Reflections on 35 years with the National Energy Board
Gaétan Caron, Chair and CEO
National Energy Board (NEB)
Alberta Energy Regulator’s Forum
14 May 2014
Slide 1 speaking notes (click to view)
Thank you for the opportunity to speak with you today.
I will start my presentation with a brief overview of the National Energy Board so that you can better understand the perspective that I am bringing to today’s discussion.
I will then highlight some findings from the Board’s research, particularly our flagship information product: the Energy Futures report.
Since we are all gathered here to talk about natural gas, I will spend some extra time discussing the NEB’s Canadian natural gas outlook.
I will conclude with a few comments about two timely, natural gas-related issues: pipeline safety and propane.
Slide 2 speaking notes (click to view)
I joined the Board in 1979. At the time, the National Energy Board was based in Ottawa and that is where the picture you see before you was taken, in 1962. These gentlemen were the first Members of the National Energy Board. They were, from left to right: Lee Briggs, Dr. Robert D. Howland, Chairman Ian N. McKinnon, Vice-Chairman Douglas M. Fraser and Maurice Royer.
The Board held its first hearing in 1960, just two months after Parliament created the National Energy Board. Our first hearing was focused on six applications to export natural gas. At the time, the Ottawa Journal wrote: “The power we have entrusted to this board is formidable. It must be both judge and prophet, a double wisdom which at times must seem a humbling duty.”
I can assure you that this duty is indeed humbling still today.
Slide 3 speaking notes (click to view)
Behind me you will see another photo from the vaults. This is a newspaper cartoon from 1960 and it very clearly demonstrates the idea of the National Energy Board as a regulator that is sharply focused on economic regulation. Our approach to regulation has been premised on the belief that markets work. We rely on market forces to determine prices, supply, demand and trade in energy markets. At the same time, the NEB continuously monitors energy markets to provide Canadians with a high degree of certainty that they are functioning properly and that Canadians have access to energy at fair market prices. Since deregulation in the mid-1980s the Board has never had to intervene directly in markets. Of course, the Board can step in if, for some reason, markets are not functioning adequately. And parties always have the option of coming to the Board if they have concerns.
Slide 4 speaking notes (click to view)
On April 20 2010, a new Board was born. While of course I don’t mean that officially the Government created a new Energy Board, still, I think many of you will agree that the world in which we all operate, including the NEB, changed irrevocably when the Deepwater Horizon suffered a catastrophic blow-out. The world watched as millions of barrels of oil gushed into the Gulf of Mexico for 70-plus days. And they all asked, could this happen here?
On April 20 2010, I was in a gymnasium in Inuvik listening to final argument for the Mackenzie Gas Project. Less than 18 months later, I would find myself in the same gymnasium, with many of the same people, asking ourselves, could an accident like the Deepwater Horizon happen here? And the answer of course is yes, unless we take steps to avoid it. So how do we go about preventing such an incident?
Slide 5 speaking notes (click to view)
In addition to regulating certain pipelines and power lines, the National Energy Board has regulatory responsibilities North of 60, which include regulating offshore drilling. At the time of the Deepwater Horizon incident, we were organizing a small, technical conference to look at the issue of same season relief well capability. It became quickly apparent that, we needed to take a much more comprehensive approach.
Within weeks of the sinking of the Deepwater Horizon, the National Energy Board announced a review of the safety and environmental requirements for offshore drilling in the Canadian Arctic. Through the Arctic Review, the Board examined the best available information on the hazards, risks and safety measures associated with offshore drilling in the Canadian Arctic.
To gather the information we needed, we held more than 40 meetings in 11 communities across all three Northern territories. We looked at lessons learned from similar incidents. We also held a week-long roundtable meeting in Inuvik so participants could engage in face-to-face dialogue, ask questions and share their views. Nearly 200 people attended the Arctic Review Roundtable Meeting in September 2011. Through this extensive consultation, the Board developed filing requirements for future applications to drill in the Canadian Arctic offshore.
