Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 35 - Evidence - December 13, 2012
OTTAWA, Thursday, December 13, 2012
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8 a.m. to study the current state of the safety elements of the bulk transport of hydrocarbon products in Canada.
Senator Grant Mitchell (Deputy Chair) in the chair.
[English]
The Deputy Chair: I welcome all of my colleagues, particularly the witnesses who are up at six o'clock in the morning their time because they are from Alberta and are appearing here on video conference. As I pointed out, Calgary probably starts, if it ever stops, at least at 4:30 or 5:00 in the morning. They have probably already been working for a couple of hours.
My name is Grant Mitchell, and I represent the province of Alberta in the Senate. I am the deputy chair of this committee and am chairing the meeting today because unfortunately our chair, Senator Neufeld from British Columbia, is absent today. We wish him well, and hopefully he returns very soon.
I want to welcome my Senate colleagues, the members of the public and people who might be viewing this meeting, if you can imagine, at eight o'clock or six o'clock in the morning, five o'clock elsewhere in the country. I will introduce some of the staff here with us, and then I will ask each of the senators to introduce themselves.
Lynn Gordon is on my left. She is the very able clerk of this committee, who has been here for a long time and directs us in a very effective and efficient manner. Next is Marc LeBlanc, an economist with the Library of Parliament, and Sam Banks, a lawyer with the Library of Parliament. They have also been with us for a long time and have provided great technical and other support.
I will ask Senator Ringuette to start the introductions of senators.
Senator Ringuette: I am Senator Ringuette, from New Brunswick.
Senator Massicotte: I am Senator Paul Massicotte, from Quebec.
Senator Lang: Senator Lang, Yukon.
Senator Brown: Bert Brown, from Alberta.
Senator Wallace: John Wallace, New Brunswick.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Seidman: Judith Seidman, Montreal, Quebec.
Senator Johnson: Janice Johnson, Manitoba.
The Deputy Chair: Thank you very much.
On November 28, 2012, our committee was authorized by the Senate to initiate a study on the safe transportation of hydrocarbons in Canada. This study will span about six or seven months. We hope to introduce a final report in June of 2013. It will examine and compare domestic and international regulatory regimes, standards and best practices relating to the safe transport of hydrocarbons by transmission lines, marine tanker vessels and rail cars.
The first portion of this study, as you might guess because we have the pipeline group here today, is on pipeline safety. We are joined from Calgary by Dr. Brenda Kenny, President and Chief Executive Officer of the Canadian Energy Pipeline Association. She is a frequent witness to our committee, always welcome and always informative. She has a very long and distinguished resumé. I will not go through it, but I would like to highlight one recent addition, which is a very significant recognition from the Women's Executive Network. She is the 2012 award winner as one of Canada's Top 100 Most Powerful Women. Not to put any pressure on her, but I am pretty sure that our colleagues and the public will understand that fact once she is finished her testimony here today.
She is joined by Ziad Saad, Vice-President of Safety and Sustainability of the Canadian Energy Pipeline Association.
Thank you both for making the effort to be here. I think you probably are aware of the routine: We will ask you to make a presentation and then we will open it to questions.
Brenda Kenny, President and Chief Executive Officer, Canadian Energy Pipeline Association: Thank you very much, Mr. Chair and other senators in the room. We appreciate the opportunity to join you today. I wish we could be there in person; I hope in the future we may be able to do that. This is a very important study and we are very pleased to see you embarking on it to explore some of these matters, as they are of top priority to us.
Today I have with me Ziad Saad, our VP of Safety and Sustainability. I should say that two years ago the Canadian Energy Pipeline Association reorganized to deepen and broaden our safety efforts. We have always had a key focus on that, but we have several new engineers who have joined our team to focus on that specifically. This is really born out of the fact that CEPA members, as you may know, have a network of over 110,000 kilometres of Canadian transmission pipelines. Through those we deliver 97 per cent of Canada's natural gas and onshore oil production. These are critically important pieces of infrastructure, delivering 3 million barrels of crude oil a day and over 14 billion cubic feet of natural gas per day.
Nothing is more important to CEPA members than the safe operation of these pipelines, ensuring both safety of the public and protecting Canada's environment. We have a very strong safety culture in this sector, and we drive for continuous improvement to ensure these pipeline systems are among the best in the world.
There are key messages we would like to begin with today that we hope will stimulate your discussion through the morning, as well as your study. The first is a discussion of the life cycle of pipelines and understanding how safety is involved with every step of the life of these systems. Also, we want to disclose what causes failures and how CEPA members are managing these hazards. Regulations standards, best practices and continual improvement are fundamental to safety. Ultimately, we want to discuss how Canada's system compares to other jurisdictions.
First is the life cycle of a pipeline, which includes design, construction, operation and eventually abandonment or retirement. Safety is engrained in every stage, as is emergency response should there be an incident during operations.
During the design stage, pipeline material selection, choices about wall thickness, required capacity and a number of safety factors are addressed. Many of these are as set out in CSA standards and other international standards, and are also required by NEB regulation. There are surveys of nearby communities, environments assessments and slope stability assessments. All of these pieces allow operators to choose a route, ensure construction impacts are understood, and avoid environmentally sensitive areas wherever possible.
During production of the line pipe in the steel mills, pipe is inspected and tested prior to shipping. This is a very important step for safety. More inspection occurs during construction to ensure quality assurance, as well. During construction, every effort is made to minimize environmental disturbance. One example is directional drilling used to install pipe across water crossings. With the advent of GPS and GIS, we are much better able now than we were 20 or 30 years ago to successfully orient these massive drills well under waterways or sensitive areas. These have improved our ability to assure safety and environmental protection.
We use state-of-the-art technologies and standards when the pipe is laid, welded, inspected and carefully buried. Once construction is complete, any disturbed land is remediated fully.
Prior to putting the pipeline into operation, we use pressure testing, typically with water, to ensure that it can hold the pressure well above its designed operating practice. Once in service, pipeline operators continually monitor, utilizing advanced monitoring and inspection technologies. These include a range of technologies that we can describe in more detail if you are interested, but the high points are sophisticated control centres, right-of-way surveillance, cathodic protection to prevent corrosion, in-line inspection using sophisticated sensing technologies, investigative digs to uncover the pipeline and inspect visually where we suspect there may be damage, and possibly retesting the pipeline on occasion where necessary. Therefore, we make every effort to ensure that throughout the construction and life cycle, there is no adverse environmental impact, and safety is a big part of that.
Once these systems are at the end of their useful life, they are purged, cleaned and sealed off to prevent any residual product from entering the environment. Concerns by stakeholders in this area have been identified, and regulators and operators have initiated efforts to complete more appropriate research into the long-term abandonment of these systems: What is the right way to go in terms of being the safest and most environmentally sound? However, it is important to note that these transmission systems in Canada will be used for many decades to come, so we are proactively planning for their eventual retirement and ensuring people's questions are addressed well before we get there.
While every effort will be made to prevent an incident, emergency response planning is absolutely critical. We ensure we have the processes and access to equipment for rapid and effective response. Pipeline operators hold both desktop and field-based emergency response drills to ensure their processes and equipment are effective. Regulators and operators work together to ensure these things are in place.
I will now ask my colleague, Mr. Saad, to outline the operating safety priorities.
Ziad Saad, Vice-President, Safety and Sustainability, Canadian Energy Pipeline Association: Thank you.
To discuss the potential failure causes in pipelines, we have summarized some of the hazards that we may experience as pipeline operators. CEPA member companies use a management system approach to identify potential hazards, complete risk assessments and determine appropriate litigation strategies. This approach acknowledges there is no silver bullet and that a combination of methods is required depending on a particular pipeline.
The primary hazards experienced on transmission pipelines are external corrosion, cracking, third-party damage, construction damage and geotechnical hazards. I will address each of those in turn.
The first point I would like to make is that internal corrosion is not typically a threat in transmission pipelines. In particular, I would like to point out that many recent research efforts have shown that diluted bitumen is not corrosive in transmission pipelines; it is similar to other crude oils.
