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Pipeline Safety
Opening Statement
Senate Committee on Energy, the Environment and Natural Resources

Presented by
Gaétan Caron
Chair and Chief Executive Officer
National Energy Board

5 February 2013

Introduction

Good evening honourable senators and thank you for the chance to speak with you on what the National Energy Board is doing to continually improve the safety of pipelines in Canada.

You have already heard from two of my colleagues on this topic, Patrick Smyth our Business Unit Leader of Operations and Iain Colquhoun, our Chief Engineer - two of the NEB’s top technical experts on pipeline safety. I trust that their testimony before this committee has been useful in your endeavour, which is, to understand the current state of the safety elements of the bulk transport of hydrocarbon products in Canada through NEB-regulated pipelines.

Vision for Pipeline Safety

For the NEB, protecting the interests of Canadians by keeping them safe and protecting the environment is paramount. The NEB expects regulated companies to lay a strong foundation for a pervasive culture of safety, forcefully affirmed by the organization’s leadership, rigorously documented, known to all employees, and consistently acted upon across the organization.

Regulated companies must identify all hazards and assess and mitigate the risks of those hazards to the public, workers and the environment when it comes to the construction and operation of pipelines. The NEB evaluates its regulated companies and their facilities year round to plan how it will verify compliance. As a part of this, we look at a number of criteria including a pipeline’s location, type, age, and operating history. We also look at historical information on the company’s management of these factors through previous compliance monitoring activities such as inspections and audits. Based on this information, the NEB strategically allocates resources where they can be of the greatest impact.

Evolution of Pipeline Safety

The National Energy Board’s regulations, along with our expectations of companies, continue to change as technology and the public interest evolve. The Board’s Onshore Pipeline Regulations, 1999 already require regulated companies to have comprehensive and effective programs, which are used to address operational hazards and risks. Amendments to these regulations are presently following the federal regulatory development process, which included a thirty-day comment period in which the Board heard from interested Canadians. Based on the comments we received, along with our own experience and research on best practices, the Board believes these amendments will strengthen our ability to promote pipeline safety in Canada.

Management systems are central in our strategy of continual improvement in pipeline safety. Both companies and other regulatory bodies across North America and beyond are recognizing their effectiveness and moving in the same direction. At their very essence, management systems document how people are to carry out the responsibilities of their position.

The NEB expects its regulated companies to have well developed and fully implemented management systems, which have been shown to consistently promote the protection of critical infrastructure and lead to a culture of safety. Management systems must have three key elements in order to be effective: they must be consistently applied; they must be incorporated into all areas of company operations; and they must have specific assigned accountability. Management systems must also be designed to share information and intelligence between all levels of an organization in order to promote better decisions.

The proposed amendments to the Onshore Pipeline Regulations, 1999 clarify the Board’s expectation that management systems must apply to the key program areas for which companies are responsible, those being: safety, pipeline integrity, security, emergency management and environmental protection. The amendments also require companies to have a process for internal reporting of hazards, near misses and incidents. This includes the conditions under which immunity from disciplinary action will be granted to the reporting individual. In addition, these amendments explicitly require programs and functions in management system design and implementation to be seamlessly linked to each other. This integration is essential to the proper functioning of a management system. And finally, they include new provisions holding a company’s senior leadership accountable for its management system, safety culture and the achievement of outcomes related to safety and environmental protection.

Creating a management system on paper is one thing, but fully implementing it into the day to day operations of an organization takes work. Effective management systems support a safety culture that is pervasive throughout the company. This happens when everybody in the company, from the top down, believes in safety, talks about it, promotes it and lives it. When there is a strong safety culture, leadership focuses on safety as much as the bottom line, and employees have the confidence that they will be backed up from the very top of the organization if they stop or delay a project over safety concerns.

NEB’s role in Pipeline Safety

Through its Regulations, the NEB clearly defines outcomes that each regulated company must achieve. Companies must determine how to best achieve these outcomes. The NEB then verifies the actions taken by each company through inspections, compliance meetings, emergency exercises, audits and investigations. If at any point non-compliances are found, the Board will take action using a suite of tools such as imposing safety orders that restrict operations, issuing stop-work orders and revoking authorizations, as well as pursuing criminal prosecution.

No matter the requirement, all of the NEB’s safety programs are designed to ensure companies effectively manage safety and environmental protection from the design of a pipeline to construction, operation and its eventual abandonment.

NEB’s direction moving forward

The Board will continue to demonstrate its commitment to safety and environmental protection in the months and years ahead. Parliament has provided the NEB with additional funds to hire more staff, increase the number of annual inspections for regulated companies from 100 to 150, and double the number of comprehensive audits from three to six. These measures will provide the NEB with additional “boots on the ground” to verify the pipelines we regulate are operating safely. In addition, Parliament has provided us a new enforcement tool in the form of administrative monetary penalties, which will allow us to issue financial penalties to companies, third-party contractors and individuals for violations of safety and environmental protection legislation. We will be ready to implement this new tool in July 2013.

In June of this year, the Board will host a Safety Forum. Key issues of this forum will include corporate leadership’s role in building and maintaining a safety culture, effective management systems and safety performance measurement. Since a strong safety culture begins with leadership, we expect the senior management of the companies we regulate to participate in the Forum. I firmly believe that issues discussed at the Safety Forum will contribute to a continually improving, robust industry-wide culture of safety.

The Safety Forum will feature experts such as Dr. Mark Fleming from Saint Mary’s University. Dr. Fleming has, in his own words, “spent the past 20 years working to understand safety culture in order to enhance safety”. His extensive research on safety culture has served to inform the basis of the Board’s philosophy and expectations for its regulated companies. I know he will be a valuable addition to the Forum.

Closing Remarks

Oil and gas remain important energy sources in our society. Canadians demand these resources to be developed safely and responsibly. The National Energy Board agrees and sees this as a fundamental element of the work that we do in keeping Canadians safe and protecting the environment.

Thank you once again for giving me the opportunity to address the current state of the NEB’s role in pipeline safety and our ongoing effort to look for new and better ways to improve on our core work, protecting Canadians and their interests. I will be happy to address any questions that you may have.

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