ARCHIVED – Administrative Monetary Penalty – Canadian Natural Resources Ltd. – AMP-002-2014

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Administrative Monetary Penalty – Canadian Natural Resources Ltd. – AMP-002-2014 [PDF 559 KB]

NOTICE OF VIOLATION

REFERENCE NUMBER: AMP-002-2014

Information for Pipeline Company / Third Party / Individual:

Information for Pipeline Company / Third Party / Individual
Name: Canadian Natural Resources Ltd. (CNRL)
Contact: Steve Laut
Title: President
Address: Suite 2500 05 June, 2014
855 - 2nd Street SW
City: Calgary
Province / State: Alberta
Telephone: Information not available
Fax: Information not available
E-mail: Information not available

TOTAL PENALTY AMOUNT:
$28,000

Date of Notice:
05 June, 2014

Regulatory Instrument #:
XG-C298-022-201 3

On 18 March 2014 Canadian Natural Resources Ltd. was observed to be in violation of a NEB regulatory requirement. This violation is subject to an administrative monetary penalty, as outlined below.

1. VIOLATION DETAILS

Date of Violation:
from: to: 5 March 2014 to: 5 March 2014
Total Number of Days: 1

Has compliance been achieved?

 X Yes

   No

If no, a subsequent NoV may be issued.

Location of Violation:

e.g. Facility/plant/head office or nearest geographical point
Ladyfern Pipeline

Short Form Description of Violation
(Refer to Schedule 1 of the AMP Regulations)

Provision and Short-form Description

NEB Onshore Pipeline Regulations

25 Failure to perform pressure testing as prescribed (Type B)

   
Contravention of an Order or Decision made under the Act (ss. 2(2) of the AMP Regulations)
   

Failure to comply with a term or condition of any certificate, licence, permit, leave or exemption granted under the Act (ss. 2(3) of the AMP Regulations)

2. RELEVANT FACTS

Briefly describe reasonable grounds to believe a violation has occurred

  1. On 11 December 2013, the Board issued Order XG-C298-022-2013 (Order) to CNRL under s. 58 of the National Energy Board Act (the Act) granting approval of construction activities to tie into its existing Ladyfern Pipeline (Project) and reverse the flow of the line. The Board also granted approval, via Order MO-044-2013, for CNRL’s intent to deactivate a segment of the Pipeline.
  2. On 7 March 2014, the NEB received CNRL’s Leave-to-Open (LTO) Application requesting approval for operation of the Project. In the Application, CNRL stated the pressure test started on 5 March 2014, and was terminated after a successful 8 hours test was achieved on 6 March 2014. Upon review of the Application, NEB staff had some concerns with the pressure testing procedure, and sent Informal Information Requests to CNRL on 18 and 27 March 2014, for additional information on the pressure tests.
  3. CNRL responded on 26 & 28 March 2014, stating that the testing actually lasted for approximately 22 hours due to the overnight period. CNRL confirmed that personnel did not stay on the site overnight to continually monitor and record pressures. This is in non-compliance with ss. 25(1) of the NEB Onshore Pipeline Regulations (OPR), which requires direct supervision of a company or its appointed agent during pressure testing. CNRL hydrostatically tested the pipeline with a 50/50 mixture of methanol and fresh (potable) water well above the minimum eight hours required under CSA Z662-1 1, without company supervision for the overnight period. Although the unsupervised liquid pressure test did not cause harm to people or the environment, the mixture of methanol and water could have an adverse effect on the environment if a leak or spill had occurred.
  4. On 9 April 2014, the Board issued Order GPLO-C298-003-2014 granting leave to open the Ladyfern Pipeline and noted its concern with the unsupervised pressure testing for the overnight testing period. The Board further directed the company to provide an explanation as to why it left the pressurized pipeline unattended and the steps CNRL is taking to ensure future compliance with ss. 25(1) of the OPR.
  5. On 21 April 2014, CNRL filed a response to the Board letter in which CNRL provided an explanation for the non-compliance and steps the company is taking to ensure future compliance with the requirements ofss. 25(1) of the OPR. CNRL explained that they anticipated completing the test during a one day work period. However, given the remoteness of the area, travel time, provincial workday safety requirements and seasonal temperature fluctuations, a suitable pipeline pressure was not obtained during the course of the normal workday. CNRL determined the associated risk to be very low as the pipeline was left in a stable static condition.
  6. On 2  2014, CNRL filed their Letter of Compliance as per Condition 5 of Order XG-C298-022-2013, in which they state that the Project was completed in compliance with all applicable conditions of the Order, with the exception of the pressure testing procedures.