Slide 6 speaking notes (click to view)
We have always considered safety to be of paramount importance. However, in the wake of incidents such as the blowout in the Gulf of Mexico, the San Bruno pipeline explosion and the pipeline spill in Kalamazoo, Michigan, the Board has established itself as a leader in terms of its expectations around safety culture.
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 or facility operations over safety concerns. Time and time again, when we look at high performing organizations with great safety records, we see organizations with a commitment to a strong safety culture. We feel that this commitment, will help focus on preventing and reducing incidents before they happen, which is our number one goal.
Slide 7 speaking notes (click to view)
Moving forward, we have a number of challenges ahead of us. One of our biggest challenges will be how we respond to a perfect storm of many applications to expand energy infrastructure in an environment of intense public scrutiny. The regulatory process is increasingly viewed as an arena where the public debate about whether the energy industry should receive approval for its plans to build and maintain infrastructure.
It wasn’t that long ago when most people in Canada had no idea who we were. When we reviewed an application from Trans Mountain Pipelines for its Anchor Loop Project in 2006, there were 8 intervenors. In our current review of the Trans Mountain Expansion Project, there are 400 intervenors.
Slide 8 speaking notes (click to view)
To give you another example of the increase in interest in the NEB, in 2008, we received 82 inquiries from the media. In 2013, we responded to 612 media requests. This is our new reality: there is an increasing desire from the public to understand and have a say in energy issues, including how energy makes its way to market.
In response to this need, we have established a new Strategic Communications Plan to focus on more proactive communications with key audiences. Our staff have conducted more than 550 media interviews over the last year. Last year, we also launched a Twitter account to quickly relay important information, including updates on incidents. We have been holding larger media events, such as a press conference around the release of the Board’s Northern Gateway recommendation.
Slide 9 speaking notes (click to view)
We are at a time now, when there is as much, if not more, interest in harvesting the resources of the North. As you may know, the Government of the Northwest Territories became responsible for the regulation of onshore oil and gas activities in the NWT outside of the Inuvialuit Settlement Region and the Norman Wells Proven Area. The National Energy Board is still the regulator for projects that fall under the Canada Oil and Gas Operations Act and the Canada Petroleum Resources Act in the offshore and the Norman Wells Proven Area. Furthermore, in accordance with territorial legislation that mirrors the Canada Oil and Gas Operations Act, we are responsible for regulating in the Inuvialuit Settlement Regions for a period of 20 years. We continue to regulate inter-provincial and pipelines that cross a provincial-territorial border under the National Energy Board Act.
We are expecting an application for the first ever deepwater drilling project in our Arctic waters. There is also a lot of interest in developing the Canol shale play. This will have implications for the National Energy Board as producers will want to get their product to market. Notwithstanding the new dynamic of devolution, the NEB will remain a high profile regulator of Northern and Arctic resources into the foreseeable future.
Slide 10 speaking notes (click to view)
I was recently interviewed by a reporter and he asked if I had any lessons learned over my career. I told him I had learned to take the time to listen to our people. I am fortunate to be surrounded by 450 staff with strengths and technical expertise in a wide range of disciplines. Take advantage of their knowledge and experience and listen to your staff before you make decisions. As a result, we are able to make decisions based on intelligent, open conversations.
Slide 11 speaking notes (click to view)
Shortly after I take my leave from the National Energy Board, the Board itself will be moving to new offices just down the street from our current location to a new building called Centre 10. Our new building is located at 517-10th Ave SW.
Our new offices will give us the space we need to grow thanks to a recent Treasury Board decision to give us additional resources. Moving forward, the Board will continue to embrace a culture of continual improvement; we will be bold, transparent and respectful. We will continue on our current path as a flexible, nimble regulator focused on results, on making sound decisions in the public interest and on keeping Canadians safe.
Slide 12 speaking notes (click to view)
I would like to leave you with one final thought: my departure will not change the good work that is being done at the National Energy Board. When I leave on June 6, the 450 people who choose to work at the National Energy Board will continue to make strides towards continual improvement. In fact, if I have done my job right, my departure will be irrelevant.
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