|
Pipeline blockage Pipeline to Eastern Canada encounters regulatory delay; Enbridge conducts further safety tests; Suncor, Valero voice frustration Gary Park For Petroleum News
Canada’s National Energy Board said “public dialogue” - an understated description of occasionally boisterous and unruly protests at regulatory hearings - will cause further delays in opening up a pipeline route for 300,000 barrels per day of Bakken and Western Canadian crude to Quebec’s two refineries.
More than 15 months after granting initial approval of Enbridge’s plan to reverse its Line 9 in Ontario and Quebec, the federal agency has imposed a fresh set of conditions on the project, delaying shipments of crude to the Suncor Energy and Valero Energy processing facilities.
The NEB ordered additional integrity tests on three segments of the 385-mile line from Sarnia, Ontario, to Montreal.
It also imposed a temporary pressure reduction on the pipeline, which could reduce the volume of crude that can be transported once the line comes into service.
The NEB said Line 9 is “located in a heavily urbanized area with a large number of waterways; any release would travel rapidly to the water systems and affect a large number of people. A higher degree of confidence in the integrity, or condition, of the pipeline is required to show that the pipeline is safe to operate.”
No response from NEB The regulator told Enbridge nine months ago that it had concerns about water crossings on the pipeline route.
Enbridge responded n February that it had addressed those concerns and applied for a “leave-to-open” to start shipments.
In early June, Suncor and Valero asked the NEB why it had not responded to Enbridge’s request, saying that delays in sourcing Canadian rather than imported foreign crude for their refineries were costing them millions of dollars.
Suncor Executive Vice President of Refining Kris Smith told the NEB “it is important that you are aware of the high cost and negative economic impacts to our business and by extension to those communities and provinces in which we operate, as the time for a decision is on-going.” Suncor’s refinery has capacity for 130,000 bpd of crude.
Refinery upgraded Valero has invested C$200 million into upgrades of its Quebec City refinery to handle Western Canadian crudes and, instead, has been forced to buy higher proceed foreign crude as feedstock for its 265,000 bpd plant.
NEB Chairman Peters Watson said that “public safety and protection of the environment are our greatest priorities.”
“The public dialogue surrounding this project reiterates the necessarily for the NEB to deliver on those priorities,” he said in a statement, demonstrating conclusively that public pressure is on the same level as industry needs.
“Our expectation of companies is zero incidents and an unwavering commitment to safety.” Watson said.
During public hearings in 2013, protests ranging from the potential ruptures to greenhouse gas emissions from the fossil fuels being moved on Line 9 forced the NEB to cancel some of its hearings, although the board was adamant that GHG concerns were a matter for the Canadian government and were not part of its mandate.
Northern Gateway still tangled The latest Line 9 ruling came exactly a year after the federal cabinet approved Enbridge’s Northern Gateway 525,000 bpd oil sands pipeline to Kitimat on the northern British Columbia coast for export to Asia.
That project remains tangled in court challenges and faces intense First Nations, environmental and public resistance.
Enbridge said it is examining the new conditions to determine its next steps, including a timeline to complete the required work, but argued it has conducted exhaustive engineering analysis and has improved safety and integrity over the past three years.
Meanwhile, Enbridge faces accusations that it is using a “backdoor scheme” to increase exports of Alberta oil sands crude across the Canada-United States border by seeking changes to an existing Presidential Permit to raise capacity on the U.S. portion of its Alberta Clipper pipeline to 800,000 bpd from 450,000 bpd.
Groups such as the Sierra Club and ForestEthics, in a letter to President Barack Obama, say that amendment should go through a full review by the State Department - the same process that has bogged down TransCanada’s proposed Keystone XL pipeline.
The question now plaguing an industry, which is hamstrung by delays in every major pipeline out of Alberta, is what safety standards the NEB is now applying, given industry evidence that 99.999 percent of the oil and natural gas it transports over about 45,000 miles of pipelines arrives safely at its destination.
| 