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Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 37 - Evidence - February 12, 2013


OTTAWA, Tuesday, February 12, 2013

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:01 p.m. to study the current state of the safety elements of the bulk transport of hydrocarbon products in Canada.

Senator Richard Neufeld (Chair) in the chair.

[English]

The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate and I am chair of this committee. I would like to welcome all honourable senators and any members of the public with us in the room and viewers all across the country who are watching on television.

I will now ask the senators who are members of the committee to introduce themselves from around the table. I will first introduce our deputy chair, Senator Grant Mitchell, from Alberta.

Senator Ringuette: Pierrette Ringuette, New Brunswick.

Senator Massicotte: Paul Massicotte, Montreal.

Senator Brown: Bert Brown from Alberta.

Senator Lang: Dan Lang, Yukon.

Senator Wallace: John Wallace, New Brunswick.

Senator Johnson: Janis Johnson, Manitoba.

Senator Seidman: Judith Seidman, from Montreal, Quebec.

The Chair: I would also like to take this opportunity to introduce our clerk, Lynn Gordon, and our two Library of Parliament analysts, Marc LeBlanc and Sam Banks.

On November 28, 2012, our committee was authorized by the Senate to initiate a study on the safe transportation of hydrocarbons in Canada. The study will examine and compare domestic and international regulatory regimes, standards and best practices relating to the safe transport of hydrocarbons by transmission pipelines, marine tanker vessels and railcars. The committee has held four meetings to date on this study.

In the first portion of our meeting this evening we welcome, from Spectra Energy Transmission West, Mr. Al Ritchie, Vice-President, Operations. Mr. Ritchie is coming to us via video conference from my hometown in Fort St. John. Maybe Mr. Ritchie can tell us what the weather was like today. I think it was mild, but I might be wrong. There are some people here from New Brunswick who experienced some snow over the weekend.

We look forward to your presentation, as always, Mr. Ritchie. It is great to see you. It is all yours.

Al Ritchie, Vice-President, Operations, Spectra Energy Transmission West: Thank you very much, Mr. Chair and distinguished senators. The weather here today is very mild for northeast B.C., so we are enjoying the break in the weather. I am the Vice-President of Operations for Western Canada for Spectra Energy.

At Spectra, we are committed to the safety of our employees, our contractors and the communities in which we operate. Safety is the principle that guides our work at Spectra every day.

I would like to thank the committee for the opportunity to speak to you on these important issues. I would like to touch on four areas: a very brief overview of Spectra Energy; talk about the safety culture that exists at Spectra Energy; speak about the construction, operation and maintenance of our Spectra facilities; and talk about our operations management system.

You may be familiar with Spectra Energy. We are partners with British Gas Canada on a major 4.2 billion cubic foot per day pipeline project. This new pipeline project, if constructed, will run from northeast B.C. to the Port of Prince Rupert. At Prince Rupert the gas will be cooled and condensed into liquefied natural gas for export. The project is in the early development stages and a final investment decision by the partners will be made in early 2015.

Spectra Energy and its predecessor company, Westcoast, have been safely operating the major pipeline and natural gas processing plant facilities in B.C. since 1957. In fact, Spectra is the largest processor of natural gas in Canada. It may be of interest that the first exports of natural gas to the United States flowed through Spectra B.C. pipelines.

At Spectra, we are focused on ensuring that a culture of safety exists. Our goal is to have highly engaged employees working every day towards a zero injury and a zero work-related injury culture. We build, operate and maintain our facilities with the objective of preventing the release of hazardous products from our pipelines and facilities. We track our safety performance daily and report incidents daily. We manage a safety tracker on our company portal visible for all employees. All incidents are communicated to the workforce, regardless of whether or not they result in a safety incident. We report and discuss safety performance and safety incidents with our senior management monthly and at each board meeting.

We very much recognize the importance of the continued trust of the communities in which we operate for the sustainability of our business and our industry. Our pipelines are designed and constructed using the latest pipeline construction technologies, methods and materials with the goal of meeting or exceeding current regulations and standards. During the three phases involved in building a pipeline — pre-construction, construction and post- construction — we apply quality management protocols, stringent materials and system integrity testing, comprehensive stakeholder engagement practices, and social and environmental stewardship practices.

As an example, as part of our gas transmission system in B.C., we recently completed a 24-kilometre section of 42- inch pipeline. This was the final component of a $400 million pipeline expansion project in this area. During this project, we held 33 weekly safety meetings designed to engage the entire construction crew. These meetings, along with top-tier safety practices on site, resulted in over 250,000 man hours being worked without a single medical aid or lost- time injury.

Spectra has a long-standing record of operating transmissions, pipelines and gathering plants in a safe and reliable manner. In its support of the importance of safety, Spectra invests close to $790 million annually across North America in maintenance and pipeline integrity programs to ensure the safe, reliable and environmentally responsible operations of our facilities.

Spectra is committed to operating and maintaining its pipeline system in a manner that complies with the requirements of CSA Standard Z662 and the National Energy Board Onshore Pipeline Regulations. At every stage of the pipeline life cycle, we take explicit and deliberate efforts to ensure that the pipelines are fit for service.

Our pipeline system was constructed over a period of almost 50 years. It includes pipe with diameters ranging from 3.5 inches to 42 inches. As a result, our pipeline integrity management program has to be flexible to accommodate the range of construction standards and material specifications, the range of operating environments and the ongoing influx of new data and information about our system.

Periodic examination is carried out to ensure our Pipeline Integrity Management Program takes advantage of improved technologies and that the program utilizes the best set of prevention, detection and mitigation activities that are available. Performance indicators are used to provide feedback to the program to ensure continuous improvement.

We work to prevent third-party damage to our pipelines. We have an ongoing program of public awareness that includes one-on-one visits and multiple information sessions designed for stakeholders throughout defined emergency planning zones, and we include right-of-way landowners, residents and businesses, schools, First Nations, municipalities and regional districts, and contractors.

However, in spite of our best efforts, not all activities near our pipelines can be controlled. We are working closely with CEPA, the CGA and the Canadian Common Ground Alliance to better mitigate this risk.

Even with proper construction, operation and maintenance, and a goal of zero accidents, there is still the potential for accidents, and our management systems allows for that with strong emergency response programs. We regularly engage in drills to test our plan and ensure staff are well trained to respond effectively. We meet regularly with emergency first response personnel, including local fire, police and ambulance officials to ensure our procedures, practices and plans are well communicated. We are participating with CEPA in improving and standardizing expectations and outcomes with regards to emergency response.

Spectra, like most of our peer companies, actively participates in both CEPA in Canada and the Interstate Natural Gas Association in the U.S., where we can work closely with our colleagues to continuously improve performance and share best practices. Last year, Spectra chaired both organizations.

This continuing maintenance assures continued safe operation of pipelines and has resulted in major pipelines having an indeterminate safe operating life as long as these inspections and other maintenance activities continue.

We have an operations management system, and this system was first developed in 2002. Its purpose is to ensure consistent and leading management practices so that we can meet our goals of safe, reliable and environmentally responsible operations. The management system is designed to provide a structure to ensure the right things are done consistently and effectively in a manner that builds continuous improvement into all of our programs.

One of a number of programs in our management system is our Pipeline Integrity Management System. It determines the current state of the pipelines through a program of inspections, tests and predictive assessments. The pipelines are continually evaluated using sophisticated state-of-the-art internal inspection equipment and data analysis. The internal inspection tools and data analysis techniques are continually improving and are now capable of predicting and identifying anomalies in the pipeline system.

The Spectra management systems and integrity management plans are reviewed internally within our Spectra business units in Canada and the U.S., externally by the National Energy Board during system audits, of which two major audits are just concluding, and also through association with CEPA and third-party auditors. Our management systems are improved and strengthened as a result of these reviews and audits.

In conclusion, successful and safe pipeline operations are achieved through strong safety cultures, effective and continually evolving management systems and their evolving programs. Spectra has a strong record as a safe, reliable and environmentally responsible operator of pipelines in North America, and we are focused every day on continually finding ways to improve our safety culture and our systems.

That concludes my remarks, Mr. Chair.

The Chair: Thank you very much, Mr. Ritchie. I will lead off with a couple of quick questions and then I will defer to the rest of the senators.

``Social licence'' is a term that is used a lot now and has been for the last number of years. I am quite familiar with the work that your company does to acquire social licence. Maybe you could explain to the group here and to those who are listening some of the things you do to get the social licence to be able to build the great infrastructure that you have in British Columbia.

