Navigating the Storm: Safety, Engagement and Leadership at the NEB

Speech to the Alberta Chamber of Resources
By Peter Watson, Chair of the National Energy Board
Edmonton, Alberta
Friday, 6 February 2015

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Introduction

  • Thank you, Leon.
  • It is truly a pleasure to be back in front of so many familiar faces and on familiar ground - and I mean that in more ways than one, as I have just returned from the first leg of a national outreach initiative, travelling extensively in the Maritimes.
  • I have worked closely with many of you over the years, discussing how Alberta as a province can develop its resources so that environmental, social and economic dimensions are in balance.
  • Out East, I had those same discussions with the folks I met with, in terms of their provinces, but from the perspective of the national energy regulator.
  • I want to talk to you today about the NEB’s vision of that balancing act and how we plan to move ahead through what I am sure many of you have heard me describe as the eye of the storm.

The Storm

  • When people say they “know which way the wind blows” that usually means that that they have a pretty good idea of what’s what in their world and what to do about it. Well, for the NEB the wind is blowing from all directions at once.
  • The Board has found itself over the last few years in somewhat unfamiliar territory...
    • on the front page of newspapers across Canada.
  • That may not seem too strange for some of high-profile organizations represented in this room, but it is certainly a unique place for the National Energy Board, because for decades, Canada’s national energy regulator had a very low profile.
    • The NEB quietly processed applications. The public and media paid little attention.
  • But in recent years, things changed.
    • In 2008, the NEB had a total of 80 calls from the media.
    • Last year, the NEB had over 600 media calls.
  • In 2006, the NEB had 8 interveners at a TransMountain pipeline hearing for a project that went through a National Park.
    • Today, there are 400 interveners at the NEB’s hearing into the Kinder Morgan TransMountain pipeline project.
  • For some, the game changer was the 2010 BP Horizon blowout where millions of barrels of oil spilled into the Gulf of Mexico.
    • For others, it was the Enbridge pipeline rupture in Kalamazoo, Michigan later that year.
  • And when the Northern Gateway Joint Review Panel completed its work in 2013, it had reviewed feedback from 1,450 participants and received 9,500 letters of comment.
    • And very soon when the Energy East pipeline hearing begins, we estimate that over 5,000 people will be participating in the process.
    • This review could very well be the biggest hearing in the history of the National Energy Board.
    • It will examine the longest proposed pipeline project the Board has ever reviewed.
  • And the demands on us seem to hit all of the major energy issues in twenty-first century Canada;
    • to lead the climate change debate,
    • to increase market access for Canada’s energy,
    • to allow more people to participate in our process,
    • to cut red tape,
    • to go faster,
    • to go slower,
    • to ensure that pipelines never fail,
    • and to answer to all the voices in the debate and to remain neutral through it all.
  • It is, for us, a perfect storm - and we are at its centre.
  • When I was in Halifax 10 days ago, a group of students at Dalhousie University opposed to the Energy East project, protested that our meetings were not open to the public, and earlier this week a group of protestors representing 350.org, Greenpeace and the Council of Canadians showed up at our office in Calgary to deliver many thousand letters demanding changes to our process.
  • So, navigating this storm is what the NEB’s plans and priorities are focused on right now. I’m going to say more about that in a minute.

We’re in this together

  • But first, I want to take that idea of the eye of the storm even further, and suggest that everyone in this industry is in that storm, and that some of the public perceptions and indeed public expectations, toward resource development, apply equally to the companies and industry sectors, as it does to us as a regulator of the industry.
    • I am talking about the unprecedented scrutiny of business practices, of consultation, and of safety records and operational performance.
    • And, unprecedented expectations around public engagement, and transparency.
  • It’s a reality of our operating environment that the general public does not differentiate the challenges facing each sector of the oil and gas industry, or even other sectors of the resource industry.
    • Perceptions about upstream oil and gas production, say, are firmly fixed in the public’s mind when they look at downstream use of oil and gas. A major incident in any part of the oil and gas supply chain, or a failure of a tailings pond at a mining project as we saw recently in BC,  impacts  the public’s confidence in the industry as a whole.
  • So in that sense we are truly in it together, whether our business is upstream, downstream, regulatory oversight, in oil or gas or mining or some part in between.
    • Nobody can afford to be complacent in this environment, because the stakes when it comes to public trust are too high.

