Canadian Energy Law : Lawyers & Attorneys for Environmental Energy Law

Gus Lu

On January 18, 2012, the U.S. State Department recommended to President Obama that the Presidential Permit for TransCanada Corp.’s Keystone XL pipeline be denied. President Obama concurred with this recommendation, which according to a State Department spokesperson was “predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest”.

The State Department’s reference to the time constraint refers to the Temporary Payroll Tax Cut Continuation Act of 2011 (“Act“), passed by Congress and signed by President Obama on December 23, 2011.  Subsection 501(a) of the Act provided that the President had 60 days from the enactment of the Act to issue a Presidential Permit for the Keystone XL pipeline. Under Subsection 501(b), the President did not have to issue the Presidential Permit if he determined that Keystone XL was not in the national interest. 

Had the Presidential Permit been granted under Subsection 501(a), Subsection 501(d) would have required the Permit to provide for a reconsideration of the route of Keystone XL within the State of Nebraska, and to provide a review period for the new route. Keystone XL’s route through Nebraska has been a controversial issue due to its location relative to the heavily-utilized Ogallala aquifer. 

On November 14, 2011, TransCanada entered an agreement with the State of Nebraska to amend Keystone XL’s route to bypass the Sandhills region that sits atop the Ogallala aquifer. That development followed the State Department’s ruling that required TransCanada to examine new routes, and President Obama’s announcement indicating that his decision would be delayed until after the 2012 Presidential elections.

Following President Obama's announcement, TransCanada stated that it intended to re-apply for a Presidential Permit and expected the new application to be processed in an expedited manner.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Gus Lu -

On December 2, 2011, Enbridge Inc. entered into an equity participation agreement with the Gitxsan First Nation, pursuant to which Enbridge will assist the Gitxsan First Nation in purchasing a stake in the proposed $5.5 billion Northern Gateway pipeline which has the potential to result in $7 million in profits for the Gitxsan over the project’s lifetime.  Northern Gateway’s proposed route does not cross the Gitxsan First Nation’s territory, although the route passes several tributaries which feed into a lake used by the Gitxsan.

This announcement arrived shortly after 61 British Columbia First Nation groups signed the “Save the Fraser Gathering of Nations” declaration, a document which states that the federal process to approve Northern Gateway violates the signatories’ “laws, traditions, values and inherent rights as Indigenous People under international law.”

The federal Joint Review Panel, established by the National Energy Board and the Canadian Environmental Assessment Agency, will begin community hearings on Northern Gateway in Kitimat, B.C. on January 12, 2012.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

On Monday, TransCanada Corp. announced that it reached an agreement with the Nebraska state government to amend the route of the proposed Keystone XL pipeline to bypass the Sandhills region, an environmentally sensitive area that sits atop the heavily-utilized Ogallala Aquifer. As part of the agreement, the state will fund studies to evaluate alternative routes.

Today, the Nebraska state legislature will consider the proposed law that will direct the Nebraska Department of Environmental Quality to prepare a supplemental environmental impact statement for the Nebraska Governor.

This development follows last week’s U.S. State Department ruling that required TransCanada to examine new routes, as well as an earlier announcement by President Obama indicating that the decision whether to approve Keystone XL would be delayed until after the 2012 Presidential elections. A U.S. State Department spokesman indicated that any agreement between the state of Nebraska and TransCanada will not alter the review process undertaken by the federal agency.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Canada's National Energy Board ("NEB") has issued a series of pressure restrictions to five pipelines as part of a broader safety strategy.  Traditionally, the NEB has sparingly enacted measures to reduce the flow of oil and gas, but several major spills in the last year have prompted the preventative response.

Pipeline age has been a factor in the issuance of restrictions, indicating that pre-1970 flash-welded pipe is of greater concern.  Most of the restrictions have required a 20 percent reduction in throughput until operators satisfy certain conditions that include "an engineering assessment that indicates that the pipeline remains fit for its intended service."