External corrosion is controlled through the use of cathodic protection and quality coatings applied to the steel pipe. In the 1970s, the industry largely adopted polyethylene tape as the coating of choice. It was later discovered that polyethylene tape coatings were less than ideal and resulted in increased pipeline vulnerability to some defects, such as external corrosion and stress corrosion cracking.
This coating system is no longer in use; current coating systems offer robust performance. Approximately 20 per cent of the Canadian transmission pipelines are coated with tape coatings. Several types of in-line inspection tools are utilized by CEPA members to detect corrosion and to allow effective preventive maintenance for tape-coated pipe.
A further safety focus is cracking, which may typically occur at the seam allowance in a pipeline, or due to a corrosive environment in the case of stress corrosion cracking. The CEPA Stress Corrosion Cracking Recommended Practices was developed in 1997 to provide guidance to the industry on development of a SCC — stress corrosion cracking — management system. The Stress Corrosion Cracking Recommended Practices is recognized around the world, and the second edition published in 2007 is cited in the major Canadian Standard for Pipelines, CSA-Z662, the oil and gas pipeline systems code.
Crack detection and characterization with in-line inspections is challenging, but great advancements in the technology have been made in the last decade. CEPA member companies continue to drive improvement in this area, and in-line inspection of cracking is now common. In rare cases where inspection is impractical, periodic pressure retesting is considered.
Prevention of external damage is critical. CEPA members provide information to the public and work with call centres to provide awareness of the location of their buried pipelines. In addition, regular right-of-way surveillance is used to detect unauthorized activity near pipelines. Periodic inspection using in-line inspection tools is also used to detect mechanical damage from third-party strikes.
The potential for construction damage to the pipe is minimized by quality control processes and inspection of pipelines prior to backfill. Post-construction pressure testing allows final check for construction-related damage prior to operation. Pipeline operators can then utilize in-line inspection technology once the pipeline is in operation to assure continued safe operation.
Finally, geotechnical hazards are also a potential cause of damage to pipelines. Examples of geotechnical hazards are landslides or erosion at a water course crossing. Pipeline operators monitor slope stability to understand how ground movements may affect the pipelines. CEPA members recognize the importance of waterways to both Canadians and wildlife, and development of a recommended practice for integrity management of water course crossings is currently under way.
Ms. Kenny: I want to finish by briefly discussing the regulations and standards. I think you have heard a lot about that from other witnesses. It is important to recognize that the systems are heavily regulated both at the federal and provincial levels, so requirements for design, construction and operation of transmission lines are set out. Also, extensive audits and field inspections ensure compliance and work with operators to ensure continuous improvement.
A number of regulatory tools are available, and the variety of these is what gives Canadians one of the best systems in the world and the ability to select between non-compliance financial penalties and potential for prosecution, if need be. The basis for many of these regulations is on standards, both Canadian and elsewhere. The CSA standards are among the best in the world and have included a variety of other standards over time. These are updated regularly, which allows regulations to keep pace with continuous improvement that takes place across the industry worldwide.
CEPA companies develop recommended practices and guidelines themselves to further push these, which are sometimes later incorporated in standards. We, as an industry, have over 16 working groups, with over 200 industry experts involved in pushing forward on key topics such as pipeline integrity, environment and emergency security management.
We also have two CEPA board task forces, including executives from across the industry, that are seized with addressing specific areas of interest around emergency response, damage prevention and integrity.
Over and above that, we are engaged internationally, including the Pipeline Research Council International, which is very heavily supported by Canadian companies. The Senate should note that of all of the pipeline companies in the world, many of the largest are Canadian companies because of the scale of our geography. We have some of the largest and most sophisticated companies in the world, and we have, over time, demonstrated that our results are among the best.
These industry-wide management systems pressing forward on continuous improvement are what have driven us to announce our CEPA Integrity First Program, which is a first for us. It cuts across the entire industry, gathers together these many best practices and pushes forward in a systematic way.
We also want to ensure that we are more transparent in our results, and we have launched a major information and awareness campaign, which allows people to access information and ask us more questions. We have print ads and television ads to make that more apparent to folks, and we are striving to become the go-to place for information on pipelines, particularly through the website aboutpipelines.com.
Every two years, CEPA hosts the premier International Pipeline Conference. That IPC is one the largest of its kind in the world. This year we had over 1,400 delegates, representing 45 countries around the world, registered to come and share in leading technologies and best practices. That was hosted right in Calgary as it will be again in two years.
We have comparable and better performance to those reported in the U.S. and Europe, and we are involved with a variety of efforts to push these forward.
I hope that outline gives you a good overview of pipeline safety and the importance and global stature of the Canadian sector.
We look forward to furthering this discussion with your questions.
The Deputy Chair: Thank you for that presentation.
Before starting on my list of questioners, I would like to welcome Senator Sibbeston from the Northwest Territories.
Senator Wallace: Thank you for the presentation.
With the proposals that are being considered in this country to extend existing pipelines and to create new pipelines, there is obviously a need to get a buy-in from the public and to satisfy the public that the lines can be safely installed and transport the product in a safe, environmentally responsible manner.
Listening to your presentation, and having had some experience in the petroleum industry myself, I know there are technical standards and details that you are all familiar with that can be presented. To technical people, it can provide assurance of the reliability of the system and the capability of responses, but the public are not technical people for the most part.
With respect to the manner in which your association is presenting your case and attempting to assure the public that the risks are minimal and will be dealt with in a safe way and that the public should have confidence, do you feel that the approach you have been taking is being accepted by the public, or are there ways you can improve how you present your story to the public? If you feel it could be improved, in what way?
Ms. Kenny: I will take us back to 18 months or two years ago before we began our education campaign, before we launched the Integrity First Program publicly to provide metrics, post all of our best practices on our website and be much more transparent and engaged around this.
This is a sector that for over 50 years has been out of sight, out of mind. We have developed this backbone for Canada, with most Canadians, frankly, unaware, and energy security and safety becoming better and better over time. It is to the point where I do not think most people who fill up their car to take their kids to soccer give a second thought to the fact that it is thanks to a pipeline; the same with cooking dinner at night on your natural gas stove, of course.
We have been recognizing and probably need to apologize to the Senate and Canadians that we were slow on the uptake that people were looking for more transparency and more information. Happily, our ability to be out of sight, out of mind was born out of an excellent safety record, and it was not something that caused a great deal of controversy for Canadians over those many decades.
Today, as we look to expand to new markets, people are asking many important questions about our energy systems, the future of Canada, our international trade, et cetera, and all of these things seem to percolate up when you are proposing a new route or a new connection point for Canada, whether it is Maritimers getting access to western crude oil or our connections to Asia.
I think it is critically important that we provide plain language that is accessible. The turning point in this past year has been several major things, for example, a major update on our website and a number of plain language, simple fact sheets that we have been trying to test with various focus groups. We have invited people to ask us questions if it is not clear. We have launched a TV ad campaign and intend to do a number of outreach components into 2013.
Senator Wallace: Thank you for that. I am sure all the safety standards you could possibly put in place are there to try to minimize spills from occurring, in particular with liquid pipelines, but they do happen.
The effectiveness of the response in terms of time limits, in terms of the availability of spill response equipment, as you know, is critical in mounting a proper response. I realize you have spill response strategies and reports and practices and so on.
In terms of some of the pipelines that are being considered and the very sensitive terrain over which those pipelines would pass, over vast areas, varying topography and all of that, how can spill response plans anticipate the timeliness of response and the availability of equipment with all of that in mind? Are they that detailed, and if something happened in a remote location, do they consider how quickly spill response equipment could arrive at that location? Do those spill response plans get down into that type of detail?
I think that is the assurance the public needs. They want to know that pristine environmental areas in the country would be responded to quickly and protected. Do you get into that kind of detail in your spill response plans?
Ms. Kenny: Yes, that is an excellent question. Of course, with any proposed pipeline, those sorts of things would be addressed in infinite detail through the course of a public hearing and invite cross-examination on them to uncover any concerns or questions that might exist.
