Pipeline Regulations,1999 section 45.1 or National Energy Board Processing Plant Regulations section 43.1 will be required, please refer to respective Guidance Notes
If YES to ALL criteria in Step 3
   
The Exemption Order applies    
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