This report was undertaken as part of the Board's regulatory mandate. The Board's third goal is that "Canadians derive the benefits of economic efficiency". To determine whether this goal is being achieved, the Board monitors energy markets and transportation systems for evidence that they are working well.

Each year the Board issues various Energy Market Assessment reports that focus on different aspects of Canadian energy markets. This is the first time that the Board has issued a report that focuses on the functioning of the Canadian hydrocarbon transportation system. The Board's intention is to issue an update to this report on a regular basis.

What is the content of the report?

This report provides an assessment of how the Canadian hydrocarbon transportation system is currently functioning and sets out the framework that the Board will use for future assessments. The Board assessed the transportation system using the following three criteria:

Is there adequate pipeline capacity in place to move products to consumers who need them?
Do pipeline companies provide services that meet the needs of shippers at reasonable prices?
Do pipeline companies have adequate financial strength to attract capital on terms and conditions that enable them to effectively maintain their systems and build new infrastructure to meet the needs of the market?

To conduct its assessment, the Board used publicly available data for the major pipeline companies that it regulates. The report also discusses some of the emerging issues pertaining to the transportation system.

What are the conclusions of the report?

Based on its assessment of the criteria outlined above, the Board concluded that the Canadian hydrocarbon transportation system is working very well at the present time. Specifically, the Board concluded the following:

(a) There appears to be adequate natural gas pipeline capacity in place on existing systems, especially since production from the Western Canada Sedimentary Basin has leveled off over the last few years.

The Board noted that there some constraints in the system east of Dawn, Ontario but this has not to date caused any prolonged problems in delivering adequate volumes to the marketplace to meet the needs of consumers.

(b) Overall, there is adequate capacity on the oil pipeline transportation system

While there is adequate oil pipeline capacity at the present time, there are some systems where capacity has been tight with some apportionment. Canadian oil producers also appear to believe that there is a need to improve access to heavy crude oil markets in the United States and have supported the reversal of two U.S. pipelines recently to allow growing oil sands production to penetrate new markets.

(c) Shippers are reasonably satisfied with the services provided by pipelines

The Board's Pipeline Services Survey revealed that shippers are reasonably satisfied overall with the services they receive from pipeline companies. Physical reliability of pipeline operations was rated very highly by shippers, indicating that products are reliably delivered to markets. Some areas where shippers indicated that pipeline companies need to improve customer service include: making tolls more competitive; exhibiting an attitude of continuous improvement and innovation; and working collaboratively towards fair and reasonable solutions to resolve issues.

(d) NEB-regulated pipeline companies are financially sound

Based on its assessment of financial data and indicators, the Board concluded that the pipeline companies it regulates are financially sound. While companies have not had to raise large amounts of capital in recent years, the investment community believes that pipeline companies should have no difficulty in raising capital to finance most major new projects at this time.

The Board recognizes that this report is a snapshot in time and does not include a comparison, for example, with pipelines in other jurisdictions. The Board considers this report as a first step in assessing the effectiveness of the hydrocarbon transportation system in Canada. The Board will continue to monitor the effectiveness of the system and will continue to meet with parties to gain an understanding of all perspectives on the transportation system. The Board welcomes feedback at any time on the measures and conclusions in this report and welcomes suggestions for improvements to future reports.