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Canada Revamps Pipeline Safety Rules Ahead Of New Projects

Maritime Activity Reports, Inc.

May 14, 2014


Canada unveiled new rules on Wednesday to enhance pipeline safety and spill response, ahead of the development of new projects proposed to carry crude from Alberta's oil sands to coastal ports for export.

The new legislation will give Canada's energy regulator, the National Energy Board (NEB), more power to enforce compliance on safety and the authority to step in to lead spill response if a company is unwilling or unable to do so.

Companies will also now be held liable, up to C$1 billion ($917 million), for all spills or incidents on their lines, whether or not they are at-fault or negligent, putting the onus on owners to ensure safe operations.

"This approach is called 'absolute liability' and it will apply to all federally-regulated pipelines," said Natural Resources Minister Greg Rickford at a press conference in Vancouver.

Companies found to be at-fault or negligent in an incident will continue to face unlimited liability.

The new measures, which include a revamp of some legislation dating back to the 1950s, build on a pledge last year to require all companies operating major crude oil pipelines in Canada to have C$1 billion on hand to fund spill clean ups.

In the case of a severe spill or incident, the government said it will backstop the initial cost of clean-up and remediation, with the NEB responsible for recovering those additional funds from pipeline companies.

"The 'polluter pays' principle will be enshrined in law so that it is clear Canadian taxpayers are not expected to foot the bill in the event of a major oil spill," said Rickford.

The changes come a day after Canada moved to strengthen its response plans for oil spills at sea and just weeks ahead of its final ruling on Enbridge Inc's Northern Gateway pipeline project, which is expected in mid-June.

The controversial pipeline, which would carry crude from the oil sands hub ofEdmonton, Alberta, to a deepwater port in northern British Columbia, is one of three major domestic projects currently on the books.

Kinder Morgan is planning to expand and twin its Trans Mountain pipeline, which also carries oil to the Pacific coast, and TransCanada Corp has proposed a line to carry crude east to refineries in Quebec and New Brunswick.

The government has pushed hard to reassure Canadians that it has policies in place to regulate those proposed projects, which would allow Canadian oil producers, now dependant on U.S. markets, to tap directly into more lucrative foreign markets.

But the projects are fiercely opposed by many environmentalists and aboriginal groups, which fear spills and the possibility that pipelines will hasten development of the Alberta oil sands and exacerbate climate change.

In an effort to address some of those concerns, the government pledged to involve aboriginal communities in pipeline safety plans, and encourage more collaboration with industry.

Regulators are also carrying out more pipeline inspections and audits each year, and will be able to fine companies that do not comply with requirements up to C$100,000 per day.

There are about 73,000 kilometers (45,360 miles) of federally-regulated pipeline inCanada, transporting more than C$100 billion worth of oil, gas and petroleum products each year.

(Reporting by Julie Gordon; Editing by Bernard Orr)

($1 = 1.0906 Canadian Dollars)

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