1. General Information on Pipelines
1.1 What is the difference between a pipeline that moves oil and a pipeline that moves natural gas?
Oil and natural gas pipelines are similar since they are both coated steel pipe buried underground. The key difference is that oil transmission pipelines typically transport liquids at pressure between 600 to 1000 pounds per square inch (psi), while natural gas transmission pipelines transport gas at higher pressures of 1000 psi or greater.
Natural gas pipelines have above-ground compressor stations at select intervals. These compressors are often land-based jet engines, and are typically fueled by the natural gas within the pipeline itself. Crude oil or liquids pipelines have above-ground pump stations at select intervals. These are typically electric pumps.
1.2 How long have pipelines been used to transport oil and gas in Canada?
Canadian pipelining began in 1853, with a 25-kilometre cast-iron pipe moving natural gas to Trois-Rivières, QC, to light the streets. Canada had one of the world’s first oil pipelines in 1862 when a pipeline connected the Petrolia oilfield to Sarnia, ON. By 1947, only three Canadian crude oil pipelines existed. One was located in Alberta and transported oil from Turner Valley to Calgary. A second moved imported crude from coastal Maine to Montreal, while the third brought American mid-continent oil into Ontario. Canada’s extensive pipeline grid began in the 1950s when major crude oil and natural gas finds in Western Canada led to the construction of large pipeline systems.
The National Energy Board (NEB) has been regulating inter-provincial or international pipelines since 1959. While much has changed since then, environmental protection and the safety and security of Canadians remains of paramount importance to the NEB.
1.3 How extensive is Canada’s pipeline system?
There are an estimated 840,000 kilometres of transmission, gathering and distribution lines in Canada, with most provinces having significant pipeline infrastructure. This includes 117,000 kilometres of large diameter transmission lines. Of this amount, approximately 73,000 kilometres are federally-regulated pipelines, which are primarily transmission lines. Pipelines operate in both remote and populated areas. Canada’s natural gas pipeline grid stretches from the coast of British Columbia and Vancouver Island to Quebec City, and its crude oil pipelines stretch from Vancouver to Montreal. There are also separate pipelines, not linked to the rest of the pipeline grid, in Newfoundland, New Brunswick, Nova Scotia, Prince Edward Island, and offshore Canada. There are major crude oil and natural gas pipelines servicing most major Canadian cities. Canadian pipeline systems are highly integrated with those in the US, allowing Canadian oil and natural gas to access and receive delivery from markets in the US.
The 73,000 kilometers of oil and natural gas pipelines regulated by the NEB transport over 100 billion dollars of hydrocarbons each year.
For more information about the pipeline network in Canada, visit the NEB website at www.neb-one.gc.ca.
1.4 How many oil and gas pipelines cross the Canada-US border?
There are 70 operating oil and gas pipelines regulated by the National Energy Board that cross the Canada-US border: 31 oil and 39 natural gas. There are 16 operating pipelines which transport other commodities. There are also about 10-15 additional pipelines at other stages (e.g., deactivated, decommissioned, built, but not operating).
2. Need for Pipelines
2.1 How do Canadians benefit from pipelines?
Pipelines deliver crude oil, natural gas and petroleum products to domestic markets throughout Canada. Pipelines are necessary to deliver fuel to Canadians to heat their homes, drive their cars, or travel by bus, train, or by air. The majority of homes in Canada are heated with natural gas, all of which is delivered by pipelines. Cars, buses, trains, boats and airplanes are all fueled primarily by petroleum products such as gasoline, diesel, or aviation fuel. These products are produced at refineries across Canada, and pipelines are needed to transport crude oil to these refineries. Without pipelines, large volumes of crude oil (over three million barrels per day in Canada) would have to be transported to refineries by other modes of transport, such as tanker trucks, tanker ships, or rail cars. Transporting three million barrels per day by truck would mean more than 15,000 additional long distance truck trips every day on Canada’s highways, which would have public safety, road maintenance, noise, and emissions implications.
