Annual Report 2014 to Parliament
It was my honour to be appointed the role of Chair and CEO of the National Energy Board in June 2014. The Board also welcomed Lyne Mercier (Board Member) as the new Vice Chair in June.
In my first six months at the Board, I have seen firsthand the excellent work of our highly skilled staff. I have observed on numerous occasions that everyone here is dedicated and passionate about the work they do, a nd truly care about making a difference in protecting the interests of Canadians. Our staff feel personally responsible for helping to ensure the safety of Canada’s energy infrastructure. They share a passion for the public service, a commitment to fairness, taking responsibility and doing the right thing. This is certainly evident when you look at all that was accomplished over the course of 2014 namely the following:
- The launch of the Safety and Performance Dashboard in March provided us with the opportunity to be open with Canadians on key safety and environmental protection data collected by the Board. We understand that Canadians want to know more about how regulated companies perform, and sharing this type of information with the public supports our goal of being more transparent. Going forward we will ensure that even more of this type of information is always readily accessible.
- Also in March, the Board approved the Enbridge Line 9B Reversal and Line 9 Capacity Expansion Project. During the hearing participants brought forward a variety of valuable perspectives and information. As a result of this process, our approval was subject to conditions; conditions we imposed to protect the public and the environment. The project is in the public interest and Canadians can be confident that we take our oversight role seriously and, that we will never take public safety and environmental protection for granted.
- We issued the Hearing Order for the Trans Mountain Expansion project in April which started the NEB’s hearing process. This review is one of the most comprehensive in the NEB’s history. There are 400 intevenors, more than any previous hearing. We will hear from 1,260 commenters and more than 45 Aboriginal groups who have presented oral traditional evidence. We expect to submit our report in early 2016 to the federal government regarding whether this project should proceed. In October, TransCanada submitted their application for the Energy East Pipeline project, which is proposed to run from Alberta to New Brunswick. This review will examine the longest proposed pipeline project in the Board’s history. In addition to these projects, in total for 2014, we received nearly 600 applications for facilities, imports, exports, tolls and tariffs - making this a very busy year for the Board.
I believe that in order for the NEB to achieve our mandate and do the best job possible, we need to better understand what the public is thinking when it comes to pipeline safety and environmental protection. This is precisely why, in my opinion, there has never been a better time to engage with and listen to Canadians. So I was very pleased to announce in November that we would be launching a National Engagement Initiative in early 2015. Through discussions and meetings, we want to hear firsthand about how we can improve our approach to safety and environmental protection. We take our job as Canada’s national energy regulator seriously, including the need to continually improve.
This is the beginning of a new era for the Board. While I am confident in the strong regulatory regime we have in place, there is always room to get better. You have my commitment that energy regulation at the NEB will continue to be world class and, that we will learn and adapt, as required, to keep it that way.
Who We Are and What We Do
The National Energy Board is Canada’s energy and safety regulator. We do not simply make a decision on a project and then walk away. We oversee safety for the full lifecycle of energy facilities — from approval to construction to operation to abandonment. We work alongside communities and share the same goal of making energy infrastructure the very safest it can be.
The staff of the National Energy Board is made up of highly skilled employees including: engineers, environmental specialists, auditors, inspectors, engagement staff, legal and administrative specialists, and others. We are proud of the work we do protecting the interests of Canadians. Whether it’s managing public hearings, building a better Web site, recruiting talented new employees or walking pipelines conducting inspections - we know our work makes a difference in keeping energy infrastructure safe and reliable.
In order for the Board to effectively serve the Canadian public, we know they need to have confidence in the regulatory regime and believe in the Board’s ability to enforce the orders, rules and regulations that are in place to protect Canadians, their communities and their environment.
Our work goes beyond approving projects and penalizing those who don’t follow our rules. We are here to serve the Public. We want to make certain that Canadians know they have a regulator they can rely on, because the Canadian Public interest is at the heart of everything we do.
In order to achieve our core mandate, the Board has outlined three strategic priorities where we will:
- continue to strategically develop, refine and communicate our actions on pipeline safety and environmental protection;
- continue to focus on safety outcomes supported by a more strategic approach to engaging with Canadians; and;
- develop and implement a framework for regulatory excellence.
Back (left to right): Jacques Gauthier, James Ballem, Peter Watson, Ron Wallace, Bob Vergette and Shane Parrish
Front (left to right): Mike Richmond, Allison Scott, David Hamilton, Lyne Mercier, and Phil Davies
Absent: Roland George and Kenneth Bateman
Our Role and Responsibilities
The National Energy Board (NEB or Board) is an independent federal regulator established in 1959. Our mandate is to promote safety and security, environmental protection and economic efficiency in the Canadian public interest, in the regulation of pipelines, energy development and trade. The Board reports to Parliament through the Minister of Natural Resources.
In 2014, the NEB-regulated approximately 73,000 kilometres of interprovincial and international pipelines along with approximately 1,400 kilometres of international power lines across Canada.
The pipelines, owned by 101 companies, shipped approximately $159 billion worth of crude oil, petroleum products, natural gas liquids and natural gas to Canadians and export customers at an estimated transportation cost of $7 billion. Overall, 31 companies had ownership of NEB-regulated international power lines which transmitted approximately $3.6 billion of electricity into and out of Canada.
The main responsibilities of the NEB are established in the National Energy Board Act (NEB Act). More information on the background and operations of the NEB can be found on the Board’s website, www.neb-one.gc.ca.
Full Cycle Regulation
The Board regulates Canada’s federal energy infrastructure over its complete life-cycle. During the design phase of the project we review and impose conditions. When they are being built, we inspect. When they are being operated, we audit. And when a pipeline has reached the end of its usefulness, we review abandonment applications to ensure that it is abandoned in a safe and environmentally responsible manner.
In other words, the Board regulates from “start to finish”, and holds pipeline companies responsible for the full life-cycle of the pipelines they operate.
We also require the companies we regulate to anticipate, prevent, manage, and mitigate any potentially dangerous conditions associated with their activities. Our Board Members and staff will not hesitate to use our full enforcement toolkit to achieve compliance with rules and regulations protecting safety and the environment.
Energy Infrastructure - Today and Tomorrow
Canadians depend on the pipeline transportation system for safe, reliable and efficient energy supply, now and in the future. The ability of this system to safely deliver natural gas, natural gas liquids (NGLs), crude oil, and petroleum products is also critical to Canada’s economy. The NEB is active and effective in Canada’s pursuit of a sustainable energy future by integrating relevant economic, environmental and social considerations when choosing a course of action.
Our requirements encourage innovation where possible but also specify mandatory design, operational practices or management methods when necessary. The regulatory framework supports a sustainable energy system that will meet Canadians’ needs today, while taking into consideration the needs of Canadians tomorrow.
Applications in 2014
Companies regulated by the NEB are required to seek the Board’s approval to, among other things:
- construct and operate international and interprovincial pipelines and international power lines in Canada, along with related facilities and activities, or modify or abandon existing facilities;
- export crude oil, natural gas liquids and electricity, and export and import natural gas; and
- establish pipeline tolls and tariffs.
|Section 52 certificates||3||4|
|Section 58 orders||41||44|
|Part VI Import/Export||412||511|
|Traffic, Tolls and Tariffs||18||15|
Decisions and Recommendations Issued in 2014 Include the Following:
Edmonton to Hardisty Pipeline Project
On 30 January 2014, the Board recommended that Governor in Council (GiC) approve the issuance of a Certificate of Public Convenience and Necessity (Certificate) to Enbridge Pipelines Inc. (Enbridge) for the construction and operation of a new 182 km pipeline from Enbridge’s existing Edmonton Terminal to its existing Hardisty Terminal in Alberta, subject to 17 conditions.