Brenda Kenny, Chief Executive of the Canadian Energy Pipeline Association ("CEPA") says the scrutiny is welcomed and operators are supportive of strong regulation, but CEPA has not seen any evidence that such reductions are necessary to ensure a high level of safety.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

After conducting a five-year application process and having received approval from the Federal Cabinet, the National Energy Board granted a Certificate of Public Convenience and Necessity to the Mackenzie Gas Project.

The project includes the 1,196-kilometre Mackenzie Valley Pipeline, which would transport 1.2 billion cubic feet of natural gas per day from the Beaufort Sea to northern Alberta.  As well, the project will involve the development of three onshore natural gas fields and the construction of a 457-kilometre NGL pipeline linking Inuvik, NWT to Normal Wells, NWT and other related facilities.

Imperial Oil, the lead proponent of the project, now estimates Mackenzie's costs to be $16.6 billion.  The Imperial-led consortium, which includes Exxon Mobil Corp., ConocoPhillips, Royal Dutch Shell PLC, and the Aboriginal Pipeline Group, has until the end of 2013 to decide whether to proceed with the project.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

In Smith v. Alliance Pipeline Ltd., the Supreme Court of Canada upheld a Pipeline Arbitration Committee (Committee)'s award of costs for the proceedings before it, as well as the costs incurred by a landowner in prior arbitration proceedings and a related Alberta Court of Queen's Bench action.

The case arose from a dispute regarding compensation to a landowner for reclamation work that he completed, but which a pipeline company was obligated to perform. The dispute, which continued for over ten years, resulted in two Pipeline Arbitration Committee proceedings and a discontinued Queen's Bench action that was commenced by the pipeline company.

The Committee determined that the costs from the other proceedings "all related to a single claim for compensation in respect of a single expropriation by a single expropriating party." The SCC held that this was a reasonable interpretation and exercise of Section 99(1) of the National Energy Board Act (NEBA), a provision that requires an expropriating company to pay all "legal, appraisal and other costs" reasonably incurred by a party in asserting their claim for compensation.

Writing for the unanimous court (with concurring reasons also written by Madam Justice Deschamps), Justice Fish mentioned that the Committee's decision was consistent with Section 75 of NEBA, which expresses the principle that parties should be made "economically whole" for all damages sustained by reason of expropriation.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Despite a consistent rise in Canadian oil shipped overseas in the last few years, less than 2 per cent of all Canadian crude exports are delivered to destinations other than the United States.  A lack of sufficient infrastructure is to blame.  However, Asian markets may soon assume a greater share of Canadian production if various projects come online to raise transport capacity to the West Coast of Canada. 

In the last month, pipeline and railway players have made the following announcements:

• Enbridge’s Northern Gateway pipeline received a $100 million injection from a corsortium that included China Petroleum & Chemical Corp., also known as Sinopec, to help the $5.5 billion pipeline get through the regulatory approval process. If approved, Northern Gateway will transport up to 525,000 barrels per day and may commence deliveries as early as 2016.
• Kinder Morgan plans to construct an 80,000 barrel-per-day expansion to its TransMountain pipeline that runs from Edmonton, Alberta to Burnaby, B.C. Kinder Morgan intends to accept open season bids for shipping commitments later this year, and may complete its expansion project by 2014 to 2015.
• Canadian National Railway Co. confirmed that it is in early discussions with Canadian oil producers and Chinese companies to ship oil via railway from Saskatchewan and Alberta to yet-to-be-determined West Coast tanker ports. 
• There are also reports that Canadian Pacific Railway Ltd. is working on a similar proposal for a “pipeline on rail” to the West Coast.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

On December 16, 2010, the National Energy Board (NEB) approved the application for the construction and operation of the Mackenzie Gas Project. The Project includes the 1,196 kilometer Mackenzie Valley Pipeline, three onshore natural gas fields and a 457 kilometer pipeline to carry natural gas liquids from near the coast of the Beaufort Sea to northwestern Alberta and onwards to southern markets. The NEB attached 264 conditions to the Project’s approval in areas such as engineering, safety and environmental protection. The NEB will monitor the Project throughout its lifespan to ensure these conditions are being met.

The NEB began hearing evidence in January 2006 on five applications filed by a number of parties, including lead partner Imperial Oil. The Board held over 58 days of hearing sessions in 15 communities throughout the Northwest Territories and northern Alberta.

To move forward, the NEB’s decision must now be approved by the Federal Cabinet. If the Project is approved, construction is expected to begin in 2014 and the pipeline is scheduled to be in operation by the end of 2018. If the Project proceeds, it will be the largest pipeline system to be constructed and operated in Canada’s north.

A news release was provided by the NEB concurrently with the reasons for their decision.
 

• Comments
• Trackbacks
• Email This
• Print
• Share Link

On Tuesday, Pembina Pipeline Corporation announced that it has received approval from the Alberta Energy Resources Conservation Board to construct and operate two pipeline projects, which will link oilfields in Slave Lake to a processing and transportation hub near Edmonton.

The Nipisi Pipeline, which is expected to carry 100,000 barrels per day (bbls/d), is set to originate north of Slave Lake and run south of Judy Creek, where it will connect to an existing pipeline delivering product to Edmonton.  The second pipeline, the Mitsue Pipeline, is designed to deliver 20,000 bbls/d of diluent from Whitecourt, Alberta to producers north of Slave Lake.

Pembina has announced that two founding customers, Canadian Natural Resources Limited and Cenovus Energy Inc., have contracted for 80% of the capacity of the Nipisi Pipeline and 50% of the capacity of the Mitsue Pipeline.  Pembina Marketing Ltd. has contracted for the remainder.

Pembina has estimated that the projects will cost a combined total of $440 million.  It also predicted that the pipelines will generate $45 million per annum in net operating income.  Project construction will commence immediately, and the pipelines are expected to be fully operational by mid-2011. 

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Mike Styczen

TransCanada announced on July 30 that it had completed line fill on the first phase of the Keystone Pipeline and that deliveries from Hardisty, Alberta to Wood River and Patoka, Illinois had commenced.

The construction of the first phase of Keystone, which will have a capacity of 435,000 barrels per day, involved the conversion of 864 kilometers of existing gas pipeline to oil service, the construction of 2177 kilometers of new 30” pipeline, and the construction of 39 new pump stations. 

Construction of the second phase of Keystone, a 480 kilometer expansion to Cushing, Oklahoma, will increase the capacity of the pipeline to 591,000 barrels per day and is expected to be in service in 2011. 

TransCanada has  already announced plans for the final phase of Keystone expansion (Keystone XL), which will take an additional 500,000 barrels per day to the U.S. Gulf Coast.  

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Lanette Wilkinson

On June 16, 2010, CSA Standards and the International Performance Assessment Centre for Geologic Storage of Carbon Dioxide (IPAC-CO2 Research Inc.) announced an agreement to develop Canada's first carbon capture and storage (CCS) standard for underground storage.

CCS is a process that involves the capture, transportation and injection of carbon dioxide emissions underground, which many believe is a promising technology to assist certain emissions-intensive industries to reduce CO₂ emissions. Several large-scale projects involving CCS have been announced in recent years in Saskatchewan, Alberta and British Columbia.

The proposed standard focuses primarily on long-term underground storage of CO₂. According to a representative of CSA Standards, the new standard will create guidelines for, and advance risk assessment expertise associated with, geological storage projects. As mentioned in our March post, risks associated with long-term storage include the reliability of injection and the effectiveness of ongoing monitoring and verification. In addition, the perpetual nature of storage also makes the siting of CCS important, including the specific geological characteristics of the proposed storage site and site-specific risks. The development of this standard represents an opportunity to promote careful site selection while also instilling public confidence in the reliability and safety of long-term storage and monitoring and verification. Ideally, the standard will contain important technical guidelines, while also remaining flexible enough to address site-specific characteristics, emerging technologies, and new information.

It is intended that the completed standard will be submitted to the Standards Council of Canada for recognition. If recognized, it could become the world's