I will share with you that I personally have looked at some of these emergency response plans, and the level of detail is incredible: down to individual streams, direction of flow, anticipation of how quickly the water moves and even seasonality. Those things have to be accounted for. The degree of remoteness, the type of topography and the design are also a part of it in terms of depth of location of valves, of sensors, et cetera.
Keep in mind that while some of the new proposals appear to be remote, I would venture to say there is not a single type of terrain in Canada that we have not already got pipelines safely operating in, and a lot of them are very remote. For example, Enbridge has been operating the Norman Wells pipeline halfway up the Mackenzie Valley since the mid- 1980s. We know how to plan for response and how to cross anything from continuous permafrost to major mountain ranges.
Senator Massicotte: I will start off with a request for information. In your concluding comments you say CEPA members have comparable or better performance as reported by organizations and regulators in the U.S. or in Europe. Could you send us the data to support that in a detailed sense?
In the next paragraph you compare your safety record to rail, but I suspect the quantum 5 accidents for pipelines and 1,023 for rail is probably not the best comparison. Maybe a better comparison is the volume each carries. Would you have data indicating the volume you carry, maybe per kilometre, the accident rate and information on ships as well? If you could get us that information we would appreciate it. Then we could have a fair comparison of your safety record to other means of transportation, and in other countries.
Mr. Saad, when I look at the June 2009 report from the Canadian Association of Petroleum Producers, based on figures for 2008, 51 per cent of all incidents in Alberta were caused by corrosion: 39 per cent by internal corrosion and 13 per cent by external corrosion. You mentioned that corrosion — I think you talked about external corrosion — was not an issue, not a problem, yet it seems to represent 30 per cent. Could you explain that a little bit? Has it changed much since 2008? Is it different in 2012? What is the issue here?
Mr. Saad: The difference, senator, is actually the type of pipelines that are being considered. The vast majority of the pipelines that are owned by the producer communities are the gathering pipelines. Those pipelines carry a wide range of products and their operating regimes are different, so their vulnerability to internal corrosion is different from transmission pipelines. Transmission pipelines that operate 24 hours a day are constantly flowing and constantly being pigged and have various other maintenance programs. They also have quality control of the products coming in, so the tariff for the pipelines specifies the property ranges of the products that they can carry.
That is where the difference is, senator, where the transmission pipelines are not vulnerable to internal corrosion the same way that some of the gathering pipelines are.
Senator Massicotte: Vulnerable to internal corrosion or external?
Mr. Saad: Internal corrosion is not an issue for transmission pipelines. External corrosion, because that is imposed by the environment in which the pipes are buried, are subject to external corrosion, and that is where all the effort is.
Senator Massicotte: I have a breakdown of the percentage of incidents in Alberta caused by corrosion or construction. Do you have something similar for transmission pipelines? I would not mind seeing a percentage of incidents by each factor, if that could be sent to us.
Mr. Saad: Yes, absolutely.
Senator Massicotte: In our last committee hearing on incidents, we noticed that there in the last year or two has been a reduction in the number of incidents from five years ago. You had an average of 75 to 100 incidents four or five years ago and now you are down to 75, on average, or approximately one death per year, which is always too many.
The explanation we got from the National Energy Board was simply to say that your members are now more sensitive to safety and that it is more cultural to them. It is now part of the organization: They talk about safety all the time. Do you agree with that explanation and is it that simple?
Mr. Saad: I agree that both the practices and the technology have improved over time, but I would like to point out that the statistics of CEPA members, which are the big transmission pipelines, are far better than what was described. For example, we have not had a death among our member companies for decades.
However, I do agree with the basic premise, senator, that the practices are constantly improving, the awareness is constantly improving among the employees, but also the outreach to the communities. The technology that allows us to maintain pipeline safety is also improving.
Senator Massicotte: Why is it only in the last two years? Why did it take so long to respond to the safety issue, if the comment by the person from the National Energy Board is accurate?
Ms. Kenny: Maybe I can speak to this part. One thing that is really important to recognize is that for the significant incidents, on 110,000 kilometres of pipeline, they are single-digit numbers and often zero in a given year. Trend lines are difficult because they are so unusual.
It is helpful to look literally decade to decade and indicate the degree to which there is a downward slope in avoiding things of consequence, which has been largely through a long-term effort around safety culture and the application of sophisticated management systems. These have improved greatly in all sectors of our economy, going right back to the auto industry and quality management programs from the 1970s. Those same practices of attention to every detail and every risk, as well as materials technologies and the like, have presented a marked change in safety and an embedded culture around that.
The second thing I want to point out is with respect to some of the smaller incidents where the numbers come up into the range of 70 or thereabouts. We have a practice in our companies to report even the smallest possible indication. We have companies that will phone in to the NEB if they even see a smudge of grease on a valve stem. These are hardly what you would call significant, but they are early indications of things that we are taking action on, and they are reported in a way that in some other sectors would probably never even come to light.
Senator Massicotte: Do you have those stats? When you say "decade by decade," do you have information on transmission pipelines that you can send us?
Ms. Kenny: Yes.
Senator Massicotte: You are basically trying to say that a lot of the information we get is not only for transmission pipelines but for what I call feeder pipelines or other stuff. You differentiate real loss on that. How do you define one versus the other? Is the pipeline going from Alberta to the West Coast a transmission pipeline? Is it a question of distance?
Ms. Kenny: That is a great question. I think the first differentiation is pressure. When you are moving product a long distance, you tend to work at a pressure that is a lot higher, roughly 300 PSI.
I have to clarify that there is no explicit cut point between these things. The analogy I like to use is that transmission pipelines are like energy highways, so at what point do you call something a road versus a highway? For us, it is moving things from one region to another or one province to another, or international trade, at a relatively higher pressure.
Senator Massicotte: If I were an environmentalist, I would be alerted to this point and say your incident rate is much lower than the others, but what we saw is averages so it must be a lot higher for what I call the feeder pipelines. One should then say that the standards of care, the standards of safety and the environmental standards are not very high or certainly not high enough. That would alert me to say that there is a weakness.
Ms. Kenny: What is important is fit for purpose. Also, of course, your study is focused on how to move hydrocarbons around Canada in a big way — truck, rail or pipe — to be able to move inter-regionally. I think it is appropriate that your focus is primarily on transmission pipelines.
On a local level — and again I go back to the road analogy — sometimes the secondary road is perfectly adequate for local use but may not be quite as robust as a major highway with multiple lanes.
Some of the feeder pipelines are used for a relatively short period of time. It is perfectly okay if they do not have an ongoing integrity management system because they are not meant to be operating for decades. They are used for a short period of time and then taken out of service very safely. Those are heavily regulated at the provincial level, and I think Canadian statistics, if you were to talk to the ERCB in Alberta, for example, or in Saskatchewan, or the OGC in British Columbia, would indicate that they are very safe and among some of the strongest regulations in the world.
We are here to speak to the transmission pipelines. They are long life, heavy use, high pressure systems, and so duty of care, attention to detail and ongoing longevity are extremely important.
Senator Massicotte: Thank you.
Senator Lang: I would like to follow up on Senator Massicotte's question because I want to look at these statistics. We are dealing with the larger pipeline, and we have been told that feeder pipelines is a different issue or at least a separate issue with respect to the question of standard of safety to some degree. However, we have these statistics in front of us where there is a fatality, on a five-year average, one every year. At least these are the statistics we have. Are these statistics mixed with the feeder pipelines along with the main transmission pipeline? Where are we getting this record of statistics as far as the pipelines are concerned?
Ms. Kenny: Senator, as a take-away, I think what we should provide another path of clarity on this issue of human safety. I suspect that some of those numbers are about worker safety during construction and that sort of thing. I would need to confirm this, but I have been told that it is safer to work for a pipeline company than for the federal government. We are extraordinarily safe considering the scale of the equipment we are using.
