Section II:  Performance Discussion

In this section, the outcomes and performance results from the strategies and major actions implemented in 2004-2005 as described in the Report on Plans and Priorities 2004-2005 (RPP) are discussed.

2.1  Goal 1

2.1.1  Context

The NEB regulates the safety of international and interprovincial pipelines and international and designated interprovincial power lines under the NEB Act. The Board also regulates facilities and drilling operations in non-accord frontier areas under the COGO Act.

Under the NEB Act, the Board regulates approximately 45,000 kilometres of pipelines, most of which are high pressure large diameter, for the transportation of oil and gas. The Board also regulates a small number of interprovincial and international commodity pipelines. Facilities and activities under the COGO Act include Imperial Oil's Norman Wells production facilities, recent production facilities in the FortLiard area of the Northwest Territories, and exploration activities in the Mackenzie Delta Region (Figure 2).

Figure 2: Canadian Frontier Areas (COGO Act)

The NEB plays a significant role in the safety of regulated facilities by ensuring that the regulatory framework encourages companies to maintain and improve their performance and that it is consistent with public expectations. The NEB verifies that the risks associated with the construction and operation of regulated facilities are assessed and managed by pipeline companies. The NEB does this by:

• Developing regulations and guidelines for the safety, security and protection of people, property and the environment;
• Assessing applications from an engineering and safety perspective;
• Ensuring plans are in place for implementation of appropriate mitigation measures before granting project approval;
• Monitoring construction and operation through inspections and audits to verify that regulatory requirements, as well as other standards identified through the application process, have been met and will continue to be met;
• Assessing safety practices and procedures under the NEB mandate as well as through the Canada Labour Code on behalf of Human Resources and Skills Development Canada;
• Investigating failures or incidents, with the intent of preventing similar occurrences;
• Meeting with regulated companies to review and assess the adequacy of their integrity management programs;
• Issuing safety advisories; and
• Where necessary, conducting inquiries or formal investigations into safety and security incidents.

The combined efforts of the NEB, industry and other stakeholders, within this regulatory framework, have resulted in heightened safety awareness, including no pipeline ruptures since 2002.

2.1.2  Strategies

The NEB identified four strategies for Goal 1 in its 2004-2005 RPP:

• Reinforce goal-oriented regulation to improve industry’s ownership of safety performance and system security.
• Provide public information on safety performance.
• Influence the development of safety related codes and standards.
• Pursue opportunities for coordination and partnerships.

2.1.3  Plans and Priorities

For Goal 1, the NEB has three key performance measures to ensure that NEB-regulated facilities are safe.  They are:

• Number of pipeline ruptures and incidents per year.
• Number of fatalities per year.
• Public perception of pipeline safety.

Number of pipeline ruptures and incidents per year

In 2004, the number of incidents reported under the NEB Actpursuant to section 52 of the Onshore Pipeline Regulations, 1999 , and section 46 of the Processing Plant Regulations increased slightly but remained within the same range as the previous four years (Figure 3). No ruptures and no fatalities occurred during 2004. The last rupture on an NEB-regulated pipeline occurred in 2002. For activity covered by the NEB Act and its regulations, no fatalities have occurred since 1997.

Figure 3: Pipeline Ruptures and Incidents, 2000-2004

In 2004, total hazardous occurrences in frontier areas, as defined under section 16.4 of the Oil and Gas Occupational Safety and Health Regulations under the Canada Labour Code (CLC)Part II decreased from 45 in 2003 to 37 in 2004 (Table 3).  The major reduction was reflected by reportable spills which decreased from 42 to 33 over the same time period.  There were three disabling injuries in 2004, as in 2003; however, when compared to 2003, this translated into a slight increase in frequency (from 2.0 in 2003 to 2.3 in 2004), likely due to a slight decrease in activity.  For activity covered under the COGO Act and the CLC, and related regulations, no fatalities occurred during 2004.

Table 3: Safety Performance Indicators for COGO Act Regulated Companies

Number of fatalities per year

There were zero fatalities in 2004 as indicated above.

Public perception of pipeline safety

During 2004-2005, the NEB contracted Environics Research Group, an independent public opinion research company, to conduct a survey of more than 1,100 landowners across Canada. The questions related to landowner perception of pipeline safety with the goal of providing data for this performance indicator.  The survey results showed that landowners generally feel safe having a pipeline on their property, and have confidence in the company operating it.  It also showed that most landowners also appear to be familiar with basic pipeline safety procedures and excavation requirements (survey results summarized in section 2.4).  A trend analysis indicated that landowners feel safer in 2004 than they did in the 2001 survey conducted by the NEB (Figure 4 and Figure 5). ^[3]  

Figure 4: Landowner Survey: Perception of Safety

Figure 5: Landowner Survey: Proximity to Pipelines

2.1.4  Program and Results on Major Actions of 2004-2005

The NEB identified five major actions for Goal 1 in its 2004-2005 RPP.  These major actions and their results are discussed below.

1.  Actively promote a broader understanding of goal-oriented regulation, within and beyond the NEB , based on results from the effectiveness evaluation.

In 2004, the NEB retained Matrix Solutions Inc. to conduct an evaluation of the effectiveness of goal-oriented regulation and its implementation. This evaluation was conducted primarily through interviews with industry, stakeholders and NEB staff and Board Members. The evaluation focused primarily on the NEB’s first goal-oriented regulation, the Onshore Pipeline Regulations, 1999 (OPR-99).  The findings can be used as guidance in the NEB’s efforts to create more goal-oriented regulations in the future.

