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Home > Speeches and Presentations > Speeches and Presentations 2009 > Saskatchewan Oil and Gas Forum

Saskatchewan Oil and Gas Forum

Presented by
Georgette Habib
Board Member
National Energy Board

Saskatchewan Oil and Gas Forum

23 and 24 April 2009

I am very pleased to be here today and for the opportunity to share with you some information about a recent initiative at the National Energy Board called the LMCI (the Land Matters Consultation Initiative). Before I proceed discussing this initiative I would like to take few moments and describe the NEB and what we do for those who are not familiar with our organization.

National Energy Board - An overview

The National Energy Board is an independent federal agency. This year I am happy to say we celebrate our 50^th anniversary. The NEB was established by the Parliament of Canada in 1959 to regulate certain aspects of the energy industry. The National Energy Board Act provides the authority for how the NEB conducts its business.

The NEB is accountable to Parliament through the Minister of Natural Resources Canada.

In addition to its role as a regulator, the NEB occasionally provides energy advice to the Minister. The NEB also reports to the public on specific energy issues, holds public inquiries when appropriate, and monitors current and future supplies of Canada's major energy commodities.

For pipelines, the NEB's role encompasses safety, environment, economics and the rights and interests of those affected by pipeline infrastructure. This gives us the authority to inspect facilities, audit a company's operations and safety programs, and to address issues related to abandoning a facility at the end of its useful life. We are a good example of single-window regulation, recognizing as I will indicate later in my presentation, that there is room for further improvement in the regulatory process.

NEB's Regulatory Role

The NEB regulates the following aspects of the energy industry:

• the construction and operation of inter-provincial and international pipelines, and international power lines;
• the traffic, tolls and tariffs of inter-provincial and international pipelines;
• the export and import of natural gas;
• the export of oil, propane, butanes, ethane and electricity; and
• oil and gas activities on frontier lands and offshore areas not covered by federal or provincial management agreements.

Under the NEB Act, up to nine permanent Board Members may be appointed. We currently have 7 permanent members and 4 temporary members. Members of the NEB are selected from the private and public sector and they have knowledge or expertise in areas such as economics, engineering, environment, finance, law, safety and science. The Board Members are supported by about 340 employees with diverse skills and expertise. We have only one office, located in Calgary. Our budget is approximately $40 million.

NEB Goals

The NEB has 4 key goals that relate to safety and security, protecting the environment, efficiency and respecting the rights and interests of those affected by NEB-regulated facilities and activities.

There are programs in place to work toward all of the goals. I will talk with you today about some of the actions we have taken and some proposed actions related to the 4th goal of “respecting the rights and interests of those affected”. This goal has been a priority of the Board for many years. However, for the first time this year, we have highlighted it as a separate goal in our strategic plan and are developing new programs to support it.

Respecting Rights and Interests

As a regulator, we make decisions in the public interest. From our perspective, the public interest is inclusive of all Canadians, and refers to a balance of economic, environmental and social interests that change as society's values and preferences evolve over time. As a regulator, the Board weighs the relevant impacts on these interests when making its decisions.

The Board uses a range of tools to identify, understand and mitigate the potential impacts of energy infrastructure on people:

• We assess the socio-economic impact assessments done by companies when they file an application. We also assess the applicant's consultation efforts with those impacted by the proposed infrastructure
• We have recently initiated an enhanced Aboriginal engagement process to better inform Aboriginal groups about our hearing processes so that we can hear first hand from them in our hearings
• We hold information sessions for all of our hearing participants
• Landowners are able to contact us at any time to ask questions and to have issues resolved
• And, our ADR program is available for anyone to access in order to address concerns

While these existing programs support our goal of respecting rights and interests, we believe we can continue to develop and improve our programs in these areas throughout the lifecycle of facilities.

Land Matters Consultation Initiative

Today, I will tell you about a project that the Board has recently undertaken to further contribute to respecting the rights and interests of those affected by energy infrastructure development.

For the past few years, we have been hearing an increasing number of concerns from landowners and from landowner associations. That is not to say that majority of landowners are not satisfied but that concerns were raised by landowners associations and some members. The issues raised relate to inconveniences to farmers from having pipelines on their property, uncertainty about the financial aspects of pipeline abandonment, the possible methods for pipeline abandonment and frustration with the formality of NEB processes.

In the fall of 2007, the National Energy Board launched the Land Matters Consultation Initiative.

The LMCI is the largest outreach and consultation effort the Board has ever undertaken with landowners and others potentially impacted by pipelines.