To my knowledge, there have not been any public deaths. Occasionally there are incidents involving workers, particularly in the upstream if you are dealing with hazardous chemicals such as H2S, which can occur on the upstream level. We need to clarify those numbers for you because if your focus is public safety, I do not think those numbers are at all indicative of any concern whatsoever.
Senator Lang: I would appreciate you providing us with that. If the statistics have been compiled, perhaps that will bring this all together. It is somewhat confusing for the public and for ourselves when we read this.
I want to go on to the question of safety and look at a number of incidents that have happened in the recent past, which of course has brought forward the question of pipelines and the question of safety. One is the issue of the rupture that took place in Michigan in 2010. We can all recall the news media and the exposure that it got to the general public and the concern by the general public, especially being in a major waterway.
In their investigation, the U.S. National Transportation Safety Board said that the company in question knew for several years that the pipeline was at risk due to corrosion and cracks. That is in the jurisdiction of the United States. In the Canadian jurisdiction, could it happen that a company would know there was a risk due to corrosion and cracks and the National Energy Board would not be made aware of that?
Ms. Kenny: Senator, it is important to acknowledge that the reason we have elaborate integrity management programs is to monitor all of these systems for any occurrence of corrosion or cracking. The National Energy Board is well aware of and regulates and audits those perhaps thoroughly.
I will use an analogy to human health. If you go to your doctor and get a clean bill of health, it may still mean that you are monitoring things over time, some things you have a watching brief on, and it is the same thing with pipeline safety. When we do the internal line inspections, we will sometimes see some minor occurrence of corrosion or very preliminary indication of a crack. It does not mean that it is impairing safety at all. It does mean that we need to keep monitoring it thoroughly and replace it well before there is a safety issue. That is how we assure safety in Canadian systems.
Senator Lang: I do not think that really answers my question. We have an American system and a Canadian system. You stated a little earlier that we had the safest system in the world compared to any other place in the world. That is the way I understood your comments. My question was this: If a company in the transmission of oil or gas in Canada knows there is a risk in one part of their pipeline due to possible corrosion and cracking, are they required to report that to the NEB so that the NEB and their regulators know this is an area that must be watched?
Ms. Kenny: Yes, they have to report that and that is always reported and it is ongoing. That risk exists constantly, and that is why we use such extensive integrity management programs constantly to avert that risk.
No transportation system and no industry is 100 per cent risk free. Whether we board an airplane or drive in a car, we are dealing with risk management. It is thanks to aggressive risk management, excellent standards, continuously improved technologies and systems that we are able to report to you today that we have among the best systems in the world, and we are pressured and pushing ourselves to get even better.
Senator Lang: I believe it is safe to say that the Senate committee and you have the same objective. The objective here is to minimize risk to the absolute minimum that we possibly can.
That leads me into another area, and that is the question of new technology and systems that are coming into play. I asked this question last week and I would like to ask it again. It has to do with the utilization of satellites and the technology they are bringing to the day-to-day operations of pipelines. How do you see the utilization of satellites further minimizing risk?
Mr. Saad: In the past decade a lot of work has been done on the utilization of satellites, especially as more and more satellites become available. There is a distinction I would like to draw. Of course, there are lots of communication satellites out there, but the earth monitoring satellites are fewer in number. That still limits the broad range of applicability, mainly because the surveillance periods are not constant. However, they are being used more extensively for slope stability.
We talked about geotechnical hazards. Satellite technology can be applied to photograph or monitor a certain area on a periodic basis. That can provide, with great levels of accuracy, any indication of movement of slopes or changes in the earth's surface that would provide information to engineers around potential hazards to a pipeline. That is one application that is being explored with satellite technology.
Ms. Kenny: I would add that, as Mr. Saad has indicated, there is more to come. We have had a meeting with the Canadian Space Agency, and it is interesting to see where Canadian technology might be able to be developed for our needs. I expect that over the next decade we will see a lot of advancement in that area, led by Canadians.
Senator Ringuette: To follow up on Senator Lang's line of questioning, you say that you have an aggressive risk management program. You indicated to us that approximately 20 per cent of Canadian transmission pipelines are coated with a tape coating, which does not seem to be a very good performer and is a major risk issue. Twenty per cent of the current pipelines are coated with coated paper. I would like you to table with the clerk of this committee your management system, particularly in regard to removing that 20 per cent of pipeline.
Second, in the last few years you have probably done some comparative study of your particular industry and the competition in regard to transportation modes for oil. If so, could you provide a copy of that study to this committee?
Last but not least, you engage with your counterpart in Europe. They have major transportation pipelines. Could you identify for us one that would be very similar to what we are doing in Canada in regards to taking care of geography, topography, environment and the product line that is transported within that pipeline?
Actually, I have a last question. Could you provide us with your average cost of design, construction, operation and abandonment?
Ms. Kenny: Senator, I will start with a few responses to what were four different questions.
On the tape coating, I must clarify that yes, 20 per cent of the systems in Canada were installed in the period of time in which tape coating was utilized. They are very safe in operation, and we continue to monitor them closely. Better ways to coat pipelines are being deployed today, and they are making it simpler to do. However, it is by no means necessary to replace them at this point in time. What is critical is that the integrity management programs are ensuring their continued safety. A lot of the tape coating is adhering, but there are areas where it sometimes loses its bond. That is the area that you watch for with this internal line inspection, and you do progressive replacements individually and in small areas.
Senator Ringuette: I am sorry, but if I can interject here, clearly you have identified that 20 per cent of the current transmission line has this kind of tape coating that is corrosive. You said that your industry practised aggressive risk management. If that 20 per cent is a risk factor in regard to corrosion and you have known that for years, what is your plan to replace that 20 per cent of pipeline before a disaster happens?
Ms. Kenny: Senator, thank you for your question. I think it is a very important one to uncover and clarify.
Tape wrap coating is not corrosive. It is an effective coating, less effective than our current coatings. What can happen with tape wrap coating is that in some areas it can disband from the steel and can increase the risk of corrosion, despite the fact that we also use cathodic protection and many other measures in operation to prevent corrosion.
The aggressive risk management is to deploy internal line inspection on a regular basis using sophisticated instruments that can detect whether or not corrosion or cracking is occurring. That is what has been done for decades, and that is why we are seeing a reduction in the number of incidents and an increase in safety. There is no need to look for specific replacement, but there are replacement programs where particular sections are deemed to be no longer safe. That is how we assure safety to Canadians, and it is well regulated and well documented.
Senator Ringuette: I hope that the different issues I have raised will be tabled with the clerk, but I want to know, of the pipeline spill incidents that have occurred in the last decade, how many of those pipeline structures were within this 20 per cent of tape coated pipes that we are talking about?
Ms. Kenny: We can certainly provide that information to you.
Senator Ringuette: Thank you.
Senator Brown: I wanted to ask how the expansion and contraction of steel pipe is affected by keeping the depth of the pipeline down to three metres, or nine or eight feet. Is that not the way you overcome the expansion and contraction of a pipeline?
Mr. Saad: Senator, the typical burial depth of pipelines is about one metre underground, but once the pipeline is buried, it is considered fixed in place. The actual interaction with the soil prevents it from moving in expansion and contraction for the buried sections of line. You notice that, often, with small above-ground sections, you will have expansion loops. Those are intended to compensate for movement of pipe that is above ground. The below-ground pipe is actually considered fixed in place, so it does not respond to contraction and expansion.
Senator Brown: I have one other question. It says in this document here, in paragraph C, that there was "a crack in the circumferential filler weld of a weld on a repair sleeve . . ." I have never heard of a weld over a weld. I thought that all welds had to be ground out completely and started from scratch again. Did this thing break because they tried to weld over a weld?
Ms. Kenny: We can take a closer look at that specific quote, but you are absolutely right that welding has to be done according to specific procedures. Where you have a thicker wall, it is typical that by design you have a layering of welds. You will have more than one pass of the welding material to build that up. I suspect that that is what you are referring to.
Senator Brown: Yes.
My father was licensed to weld high-pressure steam boilers. He had criticisms of my ability to weld, but he said that you have to grind out a weld completely in order to start over and prevent it from failing again.