Mr. Ritchie: Our social licence is, as I said, based the trust of communities. To ensure we have that trust, we work hard to be transparent, to explain to the communities what we are doing and why we are doing it. One good example is that we just concluded the construction and start-up of a new major natural gas plant south of Fort St. John. As part of that process, we created what we call our community advisory process, in which we engaged members of the community who live adjacent to our facility and have an interest in our facility in meeting regularly with us so we can hear about their concerns and we can be transparent with them about what we are doing and how best we can address those concerns.

The Chair: Second, about pipeline integrity, you talked at length about using the newest technologies available to detect maybe weakness in pipe or numerous things. For the general public, you could touch on something. How do you physically do that? Do you do it through smart pigs? Do you do it through something else? Take us through what something like that would look like in one of your sections of pipeline.

Mr. Ritchie: At Spectra, we have been involved in internal inspection using smart tool technology, which you call smart pigs. We have been running these tools through the pipeline since the early 1970s. Over that course of time, the sophistication of the technology has greatly improved. Basically what we do is run a tool through the pipeline. We then analyze the data from that tool, and if we see something that is concerning, we go in and do what is called a dig.

Last year, for example, on the southern main line or main pipeline system we did 200 of these digs. Of those, only 9 required direct work on the pipeline. The rest of the digs were really to confirm that the tools were telling us the right things and we could make repairs to the coating.

As you know, I have been involved in this for over 30 years. There has been a great advance in the technology, and the technology is evolving quickly. It is quickly approaching what we would call surgical, meaning that the technology will detect anomalies in the pipe so that when we go and dig and do the exploration, we find what we think the tool told us.

Senator Mitchell: Spectra operates in both Canada and the U.S. Could you give us some idea of differences in standards? There are those of us who would want to say that Canada is better. Would you go so far as to say that? Is it different? Could you give us a sense of the comparison?

Mr. Ritchie: I think there is great regulatory oversight over pipelines in both the U.S. and in Canada. The U.S. approach may be a little more prescriptive than the Canadian approach, which tends to be more outcome-focused, but there is very good, stringent oversight over pipeline operations in both countries.

We work with CEPA and with INGAA to ensure we are kept abreast of what is happening in both areas, to have an opportunity to learn from both regimes and to ensure we have best practices in place across North America.

Senator Mitchell: We hear a lot about the dangers or alleged dangers of transporting oil by pipeline. There seems to be less controversy about gas pipelines; for example, the one in B.C. seems to be progressing better than an oil pipeline counterpart. Could you give us an idea of the comparative risks there? We do not talk so much of gas spills as gas pipeline emissions. Are explosions an issue? Could you fill us in on that?

Mr. Ritchie: That is a great question, senator. The difference between the products is significant, as you know. I think everyone is familiar with oil. Natural gas is lighter than air, so if there is a release of natural gas, it will dissipate rapidly. There is a hazard if there is a release in that natural gas is highly flammable and you could have an ignition. However, from an environmental perspective, natural gas is lighter than air and dissipates, leaving really nothing behind.

Senator Mitchell: I am very interested in your section on safety culture. We heard from Mr. Caron, CEO of the National Energy Board. He emphasized a great deal in his presentation that it is key to pipeline safety and transportation safety of all kinds. You mentioned a couple of elements of the safety culture. You have a tracking and reporting system on a daily basis. You report to the board of directors about any incidents. I am very interested in how management operates to create that culture. Could you give us some insight into management and leadership?

Mr. Ritchie: Yes. That is a great question.

We have learned that you need to have what we call mindful oversight over the operations. By that, I mean we expect our leaders to be aware on a daily basis of the hazards and risks that exist out there. In order to understand those hazards and risks, you have to engage with the people who are closest to the issues, and those are your front-line workers.

We also insist that management maintains a sense of vulnerability. You can never be complacent. You need to understand these are hazardous, high-consequence operations. You need to maintain that sense of vulnerability.

We also believe that reporting of incidents is critically important. Prior to this meeting, for example, I sat through a weekly meeting with my management team where we reviewed every incident that has been reported over the period of a week.

The other thing that is very important is that if you want people to report incidents, you need to have what I call procedural justice; you need to have a fair culture. We believe that you need to have a non-punitive response to error. Almost 90 per cent of the issues that happen on these systems are human error and, of those, 90 per cent are actually simple errors. A non-punitive response to error is important, but you cannot accept everything. If we have learned from experience that there is a better way to do it and we have a standard operating practice, we expect people to follow it, and failure to follow it would lead to follow-up by management.

Senator Massicotte: Further to the questions of the chair, over half of the leaks are not caused by yourself but by a third-party contractor. Could you go through the scenario? Let us say a leak is accidental. What happens and how much time elapses between the time it occurs and the time you find the leak and stop it?

Mr. Ritchie: That very much depends on the volume of the leak. Like all the other major pipeline operators, we have two full-time control centres dedicated to monitoring our pipelines. One is located in Fort St. John and the other is in Calgary. They are charged with monitoring the pipelines. We view them as the last line of defence and the first line of response in the event that there is a release from the pipeline.

We practise what we call a zero tolerance for leaks. We go out and look for the smallest of possible leaks. By that, we maintain the awareness of everyone that any leak is significant and we want to find it. In the event that there is a major release, our gas control centres, through what is called our SCATA systems — supervisory control and data acquisition systems — are monitoring the full length of the system and can pick up and respond to these events quickly.

Senator Massicotte: If a building contractor or backhoe operator accidentally hits your pipe in a residential area and it is oil, how much time will it take from the time that spill occurs to the time the pipe stops emitting oil?

Mr. Ritchie: At this point, we do not have oil pipelines in our current operations; all of our pipelines to date are transporting natural gas.

We respond quickly. Often, because of all of the outreach that we do with communities, we get calls very quickly from people travelling up and down our system and from stakeholders who live along the pipeline. There are a lot of eyes on the system at all times, and we get very rapid information. As a result, we are able to respond rapidly.

With gas pipelines, it is really one of quick isolation of the pipeline section, and because the gas is lighter than air, it is the dissipation of that gas.

Senator Massicotte: Are we talking minutes, second or hours? Could it be two hours before that section is shut off?

Mr. Ritchie: It depends. These are very rare events. For example, in our northern pipeline system, the last failure we had was over 20 years ago. It depends on where we are with the pipeline. If we are in what we call ``high consequence'' areas of the pipeline — i.e., where there are many residents around the pipeline — we have automated shut-off valves. The valves themselves will detect a drop in pressure or increased flow rates through the pipeline and begin closing almost instantly. When that valve triggers, it sends a signal to the gas controllers so they know the valve is moving, so we can then start reacting and responding to it.

If someone calls in and says they can detect the smell of gas, we say, ``It is ours until proven otherwise.'' In other words, we do not take the view that it is not ours to begin with. We accept the fact that something has been reported; we will follow up on it to ensure that it is, in fact, ours. Last year, I think we had about 80 calls to our gas control centres from the public talking about and smelling gas. Of those, probably 15 were ours and the balance were other operators or there were other reasons that the public smelled something.

Senator Massicotte: You are talking about a gas pipeline. The damage to the environment is different. However, who is legally and financially responsible for damages? Let us say damages do not occur. Maybe an explosion occurs and homes are destroyed. If the contractor bursts your line, is he responsible and will his insurance pay for the damages, or are the pipeline operators responsible?

Mr. Ritchie: At this point, the pipeline operators, like Spectra, are fully responsible for all of that.

Senator Lang: I want to follow up in respect of the chair's initial questions. He referred to pipeline integrity, and the witness referred to that in his opening comments. I also understand there were two audits that have been completed in the past number of months. How often do you have these audits done? Who actually makes the decision to have an audit? Are you required by the National Energy Board to do so, or do you do it on your own? Third, are the results of these audits made public?

Mr. Ritchie: The audits by the National Energy Board under the Onshore Pipeline Regulations and National Energy Board Processing Plant Regulations are at the discretion of the National Energy Board. They conduct the audits when they see the need to do that. They also engage, of course, in regular inspection of facilities.

At Spectra Energy, we also have an internal audit program. We have annual audits of our systems and programs, and we also engage with third parties to typically do management system audits to ensure that our programs and systems are meeting today's standards and taking advantage of best practices.

Senator Brown: I want to ask whether you have the same kind of internal things that travel through the pipes. They used to be called pigs. I think they have been upgraded quite a bit. Can you tell us how much better they are now? I will not make myself say how many years ago it was that I was close to them. I would like to know about that.

I would also like to know about the kind of wrapping is put around pipes when they are damaged. It used to be yellow wrapping, and I imagine there have been improvements in that too.