3. PENALTY CALCULATION

(a) BASELINE PENALTY (Gravity Value = 0)

(a) BASELINE PENALTY (Gravity Value = 0)
Category Individual Any Other Person
(Type A)     $1,365     $5,025
(Type B)     $10,000  X  $40,000

[Refer to AMP Regulations, Subsection 4(1)]

(b) APPLICABLE GRAVITY VALUE

[Refer to AMP Regulations, Subsection 4(2)]

Mitigating Aggravating
-2 -1 0 +1 +2 +3
 X   Other violations in previous seven (7) years -- --  X           --
* insert additional information, as required *
 X  Any competitive or economic benefit from violation -- --  X          --
* insert additional information, as required *
 X  Reasonable efforts to mitigate / reverse violation’s effect          X          --
* insert additional information, as required *
 X  Negligence on part of person who committed violation -- --  X          --
* insert additional information, as required *
 X  Reasonable assistance to Board with respect to violation      X              --
CNRL was cooperative and provided the necessary information to NEB staff. CNRL also complied with the Board letter of 9 April 2014 within a reasonable time-frame and provided the necessary information as directed by the Board.
 X  Promptly reported violation to Board              X      --
During review of CNRLs LTO Application, NEB staff was unclear of the pressure testing supervision duration in the LTO, and had to submit an Informal Information Request for additional information before the assessment could be completed. CNRL subsequently explained that the testing lasted for approximately 22 hrs, of which 14 hrs were left unsupervised. This was not identified in the LTO Application.
 X  Steps taken to prevent reoccurrence of violation      X              --
To ensure compliance with the OPR, CNRL has instructed the appropriate personnel of the requirement for compliance and will ensure future pressure testing procedures concerning NEB regulated pipelines reflect the need for strict adherence to the requirement under ss. 25(1) of the OPR.
 X  Violation was primarily reporting / record-keeping failure          X  -- -- --
* insert additional information, as required *
 X  Any aggravating factors in relation to risk of harm to people or environment -- --  X             
* insert additional information, as required *
(c) TOTAL GRAVITY VALUE
-1

(d) DAILY PENALTY
(The baseline penalty, adjusted for the final gravity level)

$28,000

(e) NUMBER OF DAYS OF VIOLATION
(If more than one day, then the justification must be provided.)

1

Notes to explain decision to apply multiple daily penalties, or "Not Applicable"

Not Applicable

4. TOTAL PENALTY AMOUNT

$ 28,000

Note: The total penalty amount shown is based on the period described in Step 1 above. If compliance has not been achieved, a subsequent Notice of Violation may be issued.

5. DUE DATE

(30 days from receipt of Notice of Violation)
07 July, 2014

Notes

You have the right to make a request for a review of the amount of the penalty or the facts of the violation, or both, within 30 days after the Notice of Violation was received.

If you do not pay the penalty nor request a review within the prescribed period, you are considered to have committed the violation and you are liable for the penalty set out in the Notice of Violation. The penalty is due on the date indicated above.

The unpaid penalty amount is a debt due to the Crown and may be recovered by collection procedures stipulated in the Financial Administration Act.

The information regarding the violation may be posted on the NEB website:

  1. 30 days from the date this Notice of Violation was received or;
  2. upon issuing a decision following a Request for Review.

To Make Payment:

You may remit your fee payment by Electronic Funds Transfer (EFT) or by cheque payable to the order of Receiver General for Canada.

EFT payments can be arranged by contacting the Director of Financial Services, Monday to Friday, from 09:00 to 16:00 Mountain Time:

Telephone: 403-606-0779 / 800-899-1265
Fax: 403-292-5503 / 877-288-8803

Cheques should be made out to the "Receiver General for Canada" and mailed to:

National Energy Board
Attention: Finance
Centre 10, 517 - 10th Avenue SW
Calgary, Alberta
T2R 0A8

Your completed Payment form should be enclosed with your payment.

To Request a Review

Pursuant to the NEB Act, Section 144, you may file a request for a review of this Notice of Violation by the Board.

The date of filing is the date on which the document is received, as indicated by the date on an e-mail submission or the stamped on the document by a NEB employee.

If you elect to make a request for a review, complete and submit the attached Request for Review form to:

Administrative Monetary Penalty - Reviews
National Energy Board
Centre 10, 517 - 10th Avenue SW
Calgary, Alberta
T2R 0A8

For more information on reviews, please see the Administrative Monetary Penalties Process Guide available on the NEB's website.

Sincerely,

Patrick Smyth

Designated Officer
Administrative Monetary Penalties

403-299-3178

Date modified: