Canada's broken pipeline safety system

| April 19, 2012
Pipeline inspection gauges on White Island, California. Photo: EnergyTomorrow/Flickr

On January 9, Canada's Natural Resources Minister Joe Oliver claimed that "environmental and other radical groups," including "jet-setting celebrities" funded by foreign money, "threaten to hijack our regulatory system to achieve their radical ideological ends. They seek to exploit any loophole they can find, stacking public hearings with bodies to ensure that delays kill good projects. They use funding from foreign special interest groups to undermine Canada's national economic interest."

The "system is broken," Oliver declared. "It's time to take a look at it." Just weeks earlier, in December 2011, Canada's Federal Environment and Sustainable Development Commissioner Scott Vaughan had already taken a look at the regulatory system and released a scathing indictment of regulatory oversight on the transportation of dangerous goods in Canada, including pipeline transport of oil and natural gas.

Vaughan's report focused on the National Energy Board (NEB), Transport Canada and Environment Canada. He found that these federal departments are doing a substandard job of enforcing regulations, of ensuring known safety and environmental problems are fixed, and of checking that known violators have changed their ways.

In terms of pipeline regulatory enforcement, Canada's system has already been hijacked -- not by environmental "radicals," but by the oil and gas industry.

National Energy Board

Canada's 71,000 kilometres of oil and gas pipelines are subject to the National Energy Board Act and Regulations, administered by the NEB, which is supposed to enforce corporate compliance with regulations. According to Scott Vaughan's report, "The Board's regulatory oversight applies to the entire life cycle of a pipeline (and related infrastructure) or facility project, including construction, operation, and abandonment. The Board is a quasi-judicial federal tribunal that operates as a court of record and reports to Parliament through the Minister of Natural Resources [Joe Oliver]." A recent article by the Vancouver Media Co-op noted that the NEB "receives about 90 per cent of its funding from industry."

Currently, 83 companies have operational oil and gas pipelines in Canada. In 2011-2012, NEB regulatory oversight activities accounted for about 63 staff and $7.3 million of the overall NEB budget. As Scott Vaughan noted at his December 13 press conference, that works out to each employee being responsible for about 1,000 kilometres of pipeline.

Vaughan's audit team looked at 56 regulatory compliance reports from 2007 to 2010 and found that NEB inspectors had checked up on "only seven per cent" of those cases to see if corrective action had been taken by the company. The report states: "As a consequence we have concluded that the Board has not exercised a key element of regulatory monitoring: ensuring that identified weaknesses [in compliance] have been corrected by the regulated companies."

Vaughan's team also investigated the extent to which the NEB has reviewed the Emergency Procedures Manuals required from the 83 regulated pipeline companies. They found that by 2011, the NEB had reviewed only 51 manuals. Vaughan's team then "selected a representative sample of 30 companies from the 51 companies whose manuals were reviewed by the Board," noting that the NEB had "identified deficiencies in all of the emergency procedures manuals that we reviewed."

Those deficiencies included: "no identification of the hazards posed by the operation of the facilities; no assessment of the risks posed by the hazards identified; no list of residents in a potential accident zone; no map of the nearby residences or evacuation routes; no description or location of emergency response equipment; no description of any environmentally sensitive areas potentially affected by an incident; and no explanation of governmental roles in an emergency response."

Vaughan's audit team found that "only three" of the 30 files in their sample "contained evidence that the identified deficiencies "[in Emergency Procedures Manuals] had been communicated to the regulated companies. Only one of the 30 files contained evidence that the Board had checked to ensure that the deficiencies noted had been corrected."

The NEB has agreed with Vaughan's audit and has stated that it will make necessary changes by April 2012. Nonetheless, Vaughan's report provided a disturbing context for the January launch of the Joint Review Panel (JRP) hearings on Enbridge's Northern Gateway pipeline proposal.

Joint Review Panel

The JRP, mandated by the federal Minister of the Environment and the NEB, has three members: Sheila Leggett, a biologist and former member of Alberta's Natural Resources Conservation Board, who is now vice-chair of the NEB; Kenneth Bateman, an Alberta energy industry lawyer and member of the NEB since 2006; and Hans Matthews, an Ontario geologist and Aboriginal community development consultant specializing in mineral exploration.