Mr. Ritchie: Yes. We have been involved in running smart tools, which you referred to as the smart pigs, through the system since the 1970s. We have been at it as long as anyone in North America. Most of our systems have been inspected at least once or twice. Over that period, the technology has improved dramatically to the point where it is now very surgical. For example, if there is a corrosion spot and metal loss on the surface of the pipe, it is picked up. If there is a crack, that is picked up. The technology has improved dramatically and continues to improve. Spectra, like most of our peers, supports the development of that technology.

In terms of the coatings of the pipe, the coatings have changed since the early construction on our system in the 1950s. We went from a coating called an asphalt coating to a polyken tape coating and now to epoxy coatings. The coatings are improving going forward. Interestingly enough, though, the asphalt coating, which is 1950s technology, is a still very robust coating. The polyken tape has proven to be a less robust coating, and that was applied in the 1960s and 1970s.

Senator Brown: Do you have robotic welders or hand welders?

Mr. Ritchie: We have both. We have robotic, automated welding for a lot of the big inch new construction projects, but we also do hand welding as well.

Senator Brown: Do you use X-rays to ensure that the welds are perfect?

Mr. Ritchie: Yes, all welds are X-rayed.

Senator Patterson: Following up on Senator Brown's questions about the technology, I am impressed that you have been in the business for some decades. Could you tell us how a pipeline system built today might differ from those built 30 or more years ago?

Mr. Ritchie: Steel technologies have changed and improved over time. The quality control in the pipe manufacturing shops has improved, I would say. Certainly, coating technology has improved. Also, if you look at the construction techniques of today versus the techniques that I first worked with in the 1970s, there has been quite an improvement. Having said that, pipes built in the 1950s, properly maintained and inspected, have an indeterminate life, in my experience and opinion.

Senator Patterson: With respect to pipeline safety, does Spectra Energy invest in research and development in areas related to pipeline safety? If you do and if you have developed new technology or management systems, would that technology or innovation be shared with other pipeline companies?

Mr. Ritchie: The answer to your question is yes. Through our association with CEPA, INGAA and with Pipeline Research Council International, we work for and support research into pipeline safety. Through these associations and the subcommittees of these associations, we share best practices and learning so that the entire industry can benefit from those things.

Senator Patterson: You said that your company does R & D itself?

Mr. Ritchie: We support it through the associations. We do not do independent R & D.

Senator Seidman: Mr. Ritchie, to follow up on the question that our chair asked you about social licence, you spoke about the importance of social licence, especially in the planning phase of your pipelines. You gave an example of your most recent partnership with British Gas and the pipeline that you are developing from northeastern B.C. to Prince Rupert.

If I might explore the whole issue of social licence, in your stakeholder consultations, how often did the issue of pipeline safety come up and what kind of questions did people in those consultations raise?

Mr. Ritchie: The issue does come up. As you know, pipelines are in the news on a regular basis. Stakeholders, of course, are interested in how big the risk is, if you have systems in place to manage it, and what they need to do if there is an event. We found at Spectra that being transparent and bringing the stakeholders into the conversation is the only real way to start to build that dialogue, and that dialogue can lead to trust going forward.

Senator Seidman: I presume it can also lead to issues being put out there that you can then explore, develop and even remedy in the planning phases, which, if anything, would expedite and ensure cooperation of communities.

Mr. Ritchie: Yes, that is absolutely right, and you cannot, in my experience, prejudge what the issues and concerns will be.

Interestingly, as we built our latest gas plant, I sat through the hearing process and met with stakeholders. After we created the community advisory group, the biggest issue was actually road traffic, dust and all of the traffic associated with construction. Because we had the advisory group, we became aware of it and said, ``What can we do about that?'' We went in and, of course, did things to improve the roads and deal with the dust, driving speed and all of those things. I think you cannot prejudge. You have to have those discussions to ensure you understand the issues and concerns.

Senator Ringuette: I will start with a question that is basically a lack of knowledge on my part. When you talk about smart tools and those pigs, is it an external instrument or internal instrument of the pipeline?

Mr. Ritchie: It is an internal instrument that we send through the pipelines. They move through the pipelines recording data.

Senator Ringuette: Okay. Now I can see how it operates.

In your statement you indicated that you just completed a 24-kilometre section of 42-inch pipeline — $400 million. By a rough calculation, I am looking at $16.6 million dollars per kilometre of construction cost. Would that be accurate?

Mr. Ritchie: Pipeline construction is expensive and it varies. We have a project running a new pipeline into Manhattan, New York. That pipeline is going to be less than 20 miles long and will cost $1.2 billion dollars to construct, so it very much depends on where you are building the pipeline and what the challenges are. Obviously if you are building a pipeline across the prairies, for example, the costs associated with that are much less than if you are building a pipeline across the Rocky Mountains. The most expensive projects are those where you are building in highly populated areas, so costs vary depending on those factors.

Senator Ringuette: Was this particular 24-kilometre section near populated areas? What was the geography and topography of these 24 kilometres?

Mr. Ritchie: This is quite a remote area of ranching for the stakeholders. It is on the eastern slopes of the Rockies, so you are dealing with rock and river crossings. Those add to the complexities and the cost of building the pipeline.

Senator Ringuette: I am looking at your total operation in Canada. You have 2,900 kilometres that link Fort Nelson to B.C., then you have another 990 kilometres in the Western Canada Sedimentary Basin. From the data that I have, you would have roughly 3,900 kilometres of pipeline. Am I accurate or am I missing a few hundred kilometres?

Mr. Ritchie: Yes, we have basically three categories of pipelines. We have our main line transmission pipelines, which are large diameter pipelines. We have about 3,000 kilometres of that. We have another approximately 2,600 kilometres — and I could get you the exact lengths of those pipes if that would be helpful — of raw gas pipelines, gathering gas from the wellhead and carrying it to our processing plants. Then we have some highly specialized pipelines transporting natural gas liquids, propane, butane, across the prairies, and some very specialized pipelines carrying liquid sulphur and acid gas components. We have the whole range of pipelines.

Senator Ringuette: As you said earlier, you would have quite a difference in the construction costs per kilometre depending on the geography, but would the requirement for what you call acid gas products be higher than your raw gas and your main line? I am trying to identify the cost of building and operating the different pipeline styles. That is why I am asking all these questions. If you have a direct answer we can save some time, or if you want to supply more data through our clerk, I would appreciate it.

Mr. Ritchie: I think the best way for us to deal with that is to let me take that away and come back with a range of pipeline operating and maintenance costs in the categories we talked about.

Senator Ringuette: Would that differ from your U.S. operation with regard to costs of building and maintaining pipelines?

Mr. Ritchie: Not a great deal, with the exception of pipelines like the one going into Manhattan because you are in such a densely populated area. Generally, if you are running pipelines across the prairies of Canada or the mid- continental U.S., they would be very similar.

One challenge that we have today, particularly in northeast B.C., is the availability of the workforce. We have to go much broader afield to get a workforce than we might have done a decade ago, and that of course adds to the cost of construction.

Senator Wallace: As you point out, Spectra ingrains a culture of safety in its employees, and as a goal you want to have zero accidents and zero incidents. The reality, I am sure, is something different than that, but that is what you strive to achieve.

I am sure you track all of this carefully. What can you tell us about Spectra's performance in terms of number of incidents, accidents and the quantity of product that is lost through those incidents. How would that have been trending over the last five to ten years? Is it improving or are you finding there are more incidents and greater volume of loss?

Mr. Ritchie: Generally we are improving across the board, with some exceptions. We track everything including vehicle safety, for example. That is an area where our performance, in my view, has been relatively flat. We are not making as much progress as I would like in terms of vehicle safety. In terms of contractor safety, we have improved dramatically, which is really a credit to the major contractors in Canada and that we have top-tier performance. Our employee performance safety is also improving dramatically. I am happy to say that in over 50 years of operation at Spectra in the province of British Columbia, no member of the public has ever been injured or hurt as a result of our operations.

Senator Wallace: You keep statistics and I am sure you graph the trends and categorize in describing the different types of incidents. Is there anything you could provide us to give us a sense of what the track record has been at Spectra in terms of incidents, accidents and volume of loss that may have occurred over the last five years?

Mr. Ritchie: Yes, we could certainly do that. I would be happy to take that away and submit something.

Senator Wallace: Thank you.

I suspect the advent of new and improved technologies would probably result in an increase in the number of reported incidents. New technologies lead to a greater ability to detect these incidents. Would you agree with that? Has that been your experience?

Mr. Ritchie: I think it is generally true. The industry has continued and we have substantial investments in technology for monitoring the systems, for example. The more you monitor, the more you find. I will give an example.

We now do something we call fugitive emissions testing. We use an infrared technology that we take out to facilities to check for leaks that are non-detectable by any other means. You could not smell it, hear it or detect it with the previous gas detection technology. Now with this technology, you can find these very small leaks. Those are examples in support of what you are saying: The technology is causing us to have closer oversight over the operation of these facilities.

Senator Wallace: I am sure you are well aware that other gas pipeline companies are proposing to convert gas pipelines to transport crude. As a technical person, someone familiar with the construction, design and detail of natural gas pipelines, do you have any comments to make regarding the appropriateness of converting gas pipelines to crude use?

Mr. Ritchie: I have spent my entire career on the natural gas side, so I am really not the subject-matter expert. I think you have TransCanada coming in, who would be the subject-matter experts.

Senator Wallace: I will accept that answer.

The Chair: You might have told us this already, but just to make a comparison, can you give us the volume of gas that Spectra handles? I am not talking about the U.S.; I am talking about Canada. Can you put a percentage of what your fugitive loss is in comparison to how much gas you handle? I know it might be a little difficult to answer, but I ask that question because we hear people talk about there being so much fugitive emissions. I appreciate there are some, but you talked earlier about how you can detect it. Is there any kind of a percentage that we could use or is it such a small percentage that you cannot even measure it? Could you give us an idea about the two things?

Mr. Ritchie: We handle about 2.5 billion cubic feet of gas per day, if you are looking at it starting from the wellhead. The fugitive emissions and emissions generally are so small as to not be able to put a percentage relative to those kinds of volumes.

Having said that, we increasingly understand the need to have a zero tolerance for leaks of any kind. That is why we are applying technologies like fugitive emission technologies so that we do not gloss over even these very small emissions.

The Chair: Do you have a target date when you think that will be fulfilled, if you are just starting it now?

Mr. Ritchie: We hope that over the next three to four years we will get this new technology and a more robust process in place across all our facilities.

The reason it will take time is that for fugitive emissions you want to do the surveys just prior to planned outages so you can be prepared to deal with them if you take equipment down for maintenance.

Senator Mitchell: I am interested in follow up on a question about what we call pipeline pigs. I got that from Senator Neufeld so I know it is authentic. Could you tell us how often you run those through your pipe?

Mr. Ritchie: It depends on the service of the pipe. For example, for a main line transmission system we run them anywhere between five and ten years currently. We run them through the entire system at least once and most parts of the system now a couple of times, but if we have areas of high consequence or we have concerns, then we will run them much more frequently than that.

Senator Mitchell: Some of this you might not be able to answer but I will ask anyway. You are a big company; you are sophisticated; you have lots of resources. You probably have some of the highest levels of safety technology, not to mention management rigour and sophistication and their implications for safety culture. Could you give us an indication of how your big company safety structure might differ from a small company's safety structure? I appreciate that might be hard for you to answer, but could you try? A corollary to that would be that if you come up with new safety technologies in your monitoring system, do you share them and how do you do so?

Mr. Ritchie: The answer is we do share that and we have committees for sharing that. For example, I sit on two committees for the company. One is our environmental health and safety committee and the other is our operating committee. The real intent of those committees is to share learnings and knowledge that we are gathering across the system through our involvement with associations and with consultants and just learnings on the ground.

That is a requirement for a large operator like our company. If you are a small operator, you may not need those very structured approaches to ensure the message gets out across the organization.

Senator Mitchell: I may have missed this and you may have addressed this earlier; forgive me if I am rehashing that ground. We are aware that pipeline companies often have a major monitoring centre with lots of computers and dials. Again, I am not trying to put you on the spot with this, but in the Kalamazoo case, there was an indication — I appreciate that is oil and you are gas — of something but they did not interpret it properly and that is being looked at.

Do you have a similar kind of centralized monitoring capacity and could you talk about whether the Kalamazoo kind of case is on your mind? Could it happen? Why would it not happen or why would it happen?

Mr. Ritchie: We do; we have two major gas control centres, one in Calgary and one in Fort St. John, that operate 24 hours a day, monitoring the entire system. We are currently going through what we call a control room management process to review how those systems operate and ensure that we are always recognizing and setting up our control room operators for success. As I said, from my perspective they are the last line of defence and the first line of response to anything happening on the system.

The technology is improving but with improving technology, a little like your vehicle sometimes, you get flashing lights going off; there are all sorts of things going on. If you are not fully conversant with what that means and you do not know how to respond to it, you may just drive around with the light flashing, showing a flashing wrench on your dash or something. Because the technology is improving, we have to keep going back and asking: Does this new technology match up with the capacity of our people? Do they understand how to use it so we do not get in a situation of thinking that the technology in and of itself is a panacea? It is not. It is only there if it is supported by the human beings who are sitting in front of those control panels.

Senator Brown: Many years ago there was a bunch of railroad cars sitting on a siding for quite some time. I was wondering if the fugitive gas that you are talking about is anything like what they found, that hydrogen is such a small molecule that it actually can pass through steel.

Mr. Ritchie: The fugitive emission program is meant to pick up very small leaks, typically around valves and connections, but this technology is very sophisticated and will pick up virtually everything. We tend to test our facilities, for example, using helium as opposed to gas, helium molecules being smaller than gas molecules, so if it is tight on helium, it is very tight on gas.

Senator Brown: Thank you. It was just an oddity that I remembered.

The Chair: Thank you very much, Mr. Ritchie. That was a great presentation and a great question-and-answer session. It was good to see you again.

It is my great pleasure to now introduce our witnesses from TransCanada: David Chittick, Director of Pipe Integrity; and Don Wishart, Senior Operations and Major Projects Advisor.

Thank you for sending your presentation in advance. I think everyone had an opportunity to read it. We will go ahead with your presentation, please.

Don Wishart, Senior Operations and Major Projects Advisor, TransCanada: Thank you very much, Mr. Chair and members of the committee.

Safety is a core value at TransCanada. We make safety for us, for each other, for our contractors and for members of our community an integral part of the way we work. This safety culture has protected the public and the environment for more than 60 years, and I am pleased to say that TransCanada has an industry-leading safety record because of it.

I would like to thank the committee for inviting us to participate in these discussions. This is a very important study and is an area that TransCanada takes very seriously.

My opening comments today will address an overview of TransCanada and the Canadian pipeline industry, the regulation of our industry, the life cycle of pipelines, TransCanada's management systems and some evolving technologies that we are involved with.

With more than 60 years of experience, TransCanada is a leader in the responsible development and reliable and safe operation of North American energy infrastructure. TransCanada's enterprise includes $48 billion worth of assets across 7 Canadian provinces, 31 U.S. states and 5 Mexican states. Our three business areas are natural gas pipelines, oil pipelines and energy, which is mostly power generation and natural gas storage.

When it comes to pipelines, we have a significant footprint across Canada and the United States. We operate one of the largest natural gas transmission networks on the continent: A 68,774-kilometre system that taps into virtually every major supply basin and transports approximately 20 per cent of North America's daily natural gas needs.

Our 3,473-kilometre Keystone pipeline transports almost one quarter of Canada's crude oil exports to the United States and has moved more than 350 million barrels of oil safely and efficiently since it began operating in 2010. Collectively, we have about 40,000 kilometres of major transmission pipelines in Canada.

We have another $12 billion worth of projects under way for completion by 2015. These includes expansions of our Keystone pipeline system, other oil pipelines to service growing production in Alberta's oil sands and two potential pipelines across northern British Columbia to connect to the emerging liquefied natural gas export markets.

Safety of the public, our employees and our assets is a core value at TransCanada. Every employee is expected and required to make every decision with a context of safety in mind. Every employee is empowered to take whatever actions are necessary to ensure safety is maintained without fear of recrimination. Compensation systems from the front-line employees to the CEO reflect the value of safety.

The board of directors and management systematically govern and monitor safety culture. Approaches include direct interface with front-line employees and contractors, periodic employee surveys, third-party assessments, and more quantitative measures, like monitoring injury statistics. In Alberta, for example, the rate of injuries for public administration, educators and health workers — effectively, government office workers — is nearly 10 times that realized for a TransCanada worker. Nevertheless, a single incident is one too many and is something we put every effort we can into ensuring it does not occur.

Enormous changes are under way in North America's energy landscape, with new technologies unlocking significant oil and natural gas reserves once thought to be inaccessible. Demand for energy resources is booming from overseas markets, and at the same time North America is moving towards greater energy security and independence than ever before.

The International Energy Agency predicts that North America will require $6 trillion in new energy infrastructure by 2035. This represents a significant opportunity for companies like TransCanada and the Canadian economy as a whole.

In a 2012 report by the Canadian Energy Research Institute, it was estimated that if the pipelines currently planned are not built, Canada will forego $1.3 trillion in terms of economic growth and $276 billion in taxes between now and 2035. The Canada West Foundation reports that stalled pipeline projects mean a loss to the Canadian economy of between $30 million and $70 million every day.

Pipelines are the backbone of North America's energy system. They are a key pillar in our economy. The vast majority — some 97 per cent — of oil and natural gas is transported by pipelines, with a 99.999 per cent safety record. That is the equivalent of spilling substantively less than one teaspoon of oil per thousand barrels transported over a kilometre.

Numerous studies have shown that pipelines are by far the safest method of moving oil and gas. A recent U.S. study determined that pipelines are approximately 40 times safer than rail and 1,000 times safer than trucks on our highways, on a volume-distance basis.

Pipelines are also the only practical means of transporting large volumes of natural gas and oil long distances. They are, by an order of magnitude, the most cost and energy efficient, and they have the lowest air emissions, including greenhouse gases, of the various transportation modes. A train 75 kilometres in length would be required to transport the 3 million barrels of oil transported by pipeline in Canada every day.

Transportation by pipeline is also becoming safer. In 2011, there were five accidents reported on Canada's federally regulated pipelines, compared to a five-year average of nine, despite seeing an increase of 30 per cent in the number of kilometres of pipeline operating. Put another way, in Canada, in 2002, there were 0.076 incident per thousand kilometres. In 2010, there were 0.019 incident per thousand kilometres, an over 70 per cent decline.

The regulatory process to approve, operate and maintain pipelines is rigorous, thorough and transparent. Virtually every aspect of pipeline design, construction, operation and decomissioning must be approved by regulators. In Canada, federal pipeline design, materials, construction and operations are governed by the requirements set out in the National Energy Board's Onshore Pipeline Regulations, 1999 and by the Canadian Standards Association Z662-11 standard. Each province also has regulations for pipeline design, construction and operations under their jurisdiction.

TransCanada interfaces with in excess of 250 regulators and regulatory agents on a federal, provincial, state and municipal level throughout Canada, the United States and Mexico. In Canada alone, this includes 5 regulators at the federal and provincial levels and 41 regulatory agencies. TransCanada routinely monitors and must comply with more than 150 regulations, directives, interim directives, codes and standards for TransCanada's operations in Canada, the United States and Mexico.

TransCanada has undergone four major pipeline audits since 2002 and over 100 inspections since 2010 on its pipelines and operations. None of these audits or inspections has resulted in concerns for public safety, operations or the environment.

The Canadian regulatory structure provides for recovery of costs incurred for prudently maintaining and improving pipeline safety. The pipeline operator has neither an earnings incentive nor disincentive associated with these expenditures.

Safety is built into the full life cycle of a pipeline, starting with design, construction, operation and, eventually, abandonment and retirement.

Pipeline routing is optimized to reduce impacts and risks to the environment and population and to reduce integrity concerns. Avoiding or minimizing unstable slopes and crossing major waterways at the locations of least impact are examples.

Pipeline coatings and components are specified and manufactured to TransCanada's specifications, which are frequently more stringent than industry standards. At the pipe mill, representative samples are taken during pipe manufacture and tested using standardized methods to ensure that the material properties that have been specified are being met. The pipe is systematically inspected using ultrasonic imagery and visual methods and then pressure tested with water to ensure pipe quality control. This is all before it leaves the mill.

TransCanada employs industry best practices during construction. The quality, safety and inspection standards we adhere to on all of our projects are truly among the best in the world.

Prior to placing a pipeline into service, hydrostatic testing is conducted at pressures well above design operating pressures to prove the integrity of the pipeline. We then use in-line inspection tools, known as smart pigs, which travel through the pipeline to measure and test for any defects. Any anomalies that do not meet acceptance criteria are cut out of the line prior to operation of the pipeline to ensure they do not become problems in the future.

Once a pipeline is approved for service and begins operation, it is monitored around the clock at our pipeline control centre and is regularly inspected and tested to ensure it remains safe. This includes routine patrols of pipelines from the air and on the ground, cathodic protection to prevent corrosion, in-line inspection tools using high-resolution sensing technologies, and investigative digs. A properly maintained pipeline system can remain safe indefinitely.

Our state-of-the-art monitoring and control systems, elevated safety features and specialized staff training employed by our pipelines ensure that any leaks or problems are quickly identified and responded to. These features include: technology capable of isolating any section of our pipeline, either automatically at the valve or remotely from our control centre in Calgary; information is transmitted to our control centres from thousands of data points along our pipelines; 24-7 monitoring of the pipeline operations by highly trained staff who are expected to shut down the pipeline at the first sign of a problem until the cause of the alarm is determined and confirmed; and an essential TransCanada policy requirement that all possible problems are investigated immediately by pipeline controllers and on-the-ground field staff. The pipeline cannot be restarted until it is confirmed that it is safe to do so.

TransCanada has an extensive public awareness program that provides excavators, contractors, community officials and emergency responders with the information they need to live safely near pipelines.

The leading cause of pipeline failures in populated areas is damage done by unauthorized excavations. TransCanada's Integrated Public Awareness Program supports various Call Before You Dig programs throughout Canada and the United States to educate the public about our facilities and to minimize the risk from third-party damage.

TransCanada is a founding member and platinum sponsor of the Common Ground Alliance and also supports the regional partners at a provincial and state level to support and influence damage prevention practices and priorities throughout North America.

Emergency response plans are developed in a detailed and comprehensive way in collaboration with local emergency response partners in the communities in which we operate.

Every effort is made to ensure safety and protection of the environment throughout the life cycle of the pipeline.

TransCanada's Pipeline Integrity Management System is a set of approximately 150 interrelated and interacting processes and procedures used to ensure the integrity of the pipeline. Quite simply, management systems facilitate safety by following a continuous cycle of plan, do, check and act. TransCanada's integrity department identifies what can go wrong through a process of identifying threats, conducting risk assessments and developing a maintenance program to address these threats. The program typically consists of in-line inspections, excavations and selected hydro testing. The findings from inspections and excavations are analyzed to measure the effectiveness of the program and to promote continual improvement. The failure rate for TransCanada's gas transmission pipelines for the period of 2000 to 2009 declined 40 per cent compared to the previous decade, 1990 to 1999. The failure rate for the period of 2010 to 2019 is projected to decline 67 per cent from the failure rate of 2000 to 2009. Nevertheless, our goal is zero, and we will relentlessly pursue that goal.

TransCanada recognizes the importance of technology development and is an industry leader in the implementation of industry best practices and new technology development. Through our technology management programs, TransCanada has successfully adopted best practice approaches in the areas of pipe hazard management, pipe condition monitoring and surveillance and pipe repair methodologies.

In conclusion, our first priority is the safety of our employees and the public. Safety defines our company and our social licence to operate. TransCanada has one of the best safety and operating records in our industry. We make it clear to all of our employees and contractors that we will not tolerate anything that undermines the safety and reliability of our facilities. While we are very proud of these accomplishments, we continually strive to do better and work with our industry partners to make the entire industry safer.

The Chair: Thank you very much for that presentation. I will start off with one quick question.

About halfway through your presentation, you talked about putting into service a new pipeline and doing numerous different tests to ensure it is okay. You say that any defects are cut out of the line prior to operation. I understand that too, but how often does that happen? Would that be welding defects, or by any chance do you find defects in the pipe after?

Mr. Wishart: Generally, I do not think we have ever found a welding defect at that late a stage. We do 100 per cent inspections of our welds, so every single weld on our pipelines is radiographically inspected. We use a new automated ultrasonic technology. We ensure the integrity of the weld is good long before we hydrostatically test it or put it into service. Normally, if any issues arise in that last moment — the point you are making reference to — when we do an in- line inspection before we put it into service, we are looking mostly at that point for dents or buckles that have occurred after the pipe has been put into the ditch. Perhaps a rock was dropped on it or it sat on a rock and there was a dent.

The Chair: You never found a pipe defect either, then?

Mr. Wishart: Not at that point.

Senator Mitchell: I am dying to know your answer to the question that was deferred to you, so I will go right to it. It has already been asked, the one about conversion.

Mr. Wishart: I will defer most of this to Mr. Chittick, who knows this much better than I do.

The pipeline itself, the steel, is not any different when it is in an oil service or a gas service. The specifications of the pipe are the same. To put that into oil service we would remove compressors and put in pumps to put in tankage upstream — because we have a batched product instead of a commingled gas service — and we would change our SCADA systems, our supervisory control and data control and acquisition. It must have a different configuration for leak detection for oil than it would for gas.

We replace a lot of valves and we would put new valves in because, as pointed out earlier, gas is lighter than air, so it dissipates. Oil is not, and so you need to have valves close to river crossings and other water bodies and things like that to ensure you can minimize the volume in those areas. There would be valves added to the pipeline system as well. Finally, we have to change our emergency response planning, because we would have to have a plan that would be suitable for an oil spill relative to the release of gas.

David Chittick, Director, Pipe Integrity, TransCanada: I think Mr. Wishart answered just about everything there. We have done this once with our Keystone pipeline. We converted 870 kilometres. In that process we had to prove the ``fit for purpose'' for the pipeline to operate in oil and submit that to the NEB for their approval. Basically, the pipeline, the materials and the wall thickness are there to ensure pressure-containing capacity.

The threats to the pipeline are pretty much similar: cracking, external corrosion, internal corrosion, weather and outside force. The slight difference in an oil pipeline is there are more pressure cycles and so you can have a small crack in an oil pipeline that pressure cycles would act upon. However, we have technology readily available to identify the location of those cracks and enable the removal of the cracks.

Senator Mitchell: I do not want to put you on the spot in this case, and it may be something you cannot talk about, but I would like to give you a chance to answer.

There were allegations last year. There was a whistle-blower. You know the case I am talking about regarding alleged internal difficulties. Would you like to address and respond to that?

Mr. Wishart: Yes. I will respond at least partially. We would like to maintain the dignity and respect of the individual involved, so we will not get into details of that.

I would draw to your attention that when this particular individual raised concerns, the Chief Executive Officer of TransCanada immediately called for an investigation — which was done both through independent third parties, as well as internal parties — to see whether or not there was a substance to the issues that were raised.

From that, the investigations determined that all of the issues raised had been addressed in the normal course of quality control, so there may have been a problem, but the next phase in a typical plan — do, check — had picked up those issues.

Finally, when this was brought to the attention of the National Energy Board, they did note in the letter they made public that none of the allegations had to do with anything that represented a risk to people or to the environment. It was more administrative quality control issues that were raised.

Senator Mitchell: I am interested and I am asking this of most of the industrial witnesses who come. I asked the question earlier on how you set up your monitoring. Do you have a centralized monitoring facility? How does that compare to what was in place in the Kalamazoo case? What would you learn from that and could that happen to you?

Mr. Wishart: I think there were about three questions there, so I will try to get each of those.

The Chair: He is always sneaking them in.

Mr. Wishart: First, we do have a central control centre in Calgary, quite a sophisticated one, and we would invite the Senate to come and visit if they choose. You are more than welcome to do so. It runs all of our gas pipeline systems that carry Canadian gas, so all of our Canadian pipeline systems, as well as a number of American systems that are delivering gas from Canada to the American marketplace. Our oil pipeline system is run out of the same control system. It is a huge floor with a lot of people on it and lots of monitors and computers around the room.

I cannot speak definitively on behalf of Enbridge and how they are configured in terms of their control systems per se. However, we have a philosophy and a policy in our company that if there is something that alarms and the operator does not know the answer, or if a third party contacts us and says they are concerned, they smell something or they see something, all systems are shut down and the segment is isolated until a field employee verifies that it is safe to restart. I think that may not have occurred in the case of Kalamazoo.

Senator Johnson: Can we talk a bit about the Keystone XL pipeline where you made a request in May? You applied to the State Department for the project again and proposed this new route. I would like you to tell us about that new route and why it is not as sensitive environmentally. In Nebraska, the governor approved it, so you were in good shape, and now you need a Presidential Permit. What will you do if it does not happen? What is your push-back or position going to be if you do get it in, because he would have to approve it if Nebraska just approved.

Mr. Wishart: I think there were several questions there, so if I do not get them all, please remind me.

We did choose a different route in Nebraska that avoided an area that they have designated as the Nebraska Sandhills. The work that concluded in August of the previous year in a final federal environmental impact statement looked at some 16 different pipeline routes, including going around the Sandhills. It concluded that the route through the Sandhills was the least environmentally impactful route. The federal FEIS made that conclusion. The State of Nebraska de facto objected to that conclusion and for that reason we have moved around those Sandhills.

In terms of a pure scientist's perspective, we have not necessarily improved the overall environmental risks; we have just changed them. We have gone around the Sandhills to a different area, which obviously adds distance to the pipeline. Nevertheless, we have an endorsement from the state and from the governor and seem to have resolved the issue of crossing through the Nebraska Sandhills.

Relative to the speculation on whether we will receive the Presidential Permit for the pipeline or not, we remain confident that will occur. To us, the logical perspective from the U.S. is that they consume a large amount of imported oil — about 10 million barrels a day — and, frankly, it is a decision they have on where they wish to source that. If they do not source that from Canada, then they will source it from some other place, such as Nigeria, Venezuela or Saudi Arabia, but they are not changing their consumption of oil because of production of oil in Canada. The two are not related despite the fact that a number of parties are trying to make them related.

The fact is that the United States consumes a lot of oil that they do not produce and they need to import oil. We think the logical and the safest, most environmentally sound way of moving that oil to marketplace is through a pipeline, one that connects to their best trading partner and one who shares values with them.

Senator Johnson: Canada certainly does not disagree with that. It would be really harsh on our relationship, but how long can you wait without it becoming a negative or serious negative factor for us?

Mr. Wishart: It is a serious negative for the Canadian economy already. I made reference to the Canada West Foundation calculating that it is costing the Canadian economy somewhere between $30 million and $70 million dollars per day now. There are very large differentials between similar qualities of oil in Canada and marketplaces on the Gulf Coast, and the East Coast of Canada as well, that are only there because of a lack of transportation capacity between the supply and the demand. It is costing our economy a lot as we speak.

Senator Johnson: A lot of work is happening on the ground in Washington. The Canada-U.S. group that I chair is going down in two weeks and to meet with 15 or 20 members and congressmen. In May, we met with them as well, and there were very few who were opposed to this in either party. There has been a bit of a shift, I think. Thank you for your answer.

Senator Patterson: On the Keystone XL pipeline, if I may, I understand that TransCanada has announced that you would proceed with the development of a segment of the project from Cushing, Oklahoma, to the Gulf of Mexico. Will that investment depend on obtaining the Presidential Permit for the full line? In other words, is that a risky thing to do or will it have another use if you do not get the Presidential Permit?

Mr. Wishart: The current status is that we are more than half constructed. The pipeline itself is probably about 60 per cent completed as we speak. The overall project is about half done, so we are well on our way to completing that project, and it does have its own use and market need as well. It did not require a Presidential Permit for that. It is an interstate pipeline, but it was not one for which the State Department or Presidential Permit is required.

The Presidential Permit is only required for the 50 feet necessary to get across the border, and then on both sides of the border it is run by standard, existing regulatory processes on both the U.S. and Canadian side. We have had National Energy Board approval for many years and we have actually completed a lot of the construction on the Canadian side. On the U.S. side we are still waiting for that 50 feet that is associated with the Presidential Permit and then we can start to move from there.

Senator Wallace: Mr. Wishart, when you described some of the new projects that TransCanada is working on — of course Keystone and potentially two natural gas lines in British Columbia — I did not hear you mention another line. It is of interest to me being from East Coast of Canada, the line that is being spoken of — I would not say it has been proposed yet — that would run from Montreal to Saint John, New Brunswick, and in particular the Irving oil refinery, which is the largest refinery in the country at 300,000 barrels a day, which if it were built would be at the end of it. What can you tell us about that project? What are your thoughts and where are things in TransCanada right now in considering that project?

Mr. Wishart: We spent the better part of two years doing technical studies and economic studies behind that project, including talking to the governments along the route and producers and refiners, including the Irving refinery, to determine whether there is interest in the pipeline and whether that interest would be sufficient to make it an economic project to move forward.

We have largely completed those studies. It clearly is technically feasible. It is an economically feasible pipeline. We believe that we will be able to gain support from producers and refiners to move that forward, but that is the piece that is missing at this point in time. We need commitments from the producer community and the refiner community that they indeed want this pipeline project to move forward and that they are willing to commit to it moving forward. When that occurs, we will start the regulatory process to move that to fruition.

Senator Wallace: Last week we heard from representatives of Natural Resources Canada. They provided us with information about pipeline capacities throughout the country, including those that TransCanada is working on at this point. It was interesting, to put it mildly, to see the pipeline capacity of Keystone as compared to this line that potentially could run from Montreal to Saint John. The Montreal to Saint John line would have 50 per cent larger capacity than Keystone, which I guess shows what the significance of that line would be in terms of getting shut-in crude, Alberta crude, to market if it were built.

When I think of it going to the East Coast and the 300,000 barrels to the refinery, the information given to us is that you were looking at capacity in that line of a million barrels a day, or another 700,000 barrels. I take it that must be with a view that there is an export opportunity as well from the East Coast of Canada. Is that correct?

Mr. Wishart: I think that is at least partially correct. The capacity of that line will depend on which of the existing six pipelines across the Canadian nation we take out of service and transition to an oil service. The original Keystone pipeline, which has a capacity of a little less than 600,000 barrels, is a 30-inch line in reality. It has 34-inch pieces, the smallest being 30. The numbers that have been thrown around relative to servicing Eastern Canada with a converted line go as high as a 48-inch pipeline. If it were to be that high, you would end up with a fairly large amount of capacity just based on the diameter of the pipeline.

You would not necessarily build all that capacity in. You would add just the horsepower necessary to move the volumes that you would contract and it would have ultimately an expansion capability over time. I think, in fact, that it could very much be an export line. There is refining capacity in Montreal, in Quebec City and in Saint John. Collectively, that is 600,000 barrels a day, so there is a bigger market than just Saint John, New Brunswick, as well.

You could envision a situation where either oil was exported from Canada through that particular pipeline, perhaps as far as India, or alternatively, upgraded oil where you could use the synergies with any one of those refineries along that route to add upgrading capacity, which is a lot less expensive than doing it on a stand-alone basis. There are tremendous synergies and efficiencies in building upgrading capacity within a refining area.

Finally, you could export refined products. There are a number of ways where that line could service an ever-greater market, but it could be an oil market, a synthetic market or potentially a refined products market.

Senator Wallace: With the potential volumes that could be transported through that line, obviously it is significant to the East Coast of Canada, but in terms of Alberta, the consequences to Alberta and being able to get otherwise shut- in oil to market, it is huge on the national scale as well, is it not?

Mr. Wishart: It absolutely is. The projections that the Canadian Association of Petroleum Producers have in terms of an ultimate capacity post-2025 could be as high as 6 million barrels a day of production out of Canada. We have capacity today to move 3 million barrels of oil. Therefore, we could use 1 million barrels to the East Coast and would still need fairly substantive access to other marketplaces to sell 6 million barrels of oil a day.

Senator Ringuette: What would happen to the market for gas regarding the gas pipeline that you would transfer to an oil pipeline?

Mr. Wishart: We built our Canadian system on the basis of being virtually the sole provider of gas for Eastern Canada. At one time, it was designed for 7.2 billion cubic feet a day of capacity; that is how much capacity we built into it. Since that time, though, a pipeline was built through the United States that comes back into Canada — the Alliance and Vector systems. That added almost 1.8 billion cubic feet of capacity delivery to Eastern Canada.

In recent times, very large amounts of shale gas have been found. They are being developed out of the Marcellus and Utica deposits in Pennsylvania, New York and Ohio, areas that are displacing Canadian gas from the eastern marketplace. Our pipeline system at one time was designed for as much as 7 billion cubic feet a day and is moving at about 2.5 billion cubic feet a day at peak in the winter from Western Canada to eastern marketplaces. We can easily serve that with just a fraction of what we currently have for capacity in our system today.

Senator Massicotte: There is no question for half of our country — not necessarily your company — but it is super important to get access to our product to not only the United States but other markets, because otherwise we are stuck with a monopoly situation.

Let me go back to the question I always ask. You have had some bad experiences, but if you had a leak, especially on the oil side, how long does it take to find out you have the leak? What are the consequences? Can you describe what happens if a contractor breaks a pipe or something happens?

Mr. Wishart: It is a little bit of circumstances, but if it is a tiny little leak, it takes a long time to find because you will only be losing a pound or two of pressure. It may take days for even a little stain to show on the surface. If it was the case, though, that you just described — where a contractor ruptured the line and broke it — we are getting data back on our Keystone pipeline system every five seconds. Therefore, we could start to see a drop in pressure literally within seconds in the scenario you just described and then start shutting down the system from that point in time. We shut down the pump stations upstream and downstream of that area — two stations on each side — and then start sectioning the pipeline in between there using the valves to remotely control it.

Senator Massicotte: How much time are we talking about in the worst case?

Mr. Wishart: Minutes.

Senator Massicotte: How much damage could be done in a worst case scenario?

Mr. Wishart: There is one other factor. Shutting the system down is a matter of minutes. The volume that would be pumped out would be relatively small, although we are moving fairly large volumes — 500,000 barrels per day — so even a few minutes is a lot of volume. You are dealing with a liquid and in this case you have broken the tube. From high point to high point, or from valve to valve, that liquid will have a tendency to drain, just like anything. It will not be under pressure anymore and will not have any horsepower behind it, but effectively the volume between the two valves, as long as there is no hill between them — so it is high point to bottom, or valve to valve — will drain up.

I believe the analysis we did for the original Keystone pipeline had the maximum volume we could model in ours at 50,000 barrels that could be spilled.

Senator Massicotte: How much damage would that cause to the environment?

Mr. Wishart: Considering that 99.9 per cent of the pipeline is on land — you cross rivers perpendicular to them — it generally inundates an area of a few acres that may be impacted with oil. It usually finds a low spot in a field and starts to accumulate there. That would be the area of impact and what would occur — a number of acres of oil-soaked soils. Then you would start a long-term cleanup program immediately thereafter. After you recover all the oil — you can pick it up with vacuums or things like that — you then start to remediate the actual soil itself.

Senator Massicotte: How much money are we talking about in your experience? What is the cost of remedying the situation regarding the couple of acres of oil-soaked lands?

Mr. Wishart: We have never had an oil spill ever from a pipeline, so we do not have that direct experience. However, generally, we are talking about several years of crop impact, so you have to compensate for that. You may have to remove the soil if it is in an area where it is sensitive and take it to a better place to remediate the soil. You could be talking several tens of millions of dollars, even for a relatively ordinary one like a farmer's field or something like that.

Senator Massicotte: Are you held responsible for those cases?

Mr. Wishart: Absolutely.

Senator Massicotte: Is there no limit of liability? You are totally responsible?

Mr. Wishart: That is right.

Senator Brown: I think you gentlemen have a major problem of reaching the majority of people in the United States and Canada. They used to whip up meetings and television and radio to create worries in the public. Is that not fair to say? I have watched it quite a bit myself and I have also gone to other oil companies and held things here in the United States and Canada where people could go and listen to how well you kept your safety problems under control. However, in order to counteract those worries and fears, I think you will have to use some of the same kinds of tactics used by people who wanted to whip up damages, breaks and construction done near pipelines. I would like to ask if you people would consider using the same tactics, like radio and television.

I know things cost money, but we did this with TransAlta Utilities years ago when they were extremely worried about people being killed by high-transmission lines. We suggested short pieces of TV, and they said, ``Well, it costs a lot of money.'' We said, ``What do you think cost is worth to keep people from being killed by your lines?'' They finally decided to go ahead with it, and that is what I wanted to suggest to you people.

I have just one example that you gave me yourself. You said ``plan, do, check and then act.'' You can put that in a 10-second television thing with a person actually doing something and get back to these people who have been brainwashed to believe that we will destroy the environment and everything else with pipelines. I think it is unfair. From what I have heard, seen and know, I think that your people have been taking great leaps in keeping things safe for everyone. I think it has been completely unfair.

In order to precipitate the finishing of the Keystone and Enbridge lines, you will have to fight fire with fire. I suggest that you think closely that maybe you do find that way to do that because it is not fair that you put on something like this. I will not say that we will be number one in television because I know we are not. However, if you take a small cut and you do it regularly in between other shows, you can cover a lot of people in both the United States and Canada.

That is really my question. Would you think about trying to do that?

Mr. Wishart: I think you captured, very succinctly, a very large issue that our industry has, and that is being able to communicate more effectively with the public. First, we are very much engaged in formal, bought communications. We have television, radio and newspaper advertisements. We have spent several tens of millions of dollars on those campaigns in the United States. The polling that we have done has indicated that the average person in the United States — 70 per cent of people — would approve the Keystone project.

A challenge that we have as an industry is that part of the message we are passing on is one of reassurance, while those who are opposed to our projects are passing on a message of fear. Fear is a much more powerful emotion than reassurance.

We are not necessarily seen as credible spokespersons either, in that context, because we have a vested interest, at least from the public's perspective, in ensuring that our projects go forward, whereas some of those who are against our projects are seen as independent, just trying to protect the public interest.