The report made 14 recommendations to the NEB for specific actions; progress in these areas is described below.

In response to recommendations regarding the effective use of compliance tools, an Integrated Compliance project was undertaken to bring together information about the effectiveness of the NEB’s compliance tools (audits, inspections, etc.) and about company compliance and incident performance. The results of this initiative will allow the NEB to apply its compliance tools where they can be most effective. Compliance performance information can also be used in the evaluation of new project applications to guide the scrutiny of historical problem areas. 

The Audit Program has been underway for a number of years, evaluating company systems against the requirements of the OPR-99.  In 2004-2005, the Audit Program was reviewed and set up along ISO 9001 principles as a pilot in the NEB’s Quality Management System project.  A rigorous procedure for OPR audits now exists with job models, training requirements and performance measures.  These steps have responded to issues with the way audits were being completed that arose in the effectiveness evaluation.

A review of OPR-99 was initiated to address specific recommendations made in the effectiveness evaluation.  This project will deliver a revised draft of the Onshore Pipeline Regulations for public comment in 2005. One recommendation, to set up a tracking system for issues identified with regulation for future action, has not been acted upon, due to insufficient resources during the year.

The NEB also communicated the concept of goal-oriented regulation through public consultation on other regulatory renewal projects.  A number of meetings and workshops were held to develop the Submerged Pipeline Regulations, a new goal-oriented regulation being drafted under the NEB Act.  During these meetings, stakeholders interested in pipelines in marine environments had the opportunity to have goal-oriented regulation explained to them and discussed how the concept would apply in that specific context.  The NEB also hosted staff from Canada’s two offshore petroleum boards, several provinces, and Natural Resources Canada at a workshop to discuss the future of frontier and offshore regulations. As an outcome of workshop discussions, participants agreed to work together to make the framework of regulations that governs petroleum activities in frontier and offshore areas in Canada goal-oriented. The purpose is to ensure safety and harmonize regulatory approaches.

2.  Complete a review of and adopt safety and security leading indicators.

During 2004-2005, the NEB began a number of major projects aimed at improving the quality of incident reporting and the development of meaningful performance indicators in the area of pipeline integrity/security/safety (projects will be finalized in 2005-2006). 

In March 2005, the NEB published a report entitled Focus on Safety and Environment – A Comparative Analysis of Pipeline Performance .  This report on the safety and environmental performance of pipeline companies regulated by the NEB has been published annually since 2003. In 2005, the report was significantly revised to reflect the three key performance areas of integrity, safety and environmental protection. During 2005-2006, the NEB intends to further refine the report and to include new indicators reflecting the effectiveness of integrity management programs.

The development of the NEB’s program for the oversight of regulated companies’ security management programs will continue through 2005-2006.  The development of security performance indicators has been delayed until further development of the program has been completed and industry consulted.

3.  Integrate security into ongoing operations and programs.

On 6 May 2004, the Public Safety Act , 2002 (Bill C-7) was proclaimed and received Royal Assent. An Order of the Governor General in Council fixed 20 April 2005 as the day on which the sections amending the NEB Act came into force. The amendments provide the NEB with a clear legislative authority for the security of pipelines and international power lines.

The NEB proceeded with work under this mandate, and completed Pipeline Security Management Assessments (PSMAs) on ten Group 1 companies and two Group 2 companies between June 2004 and March 2005. The focus of these PSMAs was:

• to gain an understanding of how NEB-regulated industry is presently managing pipeline security;
• to identify industry common practices and best practices;
• to identify security related issues that may be common to regulated companies; and
• to assist the NEB in the development and implementation of a program (including regulations) to regulate security management.

NEB staff are presently developing an approach for the NEB to regulate security management based on the PSMAs, feedback received from industry and interface with other agencies. Integration of an approach for security management into existing NEB operations and programs is ongoing and is expected to take several planning cycles. 

4.  Build staff capability in pipeline integrity, northern energy development and offshore safety and security.

A staffing plan was developed with a focus on resourcing in order to meet the NEB’s projected requirements in northern energy developments. 

This major action has involved the development of a structured secondment program, in-house training, external course attendance and the active involvement of staff in learning circles. Through development dialogues, three individuals were identified as having an interest in being seconded to external organizations, including other regulators and pipeline operating companies, to obtain on the job experience in clearly specified areas of pipeline integrity assessment. One such assignment was completed in October 2004.

The NEB has undertaken the development of a detailed program for providing the regulatory oversight of integrity management programs within the pipeline industry.  This program will fit within the NEB’s evolving quality management system.  It establishes the necessary resources for the NEB to carry out its mandate regarding integrity management. 

5.  Monitor, influence and report on research and development technology advancements.

NEB staff provided a report to Board Members in March 2005 summarizing current research and emerging technologies.  In addition, staff continue to participate actively on the various committees responsible for the maintenance of the Canadian pipeline standard CSA Z662 – Oil and Gas Pipeline Systems.  Staff are also active within numerous other standards organizations including the International Organization for Standardization, and the American Society of Mechanical Engineers.

In 2004-2005, the NEB undertook the development of a Memorandum of Understanding with the U.S. Pipelines and Hazardous Materials Safety Administration (PHMSA) which provides for research collaboration in the interests of both agencies. NEB staff are actively involved in the various research forums administered by the PHMSA.

Staff keep abreast of current technology by participating in external research seminars, workshops and conferences, particularly the International Pipeline Conference. Participation has taken the form of paper presentations and peer reviews as well as conference organization.