As the Vancouver Media Co-op noted, "Concerns with the NEB and other members of the [JRP] panel go deep with environmental and First nations groups as the board has a reputation of being 'captured' by industry and approving a high percentage of projects with little environment regulation."

In fact, Joe Oliver himself told CTV on January 9: "There have been very few pipelines indeed that have ever been rejected by the National Energy Board. I think there have only been two out of tens of thousands."

Scott Vaughan's December report has highlighted just how 'captive' the NEB seems to be in terms of enforcement of pipeline safety. Without naming any companies, his report stressed the dangers of non-compliance to regulations and referred specifically to the May 2011 (Enbridge) pipeline spill of 1,500 barrels of oil near Wrigley, NWT and to the February 2011 (TransCanada) natural gas pipeline explosion near Beardmore, Ontario.

The final tally of Enbridge's reported pipeline spills for 2011 is not yet available, but the previous 10 years saw a total of more than 132,000 barrels of oil spilled by Enbridge's pipelines in North America -- more than one-half the total volume of the Exxon Valdez disaster which spewed 257,000 barrels of oil into Prince William Sound in 1989.

Transporting dilbit

Several big pipeline spills in the last two years have focused attention on pipeline safety: the Enbridge spill of 20,000 barrels of crude into the Kalamazoo River in Michigan in July 2010; the April 2011 spill of 28,000 barrels of oil from the Plains All-American Rainbow pipeline in Alberta; the July 2011 spill of 1,500 barrels of crude from an ExxonMobil pipeline into the Yellowstone River in Montana. All three of these pipelines carried tar sands diluted bitumen (dilbit), leading to charges from environmental critics that dilbit causes unique problems for pipeline transport.

As well, TransCanada's new 1,070 mile Keystone pipeline (the first leg of the proposed Keystone XL) has had more than 30 leaks and incidents since it began transporting tar sands dilbit in 2010.

Susan Casey-Lefkowitz, co-author of a February 2011 report by the U.S.-based Natural Resources Defense Council (NRDC), says piping dilbit is "like sandblasting the inside of the pipe" and makes pipelines 16 times more likely to leak than when they are carrying conventional crude oil.

One specific concern associated with piping dilbit is "column separation."

Some of the substances used to dilute the bitumen are natural gas liquids. Pressure changes within the pipeline can cause these liquids in the dilbit to change from liquid to gas and form bubbles which impede the flow of oil in the pipeline. This phenomenon -- column separation -- makes it difficult for computerized pipeline monitors to differentiate between a bubble and an actual leak in the line. "Because the proper response to column separation is to pump more oil through the pipeline, misdiagnoses can be devastating," the NRDC report warns. If a leak were the real cause of the slowed oil, then pumping more oil would be disastrous.

According to Mother Jones (February 17, 2011), the initial National Transportation Safety Board investigation of the Enbridge pipeline rupture in Michigan indicated Enbridge's data "had been misinterpreted as column separation rather than a leak. It took responders hours to get to the scene to start cleaning up the oil because of this mistake."

The final report on Enbridge's 2010 Michigan spill is expected to be released before the end of the JRP process on Northern Gateway.

In a news release on February 16, 2011, the Alberta Energy Conservation Resources Board (ECRB) called the NRDC report "inaccurate," and claimed dilbit "should behave in much the same manner as other crude oils of similar characteristics."

Corrosion of pipelines

In November 2011, a coalition of 12 Canadian and U.S. environmental groups released another report, Pipeline and Tanker Trouble: The Impact to British Columbia's Communities, Rivers, and Pacific Coastline from Tar Sands Oil Transport. The report emphasized the unique features of dilbit which make it more corrosive to pipelines.

The report points out that neither federal nor Alberta regulators "have studied the potential dangers of diluted bitumen and pipelines, or assessed its behaviour when spilled. This lack of due diligence limits their capacity to anticipate or address unique dangers diluted bitumen poses to pipelines."

According to Inside Climate News (November 2, 2011), "Even industry groups can't say exactly how corrosive dilbit is. Research is spotty and outdated."

