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A Regulator’s Perspective on Pipeline Security [PDF 123 KB]

Gaétan Caron
Chair and CEO
National Energy Board

2013 International Pipeline Security Forum
Ottawa, Ontario

30 October 2013

Introduction

I am pleased to be here today to talk about the National Energy Board’s perspective on pipeline security, which is clearly an important issue for all of us.

I would like to take this opportunity to recognize the organizers and cohosts of this Forum: Felix Kawmena with Natural Resources Canada and Jack Fox with the American Transportation Security Administration. They have lead roles, within their respective agencies, for putting this Forum together and I congratulate them on their efforts and success in putting together an interesting and impressive agenda.

I would also like to take this opportunity to recognize Jack and the rest of his Pipeline Security Group within the Transportation Security Administration for their commitment to pipeline security. We enjoy a close and productive connection between our two agencies which is essential given the critical importance of pipelines traversing our borders.

We recognize the value of partnerships and, to that end, the NEB also maintains a close working relationship with provincial regulatory counterparts across Canada, and other federal agencies in Canada and the United States to promote cooperation, and share information and best practices with respect to pipeline security.

Historical review of the NEB’s role regulating pipeline security

The Board takes safety, security and environmental protection seriously, and all are entrenched in two of our four Strategic Goals, which are:

  • NEB-regulated facilities and activities are safe and secure; and,
  • The environment is protected throughout the lifecycle of NEB-regulated facilities and activities.

In April 2005, the National Energy Board Act was amended to explicitly include “security” within the Board’s mandate and provided the basis for regulating security for the energy infrastructure under our jurisdiction. As a result of these changes to our Act, the Board issued Proposed Regulatory Change notices in 2006 and 2010.

  • The 2010 regulatory change required regulated companies to have a security management program in accordance with the CSA Z246.1 Security Management for Petroleum and Natural Gas Industry Systems. This Standard promotes a risked based approach to protect energy infrastructure from malicious damage. It includes criteria for establishing a security management program to ensure security threats are identified and managed.

2013 has been a significant year for security at the NEB; in April the revised Onshore Pipeline Regulations were promulgated and now include security. I would like to draw your attention to two areas within these Regulations where security is addressed:

  • First, Section 47.1 of the OPR sets out the requirements for our companies to have a Security Management Program that anticipates, prevents, manages and mitigates conditions that could adversely affect people, property or the environment.
  • Second, CSA standard Z246.1 (Security Management for Petroleum and Natural Gas Industry Systems) has been explicitly incorporated by reference into the Regulations, and made applicable to the design, construction, operation and abandonment of NEB regulated pipelines.

Understanding the past year

This year has been one of change for the NEB, further strengthening our regulatory mandate to achieve continual improvements in all areas of safety. At a high-level, the Jobs, Growth and Long-term Prosperity Act brought about key changes for the NEB.

  • The Government of Canada provided the NEB with an additional $13.5 million to hire staff to increase inspections by 50% to 150 and double the number of comprehensive audits to 6.
    • From April 1, 2012 to March 31, 2013, we conducted 182 inspections, exceeding our target, and conducted the expected number of audits.
  • In addition, Administrative Monetary Penalties came into force on July 3, 2013, to promote safety and environmental compliance.

This year has also been interesting in terms of the increasing interest from the public in our work.  This is important because the Board is charged with regulating pipelines, energy development and trade in the Canadian public interest, defined as: The public interest is inclusive of all Canadians and refers to a balance of economic, environmental and social considerations that changes as society’s values and preferences evolve over time.

  • Within its hearing process the Board hears from persons and groups that are directly affected. They may have the opportunity to write a letter of comment or file evidence, ask questions and present argument about a proposed application.

It is important to recognize that  we have seen a shift in public interest with respect to pipelines and energy projects overall  this past year, including:

  • Increased public scrutiny of major projects such as Northern Gateway, Keystone XL and Line 9 in Ontario and Quebec;
  • Increased expectations of environmental accountability from the public; and
  • Growing concern over the safety of energy infrastructure.

I believe it would be fair to say these issues have security implications for everyone in this room.

  • In our case, we have faced new and unique challenges around safety and security at our hearings and other public events. 
  • Our security inspector’s focus continues to be on our regulated company’s security management programs and the processes within these programs that enable our companies to monitor and adapt to changes in the security environment.