From the outset, we decided to work closely with our key stakeholders to seek their input on HOW we set up the consultation process and on how the issues for consultation were framed.

LMCI Approach

To facilitate the dialogue, the Board identified 4 streams of issues:

• Stream 1 - the first stream focused on the interactions between companies and landowners, and the Board's expectations for those interactions
• Stream 2 - the second stream examined the Board's own processes and considered ideas and options to make them easier to access
• Stream 3 - stream 3 considered the financial aspect of pipeline abandonment
• Stream 4 - the fourth stream focused on the physical and policy issues for pipeline abandonment

In February and March 2008, discussion papers were released for each stream. Hearing order was issued for stream 3 and a public hearing took place in January of 2009. The Board initiated the hearing to determine whether pipeline companies should begin to set aside funds to cover the future costs of pipeline abandonment.

The Board has not released a decision yet on the hearing.

Streams 1, 2 and 4 were considered through the LMCI public consultation process.

Consultations

As a national regulator, it is a challenge to consult with a full spectrum of interested individuals and groups across the country. For the LMCI, we held meetings in 8 provinces (all the provinces where we have regulated pipelines) and in the Northwest Territories. In some cases, the meetings were community meetings, and in other cases, the meetings were with one or more groups. Pipeline landowner associations in different regions provided significant assistance by helping to advertise the meetings and encouraging people to attend. Over 400 people participated in the meetings including landowners, pipeline company representatives, representatives from towns and municipalities, Aboriginal groups, regulators and representatives from various government departments. In addition to input received at meetings and workshops, 13 groups and individuals made written submissions to the Board.

Site visits were conducted. The purpose of the site visits was not to inspect the property or to resolve any site specific concerns. Rather it was an opportunity for more NEB staff to learn about the various situations that landowners and companies address. Landowners talked about their experiences of living with a pipeline. In many instances, landowners may have several large diameter pipelines on their property and they may have had them in place for years or decades. They accept the need for the pipelines and are perhaps seeking some further improvement in just one or two areas, such as more certainty around pipeline abandonment.

Of course in the majority of instances, landowners and pipelines co-exist without incident. In the cases where there are concerns expressed by either the landowner or the company, the LMCI consultation process was an opportunity for the Board to gather ideas for improvements.

Throughout the LMCI, we worked hard to maintain a high standard of transparency. Meeting summary notes from all of our consultation meetings and site visits, along with the written submissions, are available on our website.

Current Status and Next Steps

The Board released a Draft LMCI report in December 2008. Included with the Draft report were proposed actions for Streams 1, 2 and 4. We invited comments on the Draft report and the actions. The comment period is now closed and we expect to issue a final report in May 2009. The Draft report and all of the comments received on the Draft report are available on our website.

What we heard ... from landowners

What have we heard from our consultations?

First, from landowners and landowner associations:

Landowners who have pipelines on their property are business people, often farmers and ranchers, who want to focus on their business. Like many of you, they are facing increasing pressures in their businesses related to new environmental standards, foreign competition and increasing land values. The landowners understand the need for the existing and proposed pipelines to be on their property and want that development to happen in a way that minimizes the disruption to their main business - farming.

To that end, landowners are seeking relationships with pipeline companies that respect their business and personal needs. For landowners, this type of relationship would be characterized by respect (e.g. to provide notice for accessing the right of way, following through on commitments for information), consistency (e.g. following similar practices over time and between companies on matter such as providing approval to cross the right of way with farm equipment) and transparency (e.g. sharing information about agreements reached for all landowners providing access to ROW).

We also heard a great deal about pipeline abandonment. Farmers are concerned about what will happen to pipelines after they are abandoned. Will they be left in the ground, or will they be removed, and who is liable for pipelines left in the ground after they are abandoned? And, who will enforce the liability post-abandonment? Those are all questions that are being considered as part of Stream 4.

Landowners also requested that the NEB take a more active, and perhaps a more visible role, in monitoring company field operations. While NEB inspectors are already active in the field, in many instances, landowners may not even know that there is an NEB inspector on a site. Being more visible would be one way to build confidence in the safety and integrity of the pipeline.

What we heard ... from companies

Companies work hard to meet the expectations of the regulator. Where those expectations are not clear, companies are left to estimate the standard that will achieve regulatory approval. We know that regulatory certainty is a key factor to support efficient business development.

Companies have landowner notification and consultation programs already in place. Companies have indicated that, if the Board's expectations in those areas are changing, we need to be clear about current expectations so that their programs can be accordingly modified.