Even more worrying, the report states that "Canadian pipeline leak detection regulations permit potentially significant leaks to remain undetected on high capacity pipelines. Safety standards require hydrocarbon pipelines to take periodic line balance measurements. However, the minimum requirements for such systems allow the loss of two per cent of the pipeline's capacity per week (one per cent per month). For a 525,000 bpd [barrels per day] pipeline like Northern Gateway, meeting Canada's federal standards would still allow a spill of over 11 million litres a week (45 million litres a month) to remain undetected."

A November 2011 study by Alberta Innovates (a government-owned research corporation) concluded, based on a review of available information, that tar sands crude is not more corrosive than conventional oil. However, the study also noted that there is no definitive peer-reviewed research on the issue and urged the ECRB to start collecting data specifically on tar sands pipeline safety and operating statistics, compared to conventional oil pipelines.

The ECRB, 100 per cent funded by industry, is known as a 'captive' regulator.

U.S. Pipeline Safety Act

In the U.S., the new Pipeline Safety, Regulatory Certainty, and Job Creation Act, was signed into law by President Obama on January 3, 2012. According to the New York Times (December 17, 2011), the Act "calls for a study on whether additional pipeline regulations are needed for oil sands crude." That study will likely be overseen by the American Petroleum Institute (API) and the Association of Oil Pipe Lines (AOPL).

The Chairman of AOPL is Enbridge's Steve Wuori. The Chairman of the API Pipeline Subcommittee is Plains All American LP President Harry Pefanis. The two companies were responsible for the two biggest pipeline spills of 2010 (Michigan) and 2011 (Alberta).

In August 2011, API and AOPL discussed the creation of "pipeline safety performance improvement Leadership Teams" with Cynthia Quarterman, Administrator of the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA). UPI (December 9, 2011) reported that PHMSA is to consult with first responders, government officials and the pipeline industry about "the best strategies to prepare for and respond to pipeline emergencies."

The PHMSA (overseen by the U.S. Department of Transportation) is also considered a 'captive' regulator by critics. According to Reuters (June 15, 2011): "Before leading PHMSA, Quarterman provided legal counsel for Enbridge Energy Partners as a partner with the Washington office of the large and influential law firm Steptoe and Johnson. Prior to that, from 1995 to 1999, she served as a director of the much-maligned Mineral Management Service, a section of the Interior Department ordered to re-invent itself after the April 2010 BP oil spill [in the Gulf of Mexico]."

According to the New York Times (September 9, 2011), the PHMSA "is chronically short of inspectors... rarely levies fines" and leaves "too much of the regulatory control in the hands of pipeline operators themselves."

The new pipeline safety law, which reportedly had "heavy input from the pipeline industry," authorizes adding 10 inspectors nationwide to the current 118; doubles the maximum fine for violation to $2 million; and requires new tests on some older pipelines in urban areas.

But the new law doesn't mandate automatic and remote shut-off valves, requiring them only "where economically, technically and operationally feasible." The law neither creates standards for leak detection systems on pipelines to ensure accidents are swiftly identified, nor does it say anything about enforcing the use of so-called "smart pigs" to inspect older pipelines.

'Smart pigs'

The Pipeline Inspection Gauge, the "smart pig," is a robot which can be run inside a pipeline while connected to a GPS system. It feeds data to an expensive software program which translates the data into coloured charts identifying spots where dangerous corrosion, serious cracks, bad welds, and other dangers are occurring.

According to Greg Palast's new book, Vultures' Picnic, U.S. law already requires the use of "smart pigs" to test older pipelines, but companies find loopholes to avoid the law. "It costs a million dollars a mile to run a diagnostic PIG test," writes Palast. "Cheaper to keep them locked in that giant metal PIG-pen in Prudhoe, eh, BP?" (BP had major pipeline spills in Prudhoe Bay, Alaska in 2006 and 2009.)

The 2010 Pacific Gas & Electric (PG&E) pipeline explosion in San Bruno, California which left eight dead and levelled dozens of homes led many in the U.S. to demand "smart pig" testing of pipelines. As Carl Weimer, Executive Director of Pipeline Safety Trust, told Congressional Hearings in June 2011, "For years we have talked about the need for more miles of pipelines to be inspected by smart pigs. We have pleaded for clear standards for leak detection, requirements for the placement of automated shut off valves, closing the loopholes that allow some pipelines to remain unregulated, and for better information to be available so innocent people will know if they live near a large pipeline and whether that pipeline is maintained and inspected in a way to ensure their safety."

