The National Energy Board has slammed the brakes on Enbridge Inc.'s plan to start shipping western oil to Montreal this fall through its reversed Line 9 pipeline, saying the company failed to install shut-off valves around some major waterways.
In a sharply worded letter to Enbridge this week, NEB secretary Sheri Young said the board is not convinced the company has met the safety conditions which the regulator set when it approved the plan to reverse the pipeline's direction of flow last March, and that Enbridge cannot begin shipping crude until it addresses those concerns.
"The board takes protection of people and the environment seriously and it expects the same of the companies it regulates," Ms. Young wrote. "Enbridge must meet all requirements set out" in the NEB's approval last March.
Enbridge has largely completed the work to reverse the 639-kilometre stretch of the 40-year-old pipeline that previously carried crude from Montreal to southwestern Ontario, and to expand the capacity to 300,000 barrels per day. The project will provide Western Canadian crude producers with greater access to refineries in Montreal and Quebec City as well as export potential.
The Alberta-based industry is eager to expand its access to new markets, but several pipeline projects are stalled or face major political opposition. Enbridge's Line 9 reversal was considered a slam dunk, though environmental groups mounted opposition along its path in Ontario and Quebec.
It's not clear how long the opening of the line will be delayed; Enbridge had expected to commence the flow of crude this fall.
"We have and will continue to work with the NEB to explain our rationale and address all of their concerns," company spokesman Graham White said. "It is likely this will delay the project in-service date, but it is too early to say how long that delay will be."
The board said Enbridge won't be able to apply for a final permit to begin operations until at least 90 days after it has responded to the concerns raised in the letter.
At issue is the company's approach to safety when the pipeline crosses "major water crossings." Once it designated a river or stream as a major water crossing, Enbridge was required to install valves on both banks so the flow of crude could be quickly shut off in the event of a pipeline break.
The regulator said Enbridge had failed to provide clear justification for why it designated some streams as major water crossings but not others. It must now go back to identify which waterways involve major crossings, based on whether a spill would pose significant risk to the public or the environment.
Once that list is confirmed, the company must demonstrate it has installed valves on both sides. Currently, only six of the 104 major water crossings it has identified have valves within a kilometre of the banks on both sides, the regulator noted. "I think this is a major setback for Enbridge," said Adam Scott, project manager with Toronto-based Environmental Defence, which had opposed the project. "They clearly just figured they could get this thing rubber-stamped, and push through without actually improving the safety of the pipeline. So we're happy to see the NEB has said no."
Mr. Scott said it appears from the NEB letter that Enbridge will be required to reopen construction on the line to install valves at all the major water crossings that it identifies.
The Calgary-based pipeline company suffered a major black eye in 2010, when a ruptured pipeline spilled three million litres of crude into a tributary of Michigan's Kalamazoo River. The U.S. National Transportation Safety Board said in 2012 the company responded like "Keystone Kops" and ignored safety procedures while suffering "pervasive organizational failures."
In the Line 9 hearings, Enbridge assured the federal regulator that it had overhauled its safety procedures and learned valuable lessons from the Kalamazoo spill. In light of this week's letter, Mr. Scott challenged that claim: "It shows that Enbridge's take on safety is still lax."