You gave me an informational graph on the total percentage of breakage in all of the pipelines that exist. It was a very small percentage. I do not have it with me, but I think you could probably give me that.
Ms. Kenny: Yes. We can file that information.
Senator Brown: Thank you.
Senator Patterson: I would like to ask about pipeline operators and safety. You talked a lot about industry cooperation and best practices, but I know it is also a very competitive industry.
As far as pipeline safety management systems, are pipeline operators proprietary or do they willing share safety technology and best practices with other operators?
Mr. Saad: I can say unequivocally that when it comes to safety, there is no such thing as competitiveness; people do share their safety practices willingly. Whenever we come up with a recommended practice as an association, we publish it on our website. In fact, at the recent International Pipeline Conference, one of our members presented a paper on performance indicators for pipelines. One of the international delegates stood up and asked, "Where can I buy this information?" I had to get up and say that once all the information we develop is vetted and we are confident of its accuracy, it will be published on our website."
Senator Patterson: That is very helpful.
As far as the safety management systems, is it common among pipeline operators to contract out pipeline safety management systems, or do they develop systems in-house?
Mr. Saad: Predominantly, they develop them in-house. They could engage third-party consultants to come in and help draft them and put them together, but the actual application of the management system is absolutely undertaken within companies. Personnel are trained on it and are very proficient with it. It is a core piece of the management system that all transmission companies ensure they have.
Ms. Kenny: One area that external parties are very useful for is vetting and verifying the system, much like they are required by law to use an accounting firm to look at financial results at the end of the year. Those sorts of practices are often deployed to ensure that the internal work of those management systems is as effective as possible.
Senator Patterson: On an unrelated matter, looking at your testimony before the House of Commons standing committee in October, you told the committee that the biggest safety risk to the pipeline industry was damage incurred by third parties. You also said that Canada lacks the legislative means to enforce physical protection of pipelines from third parties. You urged stronger federal regulation that would require any party digging to call a pipeline operator if it is near a pipeline, and impose fines for the violation. Has there been any progress on that? Is the NEB involved in that issue of developing legislation to deal with what is apparently a risk?
Mr. Saad: Senator, we can have the best management systems in the world, but if we do not have rules for third parties, that is where the risks come in. They are the ones we try to mitigate with surveillance and other methods, but they are not 100 per cent in our control.
The one-call centres we referred to in our statements are a critical part of this, as well as ensuring enforcement can take place. One of the priorities is ensuring that everyone belongs to a one-call centre, whether they are owners of underground infrastructure, pipeline and otherwise, as well as people who will dig. This would ensure they call a one- call centre.
In terms of legislation, Ontario has just instituted Bill 8, which makes calling one-call centres mandatory. That is the first piece of legislation of its kind in Canada. We look forward to having more legislation across the country like Bill 8 in Ontario.
Senator Seidman: Ms. Kenny, in your presentation you specifically referred to research and development. I wish to ask you about that. You said that CEPA member companies complete research and development internally. I presume that is in-house R & D programs that would increase pipeline safety. I am making an assumption there, and I would like you to elaborate. You say this is with CEPA and other CEPA member companies or in other venues, such as Pipeline Research Council International. Could you please elaborate?
Ms. Kenny: Certainly. There are a variety of aspects to advancing technologies. I will start within the companies, and I will ask Mr. Saad to elaborate because this is his area.
For example, when we talked earlier about the importance of these internal line inspections and advancing the technologies there, sometimes our major pipeline companies will team up with a particular technology company to work collaboratively to push the envelope on investigating for these micro cracks that can be very hard to see. Enbridge and General Electric have a cracking tool that they are using on Canadian systems to advance that practice. It is the only one of its kind in the world. In so doing, they will make Canadian systems safer first but also produce technologies that can be used more broadly.
Other companies partner with other firms. One thing that we intend to do in collaboration is finding better ways to draw together those findings more quickly. In fact, our board level task force is committed to it. Such findings naturally enter the marketplace as far as technology offerings and services, but we recognize that we can move that faster.
The next level would be field trials within companies. How effective are the materials and practices they are using? How do you measure the results and tailor the technology used?
Finally, the detail technology — the deep, lab-bench research — is done at universities and research centres around the world. This is where things like the International Pipeline Research Centre are important for ongoing big programs, as well as the International Pipeline Conference. We had 1,400 experts from 45 countries come to Calgary for a few days to share all of that knowledge and to post and publish advanced research standings so that engineers and technologists can take it all to the next level.
Mr. Saad: It is that collaboration that provides the best results, whether it is bilateral collaboration like the Enbridge/General Electric situation or the PRCA, which pools a number of operators and interested parties; they all put their own money into the pot, so to speak, and co-sponsor projects. There are other forms of what we call joint industry projects where several companies will come together with a research body and they will attack a certain problem. We have academia as well.
Ms. Kenny: We have in Canada a Centre of Excellence for Trenchless Technologies, which includes pipelines. Something we want to accomplish in 2013 is making this even clearer and more focused. It has been working very well. We can take it to the next level, I think.
It is hard to separate the actual research programs, which I think are in the tens of millions a year, from our ongoing internal line inspection programs and the implied research that occurs through them; I think the last number was 600 million or 700 million a year in our operations and maintenance program. A lot of that peels out applied research as you go forward and assures safety.
Senator Seidman: As you were speaking, I was writing down "collaboration" and then "applied research." You dealt with both of those, and I appreciate that. You are right that the issue is applied research ultimately to deal with whatever incidents you may have or futuristic plans in terms of further development of pipelines and environmental aspects. I am sure there is a whole host of things that you have to come up against.
You say that incident investigations and input from technical experts or even the public are used to identify areas of potential improvement. How do you use the public to identify areas of potential improvement?
Ms. Kenny: I will take a first crack at it, and Mr. Saad may have something to add.
We have been talking a lot this morning about the technical aspects of risk management. At the end of the day, in my view, safety is two things. First, it is the engineering side of it. We are both engineers, so of course we have a habit of sliding into that. At the end of the day, keeping things safe does require good engineering.
Safety is also public confidence. Do people see safety and feel safe? Is the perception of safety there for them? That is a very important part of our responsibility and why our communications are trying to do a much better job of being open and transparent.
We want to listen to people. If we hear people saying they are concerned about this issue, we as engineers recognize when it is not really a technical issue and do not worry about it, but we still need to respond to that. We still need to provide information and we do materiality analyses when we look at our next round of best practices through this industry-level Integrity First Program. We incorporate, in that materiality analysis, what is on people's minds. What about the heart and soul of safety, not just the technology of it?
Mr. Saad: That is a clear indication of the evolution of the industry in this migration from "out of sight, out of mind" to an industry that is really conscious of what the public thinks.
As Ms. Kenny said, many times in the past engineers came around the table to determine where there are areas of development that need to take place. As Ms. Kenny said with the Integrity First Program, a great deal of it is about transparency and taking public opinion into account. Specifically, as an industry association obviously we are now doing more public perception surveys, but also this materiality analysis that Ms. Kenny alluded to was all about the review of external literature and publications to see what kinds of questions occur most frequently in people's minds.
Our focus this year, for example, is pipeline integrity and emergency management. While our internal review says those are among the most sophisticated of our management systems, around integrity management and emergency response, we still decided to tackle that as a high priority because we knew that the public has very high expectations in that regard.
Senator Seidman: With their expectations perhaps getting higher.
You have not used the words "social licence," which is interesting because it sounds to me like that is in fact what you are working on.
Ms. Kenny: Yes, that is absolutely correct. Social licence is ultimately recognition, as our members clearly have, that a regulatory licence or a legal permit to proceed is not enough in today's society to say this is legitimate. It is important to renew and deepen a sense of confidence that can come from transparency, but social licence is critically important.
The other factor, though, is that in the world of risk and social licence we have a challenge on our hands. It is often very easy, when given a binary choice, to say "no risk." In fact, pipelines are far safer than other options, such as rail or trucks, in moving large amounts of energy. If we need and use energy as Canadians, as a society we need to move it as safely as we can and deliver it as reliably as we can. By "safety," I include, of course, environmental protection.
We need to be able to enter the dialogue around social licence in a new way to ensure that confidence is built in an informed way and in a way that encompasses the questions and concerns people have, but not in a way that is isolated. There is an energy system and a social system we need to be able to address.
Senator Sibbeston: Ms. Kenny, you mentioned that the Enbridge pipeline from Norman Wells extends to Zama, Alberta. In the summer of 2011, Enbridge had a spill. They dealt with it, and it caused a certain amount of damage. I am sure millions were spent on the cleanup. Are you aware whether the company has taken preventive measures to ensure there are no further spills? Second, do you know what the company's policy is with respect to compensation for the damage done to the lands in this case?
Ms. Kenny: Senator, I am not privy to the specifics of that company's policies on that question, but I would say a couple of things generally.
First, I have never met anyone in our industry or heard any executive indicate anything other than an unequivocal commitment to make things right in the event of any sort of incident. What we witness when we see a cleanup is it is heavily regulated, as appropriate, from a variety of departments, as appropriate; ongoing remediation and monitoring until it is made right; and full compensation by the companies to individuals affected or to ensure that the remediation is complete. That is something that we stand by, required by law and embedded in the polluter-pay principle in general.
I would also add that these are very large companies with robust and extensive backup, both in capital and in insurance. They are constantly recalibrating the numbers to ensure that they are absolutely able to fully fund any eventuality.
Senator Johnson: I feel very encouraged listening to you this morning. I think you are doing excellent work.
I was impressed with your Integrity First Program. Can you tell me a little more about it? When you announced it in August, you talked about pensions, emergency reclamation and education. How are your member companies responding to this and what do you think their potential is in respect to working with you in this regard?
Ms. Kenny: I will start off and then turn over to Mr. Saad because he is the VP accountable for this program.
I have been very pleased to be in the position of leading this association at this time. These are companies that have absolutely stepped up and recognized the value and strength of collaborating across these best practices.
You will see similar programs in other sectors. The most obvious one I would point to is Responsible Care in the chemicals industry, which was also led off by Canadians a couple of decades ago, in fact. Their need to move aggressively was at a different time and different place.
The central point is whether we have adhered to raising the game. We have, absolutely.
Is there a spirit of willingness to adopt these best practices as we develop them? Yes. It is unequivocally not driving to the lowest common denominator but pulling up.
By being much more systematic, we can be focused on the priorities that matter most, measure the results and report on them, and share those best practices transparently and invite people to comment on them.
Mr. Saad: That covers it quite well. The key is that we have been collaborating since our inception as an industry association, and we will be celebrating our twentieth year next year. That collaboration has happened. What Integrity First has brought to the table is putting the structure together so it is traceable, verifiable and something that we can report on with the public confidence very much in mind in doing so.
The Stress Corrosion Cracking Recommended Practices that was developed in 1997 and then reissued in 2007 is a very good example where, without a structure, there was wide adoption of it. It was referred to in national standards and in fact is used internationally all over the world. However, Integrity First will bring additional robustness and transparency.
Senator Johnson: Does the United States have a comparable program at this time?
Ms. Kenny: No, not really, although our counterparts in the U.S. are beginning to look at this across their industries. The history is a little different between the two countries in how we have preached safety. Ironically and happily we are now, I think, finding that we are merging.
The U.S. has tended to be very prescriptive; their legal framework is more litigious. Some of their regulatory agencies are more political and I think out of that you have seen a more fractured but safe approach.
In Canada, 20 years ago we started down the path of reworking our pipeline regulations and pipeline safety standards. They have been oriented toward more of the European approach, which is more of a safety case approach, more embedded in these management systems.
The central theme there is that you will always have prescription in those standards and practices, so it is not divorcing you from those specific requirements. However, you will never, in a complex system seeking safety, get to the goal of zero incidents if you just try to prescribe safety. You have to take a holistic approach, leave no stone unturned in terms of risk management, and you must have your regulators forcing companies to have those systems in place. As Mr. Saad outlined earlier, it is these systems developed down to the guy in the field who has some ownership of that day-to-day safety culture. If you do not instill that, you will never achieve your safety objectivities to the same level or degree.
From Canada and the U.S. we now see that we need strong standards and strong management systems in place. I expect that we will see more commonality, but we do not want to see Canada slide back into prescription when we know that the safest path is more like Europe and what we have been pursuing for two decades.
Mr. Saad: People in the U.S., including the U.S. regulators, have reached out to us to find out more about the Integrity First Program and the implications it might have south of the border.
Senator Johnson: I am glad we are showing such leadership in this respect.
Senator Massicotte: I have one quick technical question. I want to bring you to Quebec. You apparently said in a speech, and I think Senator Patterson raised it, that the biggest risk was damage by others rather than pipelines. However, I understand from the numbers for Alberta that in 2008 damage by others was only 10 per cent and not the most significant factor for incidents. Is that accurate?
Ms. Kenny: Absolutely. I am glad you came back to that, senator. To clarify, when we talk about damage prevention being the greatest risk, it is the worrying trend of it being very much on an upward incline. The number of near misses has increased significantly. About 25 years ago an individual in Ontario was killed instantly striking a pipeline. It is inherently one where a human is close to an accident, and that is never a good thing for safety. We are very concerned about the level of risk that is rising, particularly as cities grow, and also as cities and towns enter into a renewal of their own infrastructure, such as water systems and the like.
Without the requirement for a call before you dig, we see a very high risk of third-party damage as these other contractors are working near pipelines.
One specific example fortunately was not natural gas as it almost certainly would have resulted in loss of life. In Burnaby there was a strike on the Kinder Morgan Trans Mountain pipeline a couple of years ago. That was a contractor who had chosen not to call to locate the pipeline and thought they were hitting a rock; it was not a rock. It was a high pressure oil pipeline. Twelve houses had to be evacuated for some time for major clean up. Oil ran down into the Burrard Inlet. Happily, it was 100 per cent recovered. There is no environmental residual effect and no one was injured, but those things frighten us because they are completely avoidable and preventable. It is one risk that we cannot completely control. We are concerned because the number of incidents and near misses is rising.
Senator Massicotte: Let me be Quebec-focused. There is a debate going on where one of your members made an application to reverse the flow of a pipeline leaving Sarnia, going to Eastern Canada. If you can, give me some scientific measures. How risky is that incident risk compared to the oil that is coming from South America? Could you compare that?
Ms. Kenny: Yes, it is a great question. I do not have the stats at hand in terms of risk of tanker versus pipeline specifically with respect to the Quebec context, but I think inherently one has to recognize that a well-monitored pipeline is, from our understanding, going to be safer than moving around on water. Globally, about 90 million barrels of oil are used every day, and if it is not moving by pipeline, it is probably moving by tanker. The safety record on the high seas has become very good and the new standards for double-hulled tanker navigation, et cetera, is a change from where it was 20 years ago.
With respect to that particular pipeline, it is very important to indicate that it was originally designed in the wake of the oil embargo, specifically to bring western crude oil into Quebec for energy security. After a period of 20 years, it was determined that markets around the world were effective and the energy security issues were not as great, so it was reversed to bring crude oil from abroad into the Sarnia area.
Now oil markets have changed again. We have growing production in Canada and an opportunity to sensibly provide more Canadians with more Canadian crude oil. There is no additional safety risk to returning to the original design flow direction; it is a system that has been well monitored throughout its relatively short life. I think that the hearings under way will illuminate and address any concerns that may be there, but overall I would have to say that is an extremely safe undertaking.
Senator Massicotte: Let us say there is a spill. Comparing a ship to a pipeline, some would argue that if you look at the way the oceans work, the infected environment is probably less in seas than on land, given there is a natural separation of the atoms of the spill. Is that accurate and relevant?
Ms. Kenny: I do not think that is accurate, senator. The knowledge base of how to remediate any oil spills on land is well understood and well applied. We have deployed those for many decades in the event of any issues, and environmental regulation has ensured that. It is important to get there to clean out the site well, to monitor it in remediation. There are a number of measures taken.
However, at the end of the day, some of that soil is actually taken to a site for bioremediation. It is important to recognize that hydrocarbons are just complex molecules similar to plants and even our own bodies. Some of the most effective techniques are letting nature take its course and break it down in what is essentially a large compost heap over time, with microbes breaking that oil out into smaller hydrocarbons.
I do not mean to simplify it, but simply remediating spills on land is well understood, well addressed, well regulated and well known.
Senator Lang: I would like to follow up on another area. I know you are doing everything you possibly can to minimize risk with the various companies that you represent, yet at the same time, from the information we have, unfortunately every now and again we do have what is termed as a pipeline rupture.
I am going to use the rupture that took place in the Peace River country this past year as an example. I want to go to the next step. The reason I bring this forward is that we are talking about safety, and we know that every now and again there is an incident. The questions are: How do we resolve that incident and are we doing everything we can to meet all the obligations, both socially and economically? Those who are opposed to pipelines have one message, and in my judgment they work in some cases on half truths and in some cases on fear of a situation that people do not understand or have never been exposed to.
From the perspective of a rupture that took place in 2011, there are a number of aspects that had to be dealt with. First was the social responsibility with those who were directly affected, and second was the environmental cleanup. Perhaps you could describe to us for the record how the companies involved met their social responsibilities and whether it was satisfactory to those who were affected.
As you had explained earlier to Senator Massicotte, this is a natural product, and at the end of the day it does meld in with the environment to some degree. Did we manage a cleanup that was acceptable to the general public in that area? You never hear what happens after a rupture takes place.
Ms. Kenny: Thank you for that question, senator. Again, as with some of the other questions where things are related to a specific company, I can only provide general information of what I do know, and perhaps the company in question or their regulators could provide more detail.
I would say that any incident is everyone's incident. From a social response point of view, we are all very concerned and interested in the information flow and assuring local publics. Emergency response plans that companies have will include a major call-down list and detailed procedures on how to handle that. I think in this case the communities were informed promptly, as per the record I have seen. There were concerns in the early days as to whether enough information was provided quickly enough. I cannot speak to that, but I do know that the company has done extensive consultation within local communities to ensure that questions and concerns have been fully addressed.
Two years hence, I actually saw a recent preliminary report on that particular incident, and it suggested that the recovery of the crude oil that was spilled has been virtually complete; almost 100 per cent was recovered. That is not leaving it on site to break down further; that is actually removing it from site to treat it separately. There were a few animals killed that were not able to be rescued; the numbers were very small. That site remediation will continue until the company, local residents and regulators are satisfied, and I think we are very close already in that case.
I am glad you asked the question because what I hear a lot in the conversations in the public sphere is an image that if there ever were to be an incident on a pipeline, it would be vast, devastating and permanent. That is simply not the case. They are very tightly contained regionally and they are very quickly cleaned up, within a matter of weeks or months for the first tranche and within a year or two or three for the tertiary response.
For the most part, a complete environmental habitat renewal will be under way very shortly, so that will be a thriving site again in short order. The monitoring of that will inform all of our members, thanks to this collaboration through Integrity First and our environmental workgroup, on what, if anything more, we can learn for that environmental response as well as the stakeholder response that you asked about as well.
Mr. Saad: The only other thing I would add is to again emphasize the commitment of the companies to see these incidents through. Irrespective of which incident you are referring to, that commitment is unwavering with our member companies; they stay with it until the job is done.
Back to one of the other questions, there is the willingness to share and collaborate amongst our member companies so we learn from events. Every incident has its nuances, and those are presented and learned from.
Senator Lang: While we have you here, for the record, with respect to the waterways — those are a major concern to Canadians — and new technology, my understanding is now we will in good part go under rivers as opposed to over them. Have you ever had a rupture in transmission pipes that go under waterways?
Ms. Kenny: Not to my knowledge, no.
Mr. Saad: Just to clarify, the vast majority of transmission pipes always go under waterways. What we were referring to, with the horizontal directional drills, is that you do not have to trench into a waterway at all during installation. They actually drill bell holes on both sides of the water crossing, and then they drill the pipe well underneath. In the case of directional drills, it is often over 10 metres underneath the watercourse, so it is really secure. Again, best practices now have become that they put an extra thick wall in the location of the river crossing to again ensure that the pipeline is more robust than it normally is.
Some failures that have been documented over the years have been where significant dynamic rivers have washed out a pipe. That is a risk that has been experienced. Now they have robust management plans to monitor all river crossings. All our member companies monitor — we talked about slope stability, how much cover is on top of the pipe and making sure it is not exposed in a flood event, for example.
Ms. Kenny: The watercourse crossings are about design and construction and about surveillance during operation. On design and construction, CEPA has a watercourse crossing manual that we did in collaboration with other associations, and it is now in its second generation. It has been used for about —
Mr. Saad: Third, actually.
Ms. Kenny: It is six or seven years old now?
Mr. Saad: Right.
Ms. Kenny: It has been useful with regard to how best to do these things, and it has also been useful to regulators as a guidepost on a minimum standard.
We are now creating one related to surveillance in operations. Each company until now has had its own surveillance plans, and those have been regulated by their individual regulator. We have an opportunity to get best-in-class across the industry, and it is of high interest for us to do so quickly.
Senator Wallace: I would like to go back to a question raised in the first round by Senator Lang when he referred to the pipeline incident that occurred in 2010 in the Kalamazoo River in Michigan. As Senator Lang pointed out, the National Transportation Safety Board, in reviewing what occurred after the fact, was critical of the federal regulation that was in place at the time and was also critical of some of the steps taken by the pipeline company and the way in which it responded and dealt with the matter before and after the incident. I thought the question Senator Lang was coming to was this: In comparing those circumstances, would there or could there be a different conclusion than what happened in Michigan? In terms of the federal regulation, the regulatory oversight and the compliance that required in that circumstance in Michigan, is there a difference here in Canada? Are NEB regulatory requirements different in a significant way such that we could have comfort that a similar result would not happen in Canada?
Ms. Kenny: I think they are stronger in Canada because of the attention to management systems as well as minimum standards. The NEB itself responded to the results of that U.S. incident by doing a detailed audit of the control room for that particular company to ensure that every effort had been made to advance and learn from that incident. We are taking note of all of those findings and deploying them across the entire industry, and the practices and learning that we are undertaking.
Could it happen here? Possibly. Do we have stronger regulation in Canada than the U.S.? Yes. Are we continuing to learn together? Yes.
Mr. Saad: One of the key features of the management system, and I do not want to put too fine a point on this, is what I indicated in my statements. We are at a level of sophistication where there is really no silver bullet. You can only achieve the excellence we require through constantly pushing the envelope on multiple fronts. That is the genius of management systems. It has been proven in many industries that through continuous learning — plan, do, check, act — you deploy better and better practices in everything you do. That is what really results in excellence, and that has been the emphasis of the Canadian regulatory system as well.
Ms. Kenny: Yes.
Senator Wallace: Thank you for your responses.
The Deputy Chair: I have a number of questions of my own, and I would like to follow up on Senator Wallace's line of questioning that followed up on Senator Lang's.
We all put a lot of stake in technology. When we were doing our three-year energy study, we went to B.C. and saw a huge control centre for an electrical system. We had this sense that perhaps there was a control system like that for the pipeline, monitoring of pressures and so on. However, in the Kalamazoo case, apparently the indicators or the gauges were saying one thing for 17 hours and people did not respond to it; they misread it.
You are putting a great deal of emphasis, as you should, on management systems, but if one of the major pipeline companies in the world, the most sophisticated and probably one of the best financed had this kind of management system problem, where do we get the confidence that this kind of technology can be operated effectively?
Second, what about management systems in that context between very big companies and progressively smaller companies? How does that technology apply and can we see that it might improve in the future?