2.2 Why do parts of Eastern Canada import oil when there is supply in Western Canada?
At present, some refineries in Eastern Canada are not connected by pipeline to western Canadian crude oil production. As a result, these refineries import most of their crude needs by tanker ship. Canada’s current crude oil pipeline infrastructure can deliver western Canadian crude oil as far east as Montreal, Quebec. Canadian crude oil supplies all the needs of western Canadian refineries, and more than three-quarters of Ontario’s refinery capacity. With the startup of the 300,000 barrel per day Enbridge Line 9 flow reversal project, Canadian crude oil delivered by pipeline began arriving in Montreal in December, 2015.
Given the higher cost of imported crude oil, and the demand from eastern refineries for Canadian crudes, industry has responded with an additional proposal to move western Canadian crude oil to eastern Canadian refineries, namely, TransCanada’s propose 1.1-million barrel per day Energy East pipeline project.
2.3 Where does Eastern Canada import oil from?
Canada’s Eastern refineries import oil from a variety of oil-producing countries. The United States recently became the largest source for imported oil. Apart from the United Sates, most of Eastern Canada’s oil imports come from the countries that are part of the Organization of the Petroleum Exporting Countries (OPEC), specifically from Algeria, Saudi Arabia, Nigeria, Angola and Iraq. Some of Eastern Canada’s oil was also imported from North Sea countries, including Norway and the United Kingdom.
2.4 Can the railway be used to transport crude oil?
Yes. Over 611,000 barrels per day of crude oil and petroleum products were transported by rail in Canada in 2014. However, transporting oil by rail is significantly more expensive than by pipeline. Transporting oil by rail or truck is typically more economically viable for small volumes over shorter distances, especially if the rail infrastructure is already in place.
2.5 Why does Canada not keep all of its oil for Canadians to use?
Canada has the third largest crude oil reserves in the world, after Venezuela and Saudi Arabia, and Canadian crude oil production is growing rapidly. Canadian oil production and resources far exceed Canadian needs for crude oil and petroleum products. On a dollar value basis, Canadian exports of crude oil, natural gas and petroleum products account for 28% of all Canada’s exports in 2014.
2.6 What are the economic benefits for Canadians from pipelines?
In addition to directly employing thousands of people during construction and operation, pipelines are a key piece of infrastructure that allows crude oil and natural gas production to reach markets. The oil and gas sector, which depends on pipelines to connect to customers, directly and indirectly employs about 740,000 people, contributes nearly 11% to the country's GDP and pays approximately $20 billion per year in taxes, royalties and fees to governments.
3. Pipeline Safety and Environmental Protection
3.1 How safe are pipelines?
Pipeline companies are subject to various regulations and are required to meet specific standards. The NEB’s regulations require a pipeline company to create a management system and protection programs that anticipate, prevent, manage and mitigate potentially dangerous conditions associated with their pipelines.
Pipeline companies are required to design safety, integrity and emergency response protection programs specific to their infrastructure that manage and mitigate risks posed to people and the environment. These programs are reviewed, inspected and audited by the NEB. If non-compliance is found, the NEB will take necessary steps to protect the environment and the public. The NEB has several compliance enforcement tools available to it and may revoke authorizations, impose safety orders that restrict operations, issue stop-work orders, and pursue criminal prosecution. The NEB is also authorized to issue administrative monetary penalties (AMPs) ranging from $25,000 for individuals to $100,000 for companies per infraction, per day.
To ensure safety, companies are required to inspect their systems regularly using specialized tools that run inside the pipelines, and conduct right-of-way surveillance and inspection. Pipeline leaks and ruptures are detected in real time using sophisticated computer-based systems. Companies can often remotely shut down flows to minimize spill volumes.
3.2 What is the accident and leak record of Canadian pipelines?
In Canada, the NEB regulates over 73,000 kilometres of pipelines that move approximately 1.3 billion barrels of oil per year. According to the NEB, these pipelines spilled an average of about 1,084 barrels per year between 2011 and 2014. This is roughly equivalent to two tank cars. Typically, most of the oil spilled is contained on pipeline company property. Spill sites must be reclaimed to restore the natural environment.
The NEB’s Safety Performance Portal and Environmental Performance Dashboard present statistics on the number and frequency of various incidents that affect pipeline safety, integrity and the environment.
3.3 How is a crude oil pipeline leak cleaned up?
Federal and provincial regulators must be notified of spills immediately by law. A company’s Emergency Response Plan, which must be pre-approved by the NEB, then guides initial response and containment of a spill with appropriate equipment, such as absorbent booms. Pipeline companies must have spill first-responders under contract. It is also an NEB requirement that companies continually educate all first responders on practices and procedures to be followed in the event of an emergency.
Once a spill is contained, oil is removed by vacuum truck for recycling. Contaminated soil and water is then removed for treatment. For NEB-regulated pipelines, a Remediation Process Guide requires companies to conduct the appropriate level of Environmental Site Assessment, and to submit a Remedial Action Plan for approval by the NEB. The Guide indicates that the most stringent criteria must be used for remediation of residual soil and groundwater contamination. The spill site is considered clean once the NEB approves a remediation closure report demonstrating all standards have been met. Reclamation of the site to restore the environment is also a part of the clean up.
3.4 How are pipeline leaks prevented or minimized?
Today, pipeline companies use sophisticated automated leak detection systems with central control rooms that permit companies to monitor rates of flow, pipeline pressure and fluid characteristics in real time. Pipeline inspection technology has also improved with the use of magnetic flux and ultrasonic tools that examine the pipe wall from the inside. These tools, known as “smart pigs,” permit companies to detect potential problems and prevent leaks. In addition, improvements in pipeline coating technologies and the use of cathodic protection have reduced corrosion of pipelines. Finally, the quality control at pipeline manufacturing facilities has also improved.
Pipeline management also has improved in the past 20 years with the creation of standards and regulations that require management systems for pipeline operation and pipeline integrity management programs to systematically evaluate pipe condition and proactively repair the pipeline as it ages so that it can operate safely.
Pipeline companies have primary responsibility for ensuring pipeline safety and environmental protection. The NEB requires companies to anticipate, prevent, manage and mitigate potentially dangerous conditions associated with their pipelines. Pipeline companies must design safety, emergency response, and integrity management programs, which are then reviewed and audited by the NEB. The NEB evaluates regulated companies and their facilities to determine appropriate compliance verification activities. The NEB looks at potential consequences to people and the environment posed by a facility based on a number of criteria including its location, type, age, and operating history. The NEB also examines historical information on the company’s management of these consequences collected through previous compliance monitoring activities.
Companies inspect their systems regularly through a combination of external and internal inspection methods. Pipelines are run and monitored 24/7 from centralized control centers that gather pressure, volume and other information in real time. Systems may have manual or automatic shut-down capabilities.
3.5 What causes pipeline failures to occur?
Pipeline failures can occur for a variety of reasons, including corrosion, environmentally-assisted cracking, equipment failure, material defects, environmental incidents (such as landslides and washouts) and human interference (such as being hit by heavy machinery).
An important part of damage prevention for pipelines in Canada are the “one call” or “call before you dig” services that aim to build awareness and promote safe excavation practices in order to reduce damages to underground facilities, like pipelines. Since pipeline failures may occur through human interference, it is important to ‘call before you dig’ to ensure that work being performed near pipelines is being done safely, and legally. Making this call initiates a communications process that will identify the location of pipelines and other buried utilities and provide information on how to safely work around them.
The Canadian Common Ground Alliance has also been working with provincial and regional partners and industry associations on the “one call” issue across Canada.
3.6 Is oil sands crude (diluted bitumen) more corrosive than conventional crude oil?
Significant independent scientific research has been done on this subject, and the results show that bitumen-derived crude is no more corrosive in transmission pipelines than other crudes.
ASTM International – an internationally recognized agency that develops standards tests – published a guide (Guide G205) for measuring the corrosivity of crude oil under pipeline conditions, based on research conducted by several organizations, including the Canmet Laboratories of Natural Resources Canada. The guide describes test methods that enable a direct comparison of various crude oils, including bitumen.
