NEB orders pipeline operators to reduce flow of oil and gas

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Amid a spate of serious pipeline spills, Canada's National Energy Board has slowed the operation of five pipelines in the past nine months as part of a broader effort to scrutinize the industry's safety performance.

The board has ordered a series of so-called "pressure restrictions," to reduce the amount of oil and gas flowing through pipes, one of the more serious measures the regulator can use to address safety concerns. Such orders have rarely been used in the past.

But as a series of accidents unravelled in the past year, including major leaks in Michigan and northern Alberta, the NEB has increasingly turned to such restrictions as part of its attempts to prevent more problems. All of the restrictions remain in effect, including one order not previously disclosed that mandates a 20-per-cent reduction on part of a natural gas system run by Centra Transmission Holdings Corp.

And documents provided to The Globe and Mail by the NEB show that some orders have arisen among broader concerns about pipeline safety, including restrictions on one Enbridge Inc. line issued after an examination of cracking on the company's vast pipeline network.

Other pipelines ordered to cut throughput include the Trans Mountain line between Alberta and British Columbia, and the TransNorthern Pipelines Inc. line in Ontario and Quebec. Enbridge pipelines 2 and 21 in the North West Territories and the Prairies are also affected. In almost all cases, the NEB ordered a 20-per-cent cut until companies can satisfy a series of conditions that include, in the case of Enbridge Line 21, an "engineering assessment that indicates that the pipeline remains fit for its intended service."

Industry sources say that historically pressure restrictions have been used only in extreme cases, such as accidents that involved fatalities or spurred investigations.

Pipeline operators say the scrutiny is welcome. "We are supportive of strong regulation," said Brenda Kenny, chief executive of the Canadian Energy Pipeline Association. She added: "we can debate whether or not pressure reductions are a necessary part of that.... I haven't seen any evidence to suggest that it's necessary."

But in letters to the operators of pipelines, the NEB makes it clear that it is cracking down on pipeline safety and integrity, which covers efforts companies make to avoid, detect and fix issues like corrosion and cracking.

Centra Transmission president Todd Karry, for example, says the company's 320-kilometre natural gas pipeline, which runs from Spruce, Man., through Minnesota and into Fort Frances, Ont., has a "pristine record in terms of safety operations."

Yet in late January, the NEB ordered the company to cut some throughput after "findings of non-compliances in the areas of safety, integrity, and environmental protection."

Mr. Karry acknowledges that the order "sounds ominous and it sounds serious." However, he said Canadian regulations are less prescriptive than those in the U.S., meaning it's less clear how exactly to satisfy the NEB. The pressure restriction order, he said, appears to be a direct result of the recent spills.

"My view is it was a function of the NEB's heightened sensitivity to operators demonstrating that their pipelines were operated in a safe and reliable manner," he said.

What's clear is that the regulator is taking a broader look at the industry's failings. In an October order to cut throughput on Enbridge Line 2, the NEB pointed to the age of the pipe as a factor, saying it "notes a correlation between pre-1970s flash welded pipe and cracking-related incidents on Enbridge's pipelines." In other words, older pipe appears to show more problems - a statement that contradicts industry arguments that a pipeline's age should not matter, so long as it is properly maintained.

The NEB also questions the advances in crack detection that pipeline companies say have allowed them to stay ahead of problems. In a letter to Enbridge, the regulator says the company's "hazard identification practices have not been consistently reliable in detecting, identifying and sizing cracking-related anomalies in the pre-1970s flash welded pipe."

A substantial quantity of Canada's pipeline system is decades old. In Alberta, for example, 40 per cent of the pipes were built before 1990. Ms. Kenny, who heads the pipeline association, said the NEB orders should not be read as a broader statement on the industry, whose safety record has shown decade-over-decade improvement.

"It does not suggest to me any specific concern about pipelines overall," she said. It doesn't even suggest there's a risk."

Enbridge, however, acknowledged that "flash welded pipe has been used by numerous pipeline companies for both liquids and gas transportation in both Canada and the U.S."

In an e-mailed statement, spokeswoman Jennifer Varey said the issue "is one that Enbridge has been addressing, and continues to address.... We understand the NEB's concern and are committed to working collaboratively with the regulator to respond to and address the concerns."

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SPILLS AND LEAKS

The past year has not been a good one for the pipeline industry, which has seen a number of high-profile spills, including:

July 26, 2010: Enbridge Inc.'s Line 6B in Marshall, Mich. An estimated 20,082 barrels leaked, about 40 per cent of it into a creek and then the Kalamazoo River. Cleanup costs have been estimated at $550-million (U.S.). Investigators have pointed to corrosion issues.

Sept. 9, 2010: Enbridge's Line 6A in Romeoville, Ill. An estimated 6,100 barrels leaked; investigators pointed to "poor" construction practices, since the oil pipe was located unusually close to a municipal water line, and surrounded by rocks.

April 28-29, 2011: Plains All American Pipeline's Rainbow line, near Little Buffalo, Alta. An estimated 28,000 barrels leaked, prompting health concerns and a pipeline outage that hurt oil producers in northern Alberta. The company blamed an improper repair job.

May 9, 2011: Enbridge's Line 21, near Wrigley, NWT. Between 700 and 1,500 barrels spilled. Enbridge initially said only four barrels spilled, and revised the estimate more than a week later.

May 29, 2011: TransCanada Corp. Keystone pipeline Severance Pump Station, Kansas. Fewer than 10 barrels spilled, because of a valve failure, which prompted a Corrective Action Order from the Pipeline and Hazardous Materials Safety Administration. The line was restarted in a week.