I am going to shift to talk about safety culture at this point, because of the importance of security in ensuing and maintaining safety. 

  • An industry-wide effort to achieve a strong safety culture will increase protection of the public, workers and the environment and at the same time help to strengthen public trust in the energy sector and its regulators, a critical component to its continued success.

Management Systems

The NEB believes that carefully designed and well-implemented management systems are the best way for the energy sector to keep people safe and protect the environment.

The Board has further clarified requirements for management systems, as part of the amendments to the Onshore Pipeline Regulations. Management systems must now:

  • apply to the key company programs for safety, pipeline integrity, security, environmental protection, emergency management, and security;
  • be in place throughout each phase of the lifecycle of the pipeline - from design, construction, operation and all the way through to abandonment; and,
  • integrate the company’s operational activities and technical systems with its management of human and financial resources.

The management system approach will ensure continual improvement and will support a lasting culture of safety within operating companies.

Performance Measures

Also this past year, the Board has started to require companies to report on leading and lagging measures for pipeline performance to provide an overview of a company’s effectiveness in meeting management system program objectives.

  • These new reporting requirements are set out in a letter to specified NEB Regulated Companies in March 2012.

There are two specific performance measures we developed that are particularly relevant for this discussion. The first is safety management, including reporting on such issues as facility safety inspections, outstanding safety issues, and assessment of near misses.

  • An example of an indicator of an outstanding safety issues is adequate safety systems. We are asking companies to measure this in terms of the number of completed corrective and preventative actions identified for operations, maintenance and construction.

The second performance measurement area I would like to highlight is security. A measure was developed to focus on employees, who are a company’s greatest security asset; they all need to have knowledge of the security management program, as well as their role and responsibilities within the program.

  • The indicator for this performance measure is training and competency. We are requiring companies to measure this in terms of the ratio of company employees who have current security training.

We are of the view that well-chosen performance measures allow industry, regulators and the public to more effectively focus on hazards and risk management, gathering consistent and comparable data for continual improvement. Company analysis of the information gathered through performance measures should lead to reduced incidents (assisting companies in striving for zero incidents), continual improvement in safety outcomes and appropriate allocation of financial and human resources.

Safety Culture

The Board sees the next step in improving company performance being a focus on safety culture. Culture influences what people see, hear, feel, and say. Perhaps most importantly, it influences the decisions and actions (behaviors) of people in an organization, and these behaviors ultimately drive safety outcomes and performance.

  • An effective safety culture is about more than just avoiding slips, trips and falls. Safety management is made up of several different strategies and activities designed to eliminate or reduce risk to the public, workers, the environment and assets.

An effective safety culture includes but is not limited to:

  • leadership commitment, accountability and adequate resourcing;
  • effective communication between employees and management, without fear of reprisals, about potential  hazards and system deficiencies;
  • employee participation  and input in organizational safety-related activities; and
  • continual learning from internal and external experiences with the goal of identifying  all  hazards and advancing safety through comprehensive risk management.

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.

  • A leadership commitment to safety helps focus attention on prevention as the priority and reduce incidents of all varieties.

Final Points

The Board has embarked on a journey to continually improve our requirements around all forms of safety.

In June this year, the NEB held a Safety Forum in Calgary, Alberta. This was a key action committed to by the Board in its Action Plan on Safety and Environmental Protection.

  • The key areas discussed at the Forum included corporate leadership’s role in building and maintaining a safety culture, effectiveness of management systems and performance measurement’s role in risk management.
  • It was at the Forum that the NEB confirmed that a goal of zero incidents is not only the right goal, but also an achievable goal. 

As noted in our Safety Forum Report, next steps will include:

  • Undertaking a public consultation on safety culture in order to develop a clear definition, attributes and indicators;
  • Developing guidance intended to improve the prevention of catastrophic events;
  • Improving how Canadians get the regulatory information they want and need;
  • Setting a path for continual improvement through collaboration with other regulators, and reporting on safety and enforcement tools the Board has recently implemented such as Administrative Monetary Penalties.

The Board will deliver on the first commitment from this report in October of this year by releasing a discussion paper that includes a draft safety culture definition and framework for public consultation.

We also expect our regulated companies to demonstrate a similar commitment to continually improving their safety culture in the months and years ahead.

I will be happy to address any questions that you may have.

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