Palast writes: "It turns out, the California company whose pipes blew, PG&E, had bad welds holding together 30-inch-diameter pipe that wasn't supposed to have welds at all. A PIG, honestly programmed, could have picked that up easily."

By remaining silent on the issue of "smart pigs," and by not making automatic shut-off valves mandatory, the new pipeline safety law has catered to industry concerns about costs.

Perhaps the biggest problem with the new law is that it leaves tens of thousands of miles of pipelines in rural areas virtually unregulated, with companies allowed to operate on the honour system. Under U.S. federal regulations, a rural area is defined as one with 10 or fewer homes along each mile of pipe, within a quarter-mile-wide right of way. In these rural areas, the safety of the entire system depends on industry self-policing. The addition of a mere 10 new inspectors nationwide only reinforces the sense that rural and wilderness areas have been abandoned by the regulatory system meant to oversee pipeline safety.

Such weaknesses in the new U.S. pipeline safety law will have repercussions in Canada.

Harmonizing regulations

In December 2011, B.C. researcher Nelle Maxey revealed details of the Canada-United States Regulatory Cooperation Council (RCC) and their "Joint Action Plan" -- part of the new Border Security deal the Harper government recently signed with the U.S.

In an article published on the Common Sense Canadian website, Maxey examined the Energy and Environment section of the RCC's Summary Report on Consultations with Canadians on Regulatory Cooperation Between Canada and the United States (available on the Government of Canada website).

Her article noted three of the "initiatives" listed:

- "Streamline permissions for and construction of new cross-border energy infrastructure, e.g., a single Canada-U.S. regime for permitting oil and gas pipelines;"

- "Ensure common approaches to nuclear liability in the event of litigation arising from nuclear incidents;" and

- "Avoid policies that discriminate against particular fuel sources, such as low-carbon fuel standards (for types of crude oil) or renewable electricity standards (for large-scale hydro)."

As Maxey observed, "As is always the case, the public is the last to find out the government's plans, but it takes only a modicum of common sense to see that Harper's moving of the Environmental Assessment Process to the National Energy Board from the Ministry of Environment, the subsequently announced streamlining of the Environmental Assessment Process, and the budget cuts to the Ministry of the Environment ... are all related to establishing a 'single-Canada-U.S. regime' for pipelines and other cross-border infrastructure."

The RCC report lists dozens of such regulatory harmonization initiatives in areas such as food safety, biotechnology, agriculture, animal and plant health, human health/consumer products, and transportation.

Council on Foreign Relations

A May 2005 Task Force established by the powerful New York-based Council on Foreign Relations (CFR) set the precedent for this regulatory harmonization in its report Building a North American Community. The CFR Task Force (co-chaired by former Canadian Deputy Prime Minister John Manley) recommended the "creation of a common economic space" characterized by "harmonization of regulation" and "regulatory convergence." It also recommended a review of sectors excluded from NAFTA, including the "prohibition of bulk water exports."

The CFR Task force was funded by U.S. grain giant Archer Daniels Midland (which is set to profit greatly from Harper's dismantling of the Canadian Wheat Board), Merrill Lynch & Co., and Yves-Andre Istel, senior adviser to Rothschild Inc. The Task Force members included such Canadian luminaries as Thomas D'Aquino of the Canadian Council of Chief Executives; Wendy Dobson, director of pipeline giant TransCanada since 1992 and long an advocate of continentalism; and Allan Gotlieb, former senior adviser to PR giant Burson- Marsteller, the top lobbyist for NAFTA, which initiated continental integration. National Public Relations, a Canadian "affiliate" of Burson-Marsteller, is currently the top PR firm for Enbridge.

The CFR Report thanked Canada's then-Deputy Prime Minister, Anne McLellan (now a director of Syncrude subsidiary Nexen Energy and Cameco, the uranium miner) and "Suncor Energy President and CEO Richard George, who briefed the group in Toronto in October 2004."

How ironic and hypocritical, then, that Stephen Harper and Joe Oliver are railing about a "hijacking of our regulatory system." That's already being done by puppet-masters much more powerful than any environmental group could ever hope to be.

Joyce Nelson is an award-winning freelance writer/researcher and the author of five books. This article was first published in the Watershed Sentinel.

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