Ms. Kenny: When we talk about a management system, many components have to work in consort. With leak detection technologies, first, how do you see that there might be an issue? Something upsetting in the pipeline profiles or pressure is a technology issue. How is that relayed to a central control room? What is automatically addressed as opposed to an alarm? There are also the processes in that control room. What are people doing? How do they assess? How do they confirm and reconfirm? When do they send out for visual checks, et cetera?
In the case of Kalamazoo, as per the report from the National Transportation Safety Board, several compounding factors led to that highly unusual and disturbing result. That is why we were all keen to see the learning from that. There is no single fix, as Mr. Saad said, no silver bullet, but it is about how these pieces fit together.
Across the industry in Canada, we have recognized leak detection technology and control room processes as two of the top priorities for the next six months. That has galvanized the fact of hammering this one hard.
Mr. Saad: Without necessarily going into specifics, the way incidents occur in modern, complex systems is they call it the Swiss cheese effect. You have layers of Swiss cheese, and when the holes line up, there are several levels of failure that need to occur in order for an incident to take place. What makes them unlikely to happen frequently is the rarity that those holes will line up. Unfortunately, in this case they did, and as Ms. Kenny said, they were as a result of multiple unusual, atypical operating conditions.
Having said that, the key from our perspective is that the industry knows about this and is learning about it. Similar to the water crossing management that we just indicated, we are looking at the control room systems for best practices in that regard.
Addressing the other part of your question, it also helps having the most sophisticated company knowledge trickle down to some of the smaller companies and some of the companies that perhaps do not have all the available tools at their disposal. That helps them get the same type of sophistication as the biggest companies.
Ms. Kenny: Part of getting safety right is of course fit for purpose. If you are running a smaller, simpler system, you do not need quite as elaborate a control room as you would if you were operating a control room from downtown Calgary that addresses a continent, if you will, from the viewpoint of, in that case, TransCanada. You will see escalations of complexity that are appropriate to the conditions of the system at hand.
The Deputy Chair: My next question is quite technical and it will become clear that I am not an engineer when I ask it.
Following up on Senator Ringuette's question about the detection of corrosion, I think your answer was, among other things, that there are mechanisms or technologies that you put into a pipeline and they can detect corrosion. They must be able to detect corrosion on the outside of the pipeline because that is where some of it would start. You do not have to wait until it cracks through, at which point it would be too late. Could you give us some insight into how that technology works?
Mr. Saad: What we call in-line inspection tools are sometimes they are referred to as smart pigs. Essentially they are a torpedo-shaped device with onboard computers, batteries and sensors. Transmission pipelines are specifically designed to accommodate these. They are launched into the pipeline, travel with the fluid in the line and are received at the other end in a section of line. It could be 50, 60, 100 kilometres long. As the pig travels, it collects data on the wall of the pipe.
Two main types of technology are used. One is magnetic flux leakage, which is similar technology to medical MRIs. It relies on magnetism running through the wall of the pipe to detect if there is thinning of the wall or cracks. The other one is ultrasound, again similar to the ultrasound technology used in medical devices. Those devices travel, and ultrasound is particularly suited to detecting wall thinning and cracks as well.
They are combined in different ways to be able to detect on the outside, as you indicated, senator, corrosion as it starts or cracks as they are initiated. They are able to provide those telltale signs to engineers who download that data once it is received and analyze it similar to how a radiologist would come up with a diagnosis in a medical situation. They are able to measure them, know the size of them, and know which ones are approaching a critical level and which are not.
The Deputy Chair: Most of us around this table would be great believers in how market mechanisms find price, which brings me to the question of how does the tariff costing in a pipeline reflect the liability or the safety considerations, the chance that there might be the risk?
Let me qualify that further to say that when you are assessing that cost in your tariff, would it vary with a pipeline that has been wrapped in this tape that is not perhaps as good? Would it vary with the age of the pipeline? Would it vary with the terrain, or does each company average it out over their entire network? How is that assessed? What is the mathematics of that?
Ms. Kenny: Generally the tariffs will be based on distance and total operating cost. The safety programs for most of the companies are held off books to say we are not going to create incentive for you to cut short on those; they need to be all in and they need to be done to the greatest extent necessary, appropriate and possible. The cost is rolled into the operating cost and then distributed across all shippers. One system may have higher maintenance costs than another because your maintenance choices will be appropriate to that particular system, but it is not segregated by specific lengths or specific locations.
The Deputy Chair: This question may be more provocative than I mean it to be, but I do not know how otherwise to say it.
There is a research centre that we hope to visit in Hamilton. It is a federal government research centre, Canmet, which does research into corrosion. It probably ranks high internationally in this kind of research. There would be those who could argue that that is a subsidy to the industry; that is, that the industry itself should be doing that research. Could you give us an idea of the value of having a government research centre like that and how the industry relates to it?
Ms. Kenny: Every modern economy recognizes that there is an important role for government in spurring technology, particularly on the leading edge of developments that may not be ready for direct application. We see it in Australia, for example. They have a very aggressive approach on pipeline research that combines government, industry and universities, directed toward priorities. Their Minister of Energy is on the record as indicating that for their economy, pipelines are one of the top four interests to them in ensuring that they can have a viable export market that continues to be safe and thrives. I just use that an as example. These are part of the partnership that is directed toward public interest.
Canmet is well known and has been for many years. As a graduate student studying welding metallurgy, I studied under a Canmet grant. I will not bore you with the details about micro-alloy elements and weld runs, but for a long time they have been at the forefront of stimulating research that would not necessarily be top of mind for an individual operator but are fundamentally important to building out the science and ensuring that Canadians are at the front of these steel making and safety issues.
Senator Massicotte: When there is a spill and there is environmental damage, I do not know whether the law is enough. Are you responsible for all the damages that you have incurred, or is it like the nuclear industry where there is a limit on liabilities? Is it unlimited?
Ms. Kenny: There is no limit.
Senator Massicotte: You are responsible to remediate totally. With regard to anyone who suffers damages from this spill, you have a legal responsibility for those persons?
Ms. Kenny: Yes.
The Deputy Chair: This is my final question, depending how you answer it.
You have noticed — and I think you may have addressed it spontaneously as well — that one of the threads in our questions is this idea of social licence and the importance of building that now. It is a new era, in a sense. It is almost as though these projects are never really turned down on environmental review. Environmental review strengthens the ability of these projects to be done properly. It is a different element now of social licence. Part of that is building credibility so that people can feel it is environmentally safe. I note that the industry, to the best of my understanding, never really attacks, criticizes or publicly diminishes environmental groups, but other opinion leaders have done that. Is that helpful?
Ms. Kenny: That is a great question. I think it is always important to avoid polarizing. It is important to take the high road and to expect from everyone concerned — environmentalists, industry, governments and stakeholders — a degree of honesty and forthrightness and also a drive toward what really matters to Canadians.
If it behooves one individual or one group or another to create myths designed to create fear, I think that is completely inappropriate, particularly in Canadian society. It may be appropriate elsewhere, but it is not appropriate here and it is not something we stand for. We have a policy of zero tolerance on lies, and we are aggressively discounting and countering things that people may choose to say that are inflammatory and just outright wrong because I think it is completely unfair to the public. We have some very important decisions to make as Canadians, and being informed and clear and able to have a rational conversation is critical. I think it is fundamental.
Is it helpful? I do not think going negative is ever helpful. I do think being honest and calling people out on lies is helpful. We will continue to do so and try to do our best to represent the facts as we know them. I appreciate that people who may be watching this today, or asking us questions, may be suspect of industry for whatever reason. All we can do is step up to our accountabilities and be as forthright, as honest and as transparent as we can be.
The Deputy Chair: You have certainly furthered that initiative today for your industry. We appreciate it greatly. I want to thank you both very much. I want to point out to you and to the public that I believe this is a great committee and this was a great discussion today. I am grateful for the work this committee is doing. I am proud to be on it. Thank you very much.
Ms. Kenny: Thank you for having us here.
(The committee adjourned.)