The NEB Balancing Act

  • Now as I mentioned earlier, those of you whom I have worked closely with in the past know my opinions about the energy debate.
    •  I have found that the public rhetoric about energy vs. the environment is too often polarized - framed as right or wrong, with winners and losers.
    • In my experience it is not that simple - it is not an EITHER/OR discussion, but rather a BOTH/AND discussion.
  • That’s one of the fascinating things about the National Energy Board - it is one of the few institutions in this country that can work towards balancing these disparate views on specific projects.
    • Every project we examine is reviewed on exactly the balancing criteria that I have spoken about: the environmental, the economic and the social aspects of the proposal.
  • This lies at the heart of our mandate to pursue the public interest, which we believe “is inclusive of all Canadians and refers to a balance of economic, environmental and social considerations that change as society’s values and preferences change over time.”
  • The 13 Members of the NEB are supported by some 450 staff from almost every professional discipline within the resource sector: engineers, environmental specialists, auditors, inspectors, lawyers, economists and engagement specialists, to name a few.
    • Our staff are well-equipped to approach and analyze a project from any angle or consideration that you could name.
  • And one thing I have learned about the Board is that everyone who works there is fiercely proud of the work we do - whether managing complex public hearings, walking pipelines to conduct inspections, or the myriad of other tasks that we perform daily to ensure that Canada’s energy infrastructure is safe and reliable.
  • So, I am confident that the Board has the right people on the job, to fulfill our mandate to regulate with full consideration of that careful balancing act which is “the public interest” of Canadians.
  • So - what about that storm - where’s that coming from? I gave you some specific examples of incidents in the past few years that have greatly influenced public perceptions of the oil and gas industry.
  • Generally, it appears that the nature of what is considered “the public interest” IS changing, and evolving over time. We are seeing it happen and it is increasingly evident in every part of Canadian energy debate.
  • So how do we do that - how do we respond to this changing public environment? How do we build public trust and confidence that we understand and are operating in the interest of all Canadians? It’s a question that the NEB is working on right now, and our strategic focus is to meet that challenge head on.

Safety, Engagement and Leadership

  • First of all: our focus is - always - on Safety.
  • Safety is the heart of the work we do - because nothing else matters if something goes wrong.
  • The NEB will continue to develop, refine and communicate the actions we take on pipeline safety and environmental protection.
  • We are putting a stronger focus on trending, root cause analysis and systemic issues, and will use that information to drive broader, more proactive compliance and enforcement.
  • And as a part of this we will focus more oversight on not just preventing incidents, but also fostering the development of an industry safety culture in which incidents are less likely to occur.
  • We have to ensure continued - and better - industry performance in this area.
    • I know that for some - particularly those in upstream sectors, this is a challenging time on a lot of fronts and the operating environment is tough.
    • But more than ever, industry needs to maintain vigilance. The focus on safety and operating excellence is not just a focus for the good times. It becomes even more critical in the tough times.
    • And the NEB is focused on demonstrating a stronger link between our targeted safety and compliance actions, and the safety performance of companies we regulate.
    • We must never become comfortable and complacent, believing that our systems for oversight are working, without ongoing testing and challenging of our approaches and the underlying assumptions we make about them. We simply cannot take our role in assuring pipeline safety and operating performance for granted. And I dare say, neither should any of you.
  • Secondly, our ongoing focus on safety outcomes will be complemented with a more strategic, intensive approach to engaging with and listening to Canadians.
  • This means reaching out to Canadians as a whole, beyond the scope of our regulatory processes, with the goal of more fully understanding regional and national needs when it comes to energy development - and also, helping Canadians better understand the NEB’s role in that.
  • Being proactive and transparent is key. We have identified a real need to demystify the work we do as the regulator - to get better at explaining our processes and the reasons behind our decisions.
  • Transparency is a big issue for Canadians right now. 
    • It is one of the reasons why the Board has decided to open two small satellite offices - one in Vancouver and one in Montreal
    • to be as open and accessible as we can be, to understanding the needs and concerns of stakeholders, and helping them understand what we do, how we do it, and how they can be involved
    • and in some cases, explaining what we cannot do or how their expectations may not be reasonable.
    • The key is to be straight with people - while developing an ongoing and enduring relationship.
  • It is time for the regulator to step out from behind their dias, and engage with people in their own communities, across their kitchen table.
  • As I mentioned earlier I, along with the some of our Board Members, have been meeting with and directly engaging Canadians on safety and environmental issues.
  • We are holding meetings in every province in order to reach a broad cross-section of Canadians - community leaders, Aboriginal groups, emergency personnel, and landowner groups, among others.
  • These sessions have started and will continue over the next few months.
    • Canadians will not like or dislike energy development or facilities any more or less because of the relationship we have with them, but they will understand who we are, what we do, and what we cannot do, and I am confident that the resulting conversations help the Board navigate the changing context of people’s expectations about for us.
    • I should mention that at the end of the cross-Canada outreach initiative we are planning to host a pipeline safety technical conference of subject matter experts in Calgary. I sincerely hope to see some of you there!
  • Our third priority for the Board is to Lead Regulatory Excellence.
    • We are committed to act and to be seen as a “world-class” regulator
  • We are working to develop and implement a framework for regulatory excellence.
    • This means taking steps to define what regulatory excellence means, and putting structure around our organizational self-assessment, bench-marking and measurement.
  • Our goal is to show, quantitatively as well as qualitatively, how we know our programs are focused on the right things and achieving the right results.

At the same time, we are following closely the work of the Alberta Energy Regulator in its best in class regulatory review. I will be attending their expert summit at the University of Pennsylvania in March, and we are looking to join the AER as a partner in this initiative at the completion of their first phase of research in June.

Conclusion

  • So - in closing I can just say that the view from the ‘eye of the storm’ is unique.
    • While controversy and change swirl around us, we at the centre of the storm will calm and think clearly about the future we are working towards.
  • And that includes all of us here today, who work in and have a voice in Canada’s resource development industry.
    • I’d like to challengeall of you, in your respective organizations, to consider how you can focus on safety (and operating) performance, better engagement and leadership - even in tougher times like we are facing now.
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