We have an element of trustworthiness and credibility, and then our message is not one of such a strong emotion as fear can be.

I do see it as a challenge. I do not think we have been successful. However, I do want to reassure you that we have very much engaged in trying to be truthful and forthright in terms of our communications around this, and we have used paid media to accomplish that.

Senator Lang: If I could just pursue your point at the beginning, your message of reassurance is very important from the point of view of Canadians and the ordinary citizens in our country, to reassure them on the question of safety and what you have to offer. When we hear what your company does on a daily and an annual basis with respect to ensuring the safety of your pipeline, it obviously reassures everyone around this table. We have very little knowledge of how to run a pipeline, but your record speaks for itself, with so few problems as we look back.

There is one area that I would like to pursue a little further. You made the statement that ``numerous studies have shown that pipelines are by far the safest method of moving oil and gas. . . . Pipelines are approximately 40 times safer than rail and 1,000 times safer than trucks on our highway on a volume-distance basis,'' and then you refer to a source. I would like to pursue this because one area that we are looking at is the question of transportation of fossil fuels by pipeline versus by rail or trucking. Perhaps you can expand further on that. You just indicated numerous studies. Could you refer to those? Are any of them Canadian studies, and can you provide them for the committee?

Mr. Wishart: I am not aware of any Canadian studies, but the data set is probably just as readily available. It often requires multiple government organizations to get the data because the regulation is parsed amongst the various transportation modes. You have the Coast Guard versus the Department of Transport versus the National Energy Board, for example, but the data are there. There are other studies. I am aware of one that was done in 2002 by a group called Allegro Energy Consulting. They had looked at tankers — the big ones — barges, rail, truck and pipe and had done a comparison on a volume-distance basis, similar to the one that I made reference to. The reference I made was the most current one. It was 2012, so I thought that was a good one to use. There are data sources where people have worked to try to normalize reporting criteria that are not common amongst jurisdictions. Some have larger volumes, and some have smaller volumes that need to be reported. Trying to get the distance and the volume is often hard work, but there are academics who have done these types of papers. The Manhattan Institute for Policy Research and Allegro are two that I am aware of in that respect.

Senator Lang: I just want to pursue the question of safety a little further to do with the utilization of satellites and the information provided to you in your day-to-day operations. Perhaps you could update on us where you are with that and how you make use of these satellites.

Mr. Wishart: I will answer the first part of that, and then Mr. Chittick will answer the second part.

We do use satellites as our telecom system. All the way from Mexico, through the United States and Canada, satellite is our primary means of communicating between all of those thousands and thousands of little transmitters we have that are collecting temperature and pressure data. It goes up to a satellite and comes into our control centres, but we have also used satellites for route selection — trying to find better routes — and monitoring. I will turn to Mr. Chittick on that.

Mr. Chittick: Today we utilize satellites for detecting ground movement along the right-of-way. Ultimately, with satellites, we can foresee where we will be able to use that to identify encroachment upon the right-of-way. There are a lot of studies, developments and research projects in place. The costs are quite prohibitive; we do not quite have the satellite coverage. However, you can clearly see that, in the future, we will be able to rely upon that for detection of encroachment upon the right-of-ways.

Mr. Wishart: There is coverage in terms of the telecom part of the world but not as good satellite coverage in terms of visual imagery, landsat type imagery.

Senator Lang: It is another march in the world of technology. It is another tool for you to meet the objective of safety and to ensure that we minimize the risk even further.

I just want to go into one other area, the question of the gas-to-oil line conversion that was spoken of earlier. My understanding, going back to what I read, is that the line that is going to the east was, at one time, an oil line and was converted to a gas line. At least one of them was, and it is being converted back.

Mr. Wishart: The lines that we are considering for the project have always been gas lines.

Senator Lang: I want to go a little further, going back to reassuring the public and the debate that is ensuing in the east. With respect to the conversion and checking for integrity of the pipe and the actual utilization or conversion of that line, could you tell us exactly what you do differently than you normally would in checking the integrity of a line on an ongoing maintenance program?

Mr. Wishart: Probably the biggest issue is the one that Mr. Chittick referred to and that I will ask him elaborate on. You can have very benign imperfections in the pipe in a gas pipeline system that will never be a problem because the gas is this compressible product that does not cause these cyclical strains on the pipe. If you are in a liquid state, where it is non-compressible, then changes in cycles put more cyclical strain on the pipe. For that reason, Mr. Chittick would run sophisticated in-line inspection technologies to look for the imperfections and then remove them, and that is exactly what we did on the original Keystone pipeline.

Senator Patterson: We were told by the Department of Natural Resources earlier in our meetings that the Keystone XL pipeline would be built with the latest technology. The assistant deputy minister, who was a witness, said that it would probably be one of the safest pipelines in North America being built to the standards that are being proposed. I take it you would agree with that statement. Could you detail what would make this the safest pipeline in North America?

Mr. Wishart: The assistant deputy minister noted a conclusion that was in the State Department's final environmental impact statement as well. They actually had that statement in there. The reason they feel comfortable that it will be the safest pipeline ever built is that, beyond all standards, codes and regulations, TransCanada has agreed to 57 different undertakings that would be in excess of what is required by code.

For example, pipelines by code today are generally buried at a minimum depth of about three feet and we have agreed to bury it at four feet. We have agreed to put in more sectionalizing valves than would be required by code, as another example. There are 57 of these types of conditions we have agreed to that, collectively, are beyond what would be required under any regulations, standards or codes that exist today.

Senator Patterson: I have another question along that line. It will deliver oil sands product, and I know there was a concern in the U.S. about there being sand and a deep aquifer underneath. Is oil sands product different from other lighter crude? I know you never have spills, but if there was one, is this a thicker product that does not flow as some people imagine oil flowing?

Mr. Wishart: It clearly is thicker. It would be 350 centistokes, which is a measure of viscosity of the oil. It is very tar- like when it moves through the line. It is a lot heavier than diesel-like products that come out of synthetics are almost that sort of quality. We have been moving that in Canada since Great Canadian Oil Sands Ltd. first started being developed in the early 1960s, so we now have 50 years of history of moving heavy bitumen origin oils in the pipeline. Before they get into the pipeline, all of the impurities are removed from the oil stream and that is because all oil in North America is managed under a common tariff system, so it can go to any refinery that wants to buy it. It must have a certain amount of bottom sediments and waters inside it so all the sand has been removed. It has a very low percentage of water and has a viscosity that meets the criteria for a pipeline. It can connect that way into all the other pipelines in North America so we have a common system of moving oil across our nations.

If it ever did spill, though, it is just a heavier version of oil. It floats on water, it is a little thicker, does not move as far as and fast as gasoline or diesel would, so it stays closer to the area it would be spilled in. Other than that it is a hydrocarbon with hydrogen, carbon and oxygen, basically.

Senator Patterson: I know you moved the route away from the sand and there were fears that a spill could somehow damage that deep aquifer. Was it realistic that the oil would ever get that deep, even if there had been a spill?

Mr. Wishart: I believe that that was not realistic. A university professor from the University of Nebraska in Omaha spent his entire career studying the Ogallala Aquifer, and his conclusions were that there was no risk to the aquifer whatsoever from an oil spill from the Keystone pipeline. Virtually everything that had been published in that respect was not based on science or fact. First of all it floats, and the second thing is the inclination of the oil spill is a different way. If it ever did spill and we never cleaned it up and over time it percolated down into the aquifer — it would be an odd situation that you would never do anything for years and years for that to occur — it would cause an impact measured in feet, not in seven entire states in the United States which the Ogallala occupies. The water moving through that aquifer moves at about a foot a year, so it is about that porosity. It is not a lake; it is rock with little holes in it.

Senator Wallace: Mr. Wishart referred to at least a couple of studies that did comparative safety performance between pipeline, rail and ship. That information could be useful to us.

Mr. Wishart: I will ensure that I give you a full citation of those studies so you have proper access to find them.

Senator Brown: When the Americans first started using the aquifer for irrigation, they were able to draw the water that they needed, which was 1,000 gallons a minute, at a level of 70 feet and 10 years later it was down to 700 or 800 feet. I do not know how far down it is now.

The question is still a comment about what I was asking before. These people have gone into children's schools, et cetera. I am asking you to think seriously about putting some little vignettes together that would counteract this stupidity.

The Chair: Thank you for that. We appreciate it.

Thank you very much, gentlemen, for your presentations and your answers. I think they were great. There is lots of good information there for all of us, and we appreciate that you will get the other information to our clerk and then it will get to everyone, but especially to our researchers. That would be great. Thank you very much for coming. I know you have a busy schedule.

(The committee adjourned.)