Corrosivity in transmission pipelines comes from two sources – water content and erosive constituents, such as mud and sand. Those substances are removed before crude oil enters pipelines for transmission. Moreover, for transport in transmission pipelines, the sand and water content of oil is strictly controlled and the combined basic sediment and water content must be less than 0.5 per cent by volume.
In addition, crude oils, including bitumen-derived crudes, contain little or no carbon dioxide (CO2) or hydrogen sulphide (H2S).
Finally, pipelines carrying bitumen-derived crude oil operate at the same pressure levels as pipelines carrying other types of crude oil.
3.7 Who is liable for cleaning up a pipeline spill?
If the operator is at fault, the pipeline company is completely liable for all costs to clean up a pipeline spill. In Canada, there is no limit on the amount a company may be required to pay to clean up a spill. In addition to being financially responsible for clean up, the company may also be fined or be subjected to other enforcement actions such as Board Orders and Directives or prosecution.
If an incident occurs, the NEB holds the company responsible and accountable for clean-up and site remediation. The Pipeline Safety Act sets out absolute liability of $1 billion for companies operating major oil pipelines (classes and limits for other pipelines will be established in regulations). This means that companies will be automatically responsible for up to $1 billion in damages regardless of whom or what caused the incident. It is important to note that where the pipeline company is at fault or negligent, liability will remain unlimited. This extends to damages to the environment beyond the costs of clean-up and other losses. All companies operating a pipeline will be required to hold a minimum level of financial resources to ensure they can respond quickly in the event of an incident. If the operator is unwilling or unable to shoulder its responsibilities, the Government of Canada will provide the NEB with the resources to take control of spill response, cleanup and remediation, and the NEB will be authorized to recover any costs incurred from industry.
4. Regulation of Pipelines in Canada
4.1 Who regulates pipelines in Canada?
Pipelines in Canada are regulated based on jurisdiction, according to Canada’s Constitution. The NEB, an independent federal agency created in 1959 by the Government of Canada, regulates pipelines that cross inter-provincial or international boundaries. This includes 73,000 kilometres of inter-provincial and international pipelines within Canada. The NEB regulates approximately 100 pipeline companies in Canada.
Pipelines that are intra-provincial (i.e. are entirely within one province) are regulated by each individual province. This includes the smaller natural gas distribution lines which go to every house with a natural gas furnace or water heater.
4.2 Who makes the decision to build a new pipeline?
This is a business decision made by commercial participants based on market demand for transportation capacity. Pipeline companies propose projects based on their predicted economic feasibility. Before any project for an international or inter-provincial pipeline can proceed it must be reviewed by the NEB and approved by the Government of Canada.
4.3 What are the regulatory requirements to build a pipeline?
Before any pipeline can be constructed in Canada, it requires permission from the appropriate federal or provincial regulator.
In making this determination, the NEB may consider information relating to:
- Environmental and socio-economic matters;
- Economics and financial matters;
- Land matters; and
- Any public interest that may be affected by granting or refusing the application.
4.4 How are Aboriginal groups/communities involved in the process of pipeline construction?
The Government of Canada has a legal duty to consult Aboriginal groups whose Aboriginal and treaty rights may be adversely affected by any proposed project that requires a federal decision. The Government recognizes that Aboriginal groups and communities have the right to be given the opportunity to understand the impacts a project may have on their rights and interests, to express their views regarding the project, and to have their views in respect of impacts to established or potential rights be considered and accommodated, where appropriate.
For major pipeline projects over 40 kilometers, the Government of Canada engages Aboriginal groups early in the review process and also relies on the NEB hearing processes, to the extent possible, to fulfill its duty to consult. The NEB’s filing requirements require applicants to consult with potentially-affected Aboriginal groups on all proposed projects both before and during a project review. The proponents are also required to report to the NEB on the outcomes of their consultation. Aboriginal groups are encouraged to bring forward their concerns about a proposed project to the regulatory process to ensure the NEB and the Government can consider their views. NEB staff members are available to explain the NEB’s processes and how to become involved in those processes.