The Project would also include construction of a new initiating pump station at the Edmonton Terminal, a new pump station at each of Enbridge’s existing Strome and Kingman stations, and associated facilities and infrastructure at the Edmonton and Hardisty Terminals. The Board approved these additional facilities, subject to 14 conditions. The Order approving the additional facilities will take effect only if the Certificate is issued. The Board also approved Enbridge’s proposed tolling methodology for the Project, subject to the Certificate being issued. Please see the NEB’s website to read the complete recommendation and decision. (OH-001-2013)
Abandonment of the North Reagan Pipeline
On 6 May 2014, the Board granted Glencoe Resources Ltd. leave to abandon in-place the approximately 215-metre North Reagan Pipeline and associated surface equipment (Pipeline), subject to eight conditions. About 200 metres of the Pipeline are located within Canada and 15 metres are within the United States. Please see the NEB’s website to read the complete decision. (MHW-001-2014)
Integration Asset Transfer
On 16 October 2014, the Board approved an application from Nova Gas Transmission Ltd. (NGTL) to sell certain assets to ATCO Gas and Pipelines Limited (NGTL Transferred Assets), and granted NGTL leave to purchase certain assets from ATCO Gas and Pipelines Ltd. (ATCO Transferred Assets). The NGTL Transferred Assets are comprised of 31 delivery and 89 receipt meter stations and 1,418 km of pipeline. The ATCO Transferred Assets are comprised of 11 delivery and 19 receipt meter stations, one compressor station and 1,249 km of pipeline. The Board also recommended that GiC approve the issuance of a Certificate for the ATCO Transferred Assets that would come into the Board’s jurisdiction as well as the variation of an existing Certificate to reflect the NGTL Transferred Assets leaving the Board’s jurisdiction. The Board granted NGTL leave to open the facilities, and approved NGTL’s proposed Monetary and NonMonetary Adjustments, should a Certificate be issued. Please see the NEB’s website to read the complete recommendation and decision. (GH-002-2014)
Tolls and Tariffs
TransCanada PipeLines Ltd. 2015 to 2030 Tolls
On 28 November 2014, the Board approved revised tolls and tariff for TransCanada PipeLines Ltd.’s Mainline System. Reasons for Decision were issued on 18 December 2014. TransCanada applied for approval of a settlement agreement (Settlement) for its Mainline System. The Settlement was reached between TransCanada and three Canadian local distribution companies - Enbridge Gas Distribution Inc., Union Gas Ltd. and Gaz Métro Limited Partnership. After a comment process among TransCanada shippers and stakeholders, the Board found it could not approve the Settlement as a contested settlement under the Board’s Settlement Guidelines. In April 2014, TransCanada agreed to the Board’s offer to treat the Settlement as a contested tolls application. The Board approved the applied-for design for Mainline tolls for 2015 to 2020. In principle, the Board approved certain parameters for a toll-setting methodology up to 2030. The Board decided to maintain pricing discretion established in the RH-003-2011 Decision but directed TransCanada to provide remedies preventing access to and the use of non-public, shipper-specific information in its exercise of pricing discretion. The Board directed TransCanada to file an application prior to 31 December 2017 to review the ongoing appropriateness of the approved toll design for the 2018 to 2020 period. Please see the NEB’s website to read the complete decision. (RH-001-2014)
Part VI - Imports and Exports
Jordan Cove LNG Export License
On 20 February 2014, the Board approved an application by Jordan Cove LNG for a license to export liquefied natural gas (LNG), subject to GiC approval. Following a written process, the Board determined that the quantity of gas proposed to be exported by Jordan Cove LNG is surplus to Canadian needs. Jordan Cove LNG’s request for exemption from the Reporting Regulations was denied; however, the Board accepted Jordan Cove LNG’s request for a 15 per cent annual tolerance and a 10-year sunset clause. The export license authorizes Jordan Cove LNG to export 442.68 billion cubic metres (109m³) over a 25-year term. LNG will be exported from Canada at the natural gas pipeline export points near Kingsgate and Huntingdon, British Columbia. Please see the NEB’s website to read the complete decision. (OF-EI-Gas-GL-J705-2013-01 01)
Triton LNG Limited Partnership Export License
On 16 April 2014, the Board approved an application by Triton LNG LP to export LNG, subject to GIC approval. The Board determined that the quantity of gas proposed to be exported by Triton LNG LP is surplus to Canadian needs. Triton LNG LP’s request for exemption from the Reporting Regulations was denied; however, the Board accepted Triton LNG’s request for a 15 per cent annual tolerance and a 10-year sunset clause. The export license authorizes Triton LNG to export 93.725 billion cubic metres (109m³) over a 25-year term. LNG will be exported from Canada at the outlet of the loading arm of a proposed natural gas liquefaction terminal to be located in the vicinity of Kitimat or Prince Rupert, British Columbia. Please see the NEB’s website to read the complete decision. (OF-EI-GasGL-T293-2013-01 01)