Pipeline companies have also observed what they see as inconsistencies in some current NEB inspections of company operations. If the NEB will be expanding its program for inspections and audits, then the companies are requesting clear and consistent processes that would apply to all areas of regulatory oversight.

What we heard ... from many parties

One of the common interests shared by both landowners and companies is that, wherever practical, issues should be resolved as early as possible. The Board supports this concept. Parties also indicated that resolution outside the regulatory process is preferred since that can enable more informal and perhaps more broad-based resolution of the issues. Two mechanisms for supporting the early resolution of issues are the Board's Landowner Complaint Resolution Program, and the Appropriate Dispute Resolution Program. These options are available to parties at any point in the lifecycle of facilities. There may be more that the Board can do to make people aware of these options and to improve their effectiveness.

Pipeline companies and landowners also suggested that the NEB should be more visible in communities, particularly in the early project planning phase when there may be new activity in a region. They also indicated that the NEB should continue to be visible in the community during the on-going operation of a pipeline. Having the regulator visible and active in the community is a helpful reminder about how to access it if there are concerns, and it is also a reminder about pipelines being in the area and the need for safe activity in the vicinity of the pipeline. The regulator could help to reinforce the safety messages already being delivered by the pipeline company by participating in local meetings and events.

Proposed Actions - Stream 1

I will now describe some of the proposed actions from our Draft LMCI Report. We are continuing to consider the comments we have received on these actions and will confirm the direction and timing when we issue the final report.

One of the largest actions that we are undertaking relates to the development and implementation of a systematic approach to respect the rights and interests of those affected by pipelines. What do we mean by that? I already described some of the activities and programs we have in place to support this goal, including our Enhanced Aboriginal Engagement program, our Landowner Complaint program and our on-going work related to public engagement. To further support this goal, the Board needs to review its existing regulations and guidance material that sets out expectations for company programs related to involving the public in pipeline development and on-going operations. We know that many companies have public involvement programs, however by clarifying the Board's expectations such programs should be more consistent among the different companies.

The Board's goal is for all companies to have effective pubic involvement programs and the Board will continue to work with companies and other stakeholders to ensure that workable, effective approaches are developed to provide the appropriate regulatory oversight in this area.

Under the NEB Act, permission to move vehicles or mobile equipment, including farm equipment, across the right of way is provided by the pipeline company. In some cases, this permission may be provided in an easement agreement. In other cases, landowners have concerns about the process for seeking permission. To address this concern, representatives of pipeline companies and landowners have agreed to meet to determine whether there are clearer expectations that could be developed in this area. The Board is encouraging interested groups to work together to develop standards to address the matter, thereby contributing to the overall safety and security of pipeline companies' and landowners' operations on the right of way. For example; developing industry/landowner standards related to blanket crossing agreements, definition of "normal operations" and "normal farm equipment", depth of cover and company response time for crossing requests. The Board will be pleased to assist in these discussions over the next year, the Board will assess whether further steps towards standards are required to address any outstanding issues to promote safety and security in the area of crossings. In parallel, the Board intends to include the requirement for companies to have a program to manage the movement of vehicles in the Board's new Damage Prevention Regulations. (For more information about the Damage Prevention Regulations, please see the Board's website.)

To improve the understanding of existing rights and responsibilities of all parties, the Board is proposing to develop a standard landowner information package that could be provided to landowners early in the lifecycle for proposed new facilities. The package would include contact information for the NEB, an offer to talk directly with an NEB representative, an overview of the NEB's regulatory approach and information on landowner rights and responsibilities.

Proposed Actions - Stream 2

We have identified a number of improvements that could be made to some of our NEB processes.

To facilitate negotiated agreements among parties, and to support the agreements being reached EARLY in the regulatory process, the Board is proposing to engage stakeholders in further discussions on increasing the use of ADR. In addition to ADR, the Board will consider how technical conferences or workshops could be used more frequently and more effectively within a regulatory process to increase opportunities for less formal dialogue among parties. The less formal discussions often result in more understanding of the issues and can contribute to parties reaching their own agreements.