The NEB encourages companies and Aboriginal groups to work together during the planning and design phases of a project to eliminate or mitigate impacts on Aboriginal interests. Aboriginal groups are encouraged to bring outstanding issues forward to the NEB for consideration in its decision-making or recommendation.
Where major projects may impact treaty or Aboriginal rights, the NEB implements its Enhanced Aboriginal Engagement procedures, which can include meeting to discuss Board process and opportunities to participate in processes related to specific applications. The NEB offers a Participant Funding Program to assist interested parties, including Aboriginal persons and groups, with participation in an oral facilities hearing.
On certain pipeline reviews, the federal Crown may also undertake direct engagement and consultation with Aboriginal groups whose rights could be potentially affected by projects. These activities could include early meetings to explain the process and hear concerns; consultations outside of the NEB’s review to better understand issues or consult on matters outside of the NEB mandate; consultation on NEB recommendations and follow-up engagement activities.
The Government may also engage Aboriginal groups on broader issues including to identify and advance opportunities to enhance participation in pipeline development, safety and operations (e.g., monitoring, incident response, advancing the use of federal programs to support training and skills development, etc.).
4.5 What are the implications of new pipelines for landowners?
If the NEB or Government of Canada approves a major pipeline, this approval will include a proposed general pipeline route or corridor. The NEB requires companies to communicate with and involve the public when they are developing projects. The level of public engagement should be appropriate for the setting, and the nature and magnitude of each project.
Pipeline companies are responsible for attempting to negotiate easements with landowners. These are land agreements that grant the company permission to place the pipeline in the ground within a certain location along the route. The landowner may be a farmer, municipality, province, or other individual. Landowners receive financial compensation for having the pipeline on their land. These are private negotiations, where landowners and pipelines agree on compensation and other details, including the activities that can occur on the pipeline right-of-way.
The NEB has an Appropriate Dispute Resolution (ADR) process which provides parties with an opportunity to resolve their issues through a Board staff member trained in mediation. ADR’s are not used in compensation disputes. If landowners and the pipeline company cannot agree on the exact terms of compensation for land use or damages, either the landowner or the pipeline company can request negotiation services or binding arbitration from the Minister of Natural Resources (see the Pipeline Arbitration website at www.nrcan.gc.ca/energy/infrastructure/natural-gas/pipeline-arbitration-secretariat/5907).
4.6 How does a company decide where the pipeline route should go?
Pipeline companies may study various routes and optimize the use of existing rights-of-way, such as public utility corridors, electrical transmission lines, other oil or natural gas pipelines, highways and railways. Companies will also gather input from affected landowners and land users and consider environmental and socio-economic impacts when proposing final pipeline routing for NEB approval.
4.7 Will I be restricted in my use of the lands where the company has a pipeline right-of-way?
Landowners may face some restrictions on use of the land on or near the pipeline in order to maintain public safety and environmental protection. For a farmer, this typically means the land can continue to be farmed, including crossings by certain agricultural equipment if certain conditions are met. However, buildings or other structures cannot be installed immediately over the pipeline right-of-way, as this would cause safety hazards.
4.8 What are a pipeline company’s obligations after construction?
Pipeline companies are responsible for all aspects of a pipeline during its construction, operation and after the company stops operating the pipeline. This means that companies are required to address all conditions that have the potential to harm people, property or the environment throughout the life-cycle of a pipeline.
4.9 What happens when a pipeline is no longer needed and is abandoned?
Pipeline owners and operators are responsible for the costs to abandon pipelines or facilities. The costs include the abandonment work, which includes clean-up of the surrounding area until it is reclaimed to the acceptable environmental standards, and unforeseen events such as pipeline settlement or exposure that might occur after abandonment.
When the NEB reviews a pipeline abandonment application, the NEB will assess the environmental and socio-economic implications of abandonment. If the NEB approves the abandonment application, it will issue an Abandonment Order, with specific conditions that must be satisfied before the Order can take effect. These are designed to address any risks to public safety, property and the environment.
The Board also requires that the appropriate level of funds to be put aside by pipeline companies to cover the costs of abandonment.