Oregon LNG Marketing Company, LLC Export License
On 1 May 2014, the Board approved an application by Oregon LNG Marketing Company, LLC (Oregon LNG) to export LNG, subject to GiC approval. The Board determined that the quantity of gas proposed to be exported by Oregon LNG is surplus to Canadian needs. The Board accepted Oregon LNG’s request for a 15 per cent annual tolerance and a 10-year sunset clause. The export license authorizes Oregon LNG to export 375.17 billion cubic metres (109m³) over a 25-year term. LNG will be exported from Canada at the natural gas pipeline export points near Kingsgate and Huntingdon, British Columbia. Please see the NEB’s website to read the complete decision. (OF-EI-Gas-GL-O113-2014-01 01)
Aurora LNG Ltd. Export License
On 1 May 2014, the Board approved an application by Aurora LNG Ltd. to export LNG, subject to GiC approval. The Board determined that the quantity of gas proposed to be exported by Aurora LNG is surplus to Canadian needs. The Board accepted Aurora LNG’s request for a 15 per cent annual tolerance and a 10-year sunset clause. The export license authorizes Aurora LNG to export 849.82 billion cubic metres (109m³) over a 25-year term. LNG will be exported from Canada at the outlet of the loading arm of a proposed natural gas liquefaction terminal to be located in the vicinity of Prince Rupert, British Columbia. Please see the NEB’s website to read the complete decision. (OF-EI-Gas-GL-A777-2013-01 01)
Service Standards and Results in 2014
Service standards are an essential tool in today’s resultsbased management environment. The NEB has its own internal service standards for many regulatory functions and services.
The Board communicates to the public and stakeholders the expected timeline in which an application or request will be processed, having due regard to the assessment it must carry out to fulfill the NEB’s mandate as stipulated in the legislation.
The following tables 1, 2 and 3 list the overall NEB service standards and results, as well as the standards and results for electricity export applications and section 58 applications in 2014.
Table 1 - NEB Service Standards and Results in 2014
|Task||Service Standard||No. of Applications or Requests||Results|
|Release of Hearing Decisions and Recommendations||100 % of Reasons for Decision or Recommendation for applications under s.52, 58 or 58.16 completed no later than 15 months from the Board’s determination.||3||100%|
|Release of Hearing Decisions and Recommendations||80% of Reasons for Decision or Recommendations for applications other than s.52, 58 or 58.16 completed within 12 weeks following a public hearing.||5||100%|
|COGO Act Applications to drill a well||Decision rendered within 21 calendar days of the receipt of a complete application||0||n/a|
|COGO Act Applications to alter the condition of a well||Decision rendered within 21 calendar days of the receipt of a complete application||4||100%|
|COGO Act Geological and Geophysical Applications||Decision rendered within 30 calendar days of the receipt of a complete application||3||100%|
|Authorization for export of crude oil and/or petroleum products||Two working days (short-term orders only)||36||100%|
|Authorization for export and import of natural gas||Two working days (short-term orders only)||232||99%|
|Authorization for export of NGLs||Two working days (short-term orders only)||14||100%|
|CPR Act Applications
Significant Discovery Applications on frontier lands
|80% of decisions rendered within 90 calendar daysfrom the day that all information is available to begin the evaluation process||0||n/a|
|CPR Act Applications
Commercial Discovery Applications on frontier lands
|80% of decisions made within 90 calendar days from the day that all information is available to begin the evaluation process||0||n/a|
|Landowner Complaint Process||100% of requests responded to within 10 calendar days||19||100%|
|Financial Audits||80% of draft audit reports will be sent to the company within eight weeks of field work completion||2||100%|
Table 2 - Service Standards and Results for Electricity Export Applications in 2014
|Category||Category Description||Service Standard||No. of Applications||Results|
|A||Minor complexity of issues||80% of decisions released within 40 calendar days following the completion of the Notice of Application period||9||100%|
|B||Moderate complexity of issues||80% of decisions released within 90 calendar days following the completion of the Notice of Application period||0||n/a|
Table 3 - Service Standards and Results for Section 58 Applications in 2014
|Category||Category Description||Service Standard||No. of Applications||Results|
|A||Minor complexity of issues with no third party interest||80% completed within 40 calendar days of the receipt of a complete application||8||100%|
|B||Moderate complexity of issues with possible third party interest||80% completed within 90 calendar days of the receipt of a complete application||25||96%|
|C||Major complexity of issues with likely third party interest||80% completed within 120 calendar days of the receipt of a complete application||6||83%|