The Board will also consider how we can provide more process assistance to parties in our hearings. While our hearing processes are generally acceptable and effective for industry representatives, we know that non-industry participants are sometimes challenged with our quasi-judicial processes. We will explore how we can work with those parties to help them participate effectively, so that the Board hears about potential project impacts and can continue to make decisions that appropriately balance all of the public interests. (Examples of process support could include; developing an intervenors' guide, samples of past hearing documents or templates to be accessed by intervenors, formalizing the role of process advisor and training NEB staff to perform this role, developing training modules (Intervenor 101) and assessing effectiveness)

We will also develop plans to be more visible in communities and with landowners. We will seek opportunities to participate in some community events and meetings. While our NEB inspectors will not be able to knock on all landowner doors during a field inspection, we will assess where it would be valuable to make contact with landowners when we are visiting in a region. In situations where there has been a public concern, or where there is a lot of activity anticipated, we will determine how best to reach interested and affected landowners in that area.

Proposed Actions - Stream 4

To provide guidance for pipeline abandonment planning, the Board has developed draft Principles for the end-state of land post abandonment There are 7 principles under these 4 headings.

One of the key draft principles is that facility owners and operators are responsible for the retirement of facilities and reclamation of the right of way and any liabilities arising from these facilities post retirement.

Three principles describe how retirement and reclamation planning ought to be conducted:

• Involve those affected
• The risk to public safety, property and environment is acceptable in the public interest.
• Reuse and recycle facilities whenever possible when identifying abandonment options.

Two principles describe the desired end state of the land:

• ROW to be returned to a state compatible with the surrounding environment. Where reasonable, accommodate the desired land use of those who are affected
• In natural environmental areas, re-establishment of habitat quality as native state as is consistent with the current and surrounding land use.

The last principle notes the need to measure the performance of retirement and reclamation plans to facilitate continuous improvement.

The Board is now considering the comments received on the principles. The final principles will be incorporated into the Guidance Notes that accompany certain sections of the Onshore Pipeline Regulations and a reference to the principles will be placed in the Board's Filing Manual.

Proposed Actions - Stream 4 (cont'd)

In February, the Board released an advisory letter to clarify the Board's views on jurisdiction after a pipeline is abandoned. In the letter, the Board said that its jurisdiction over a pipeline continues until all conditions included in an abandonment order have been met. The Board has discretion to decide on an appropriate abandonment methodology as it hears specific abandonment applications. The Board commits to setting conditions appropriately within an abandonment order such that when an abandonment order comes into effect, the safety and property concerns and environmental effects are well understood and residual impacts are considered acceptable.

The Board is also committed to initiating a multi-stakeholder group to research the physical issues of abandonment and develop sound knowledge and standards. The work of this group should help mitigate the concerns which were heard through the LMCI regarding the physical issues of abandonment.

Proposed Actions - Overall

The Board is proposing to establish a working group, for a 1-year pilot, to continue the dialogue with key stakeholders and build partnerships on land matters.

What is Changing for Companies?

One of the most significant actions to be confirmed through the LMCI is that company programs for consultation and issue resolution will be subject to NEB oversight. Regulatory options will be considered and assessed with our stakeholders, to ensure that the Board has the appropriate level of oversight in this interest area.

From the outset of the LMCI, the Board has worked closely with the Canadian Energy Pipeline Association, the Canadian Alliance of Pipeline Landowners' Associations, l'Union des producteurs agricoles and the Canadian Association of Petroleum Producers. We observed and appreciated a desire on the part of all these groups to continue to work together collaboratively on key issues. As I noted earlier, the Board is encouraging the interested associations to find common ground and solutions to concerns expressed in certain areas where the Board has limited authority. For example, the company and landowner representatives are better positioned to develop additional guidance on land acquisition processes and easement agreements. The Board will follow the progress made by the groups and upon request, would be pleased to assist in the discussions.

What is Changing at the NEB?

In addition to providing clarity on its expectations for regulated companies, the Board acknowledges that we also have a role in working directly with our stakeholders so that we understand how they may be impacted.

The Board is committed to provide process support for hearing intervenors, improved ADR, and additional outreach and interactions with our stakeholders.

For more information

For more information about the Land Matters Consultation Initiative or any other Board activities, please visit our website.

We are working toward continual improvement in all of our processes and we would love to hear your ideas. We strive to be an active, effective and knowledgeable partner in the responsible development of Canada's energy sector for the benefit of Canadians, and we need your involvement to achieve that.

What's Next?

The dialogue that has been a key part of the LMCI will result in concrete improvements that, in the Board's view, will achieve an appropriate balance among landowners, project proponents and others impacted by infrastructure development.

The Board looks forward to continuing the constructive and collaborative approaches that have been established through the LMCI so that there can be continual improvement in the Board's regulatory approaches for land matters.

Thank you for your attention. I will be happy to answer any questions which you may have.

 

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Date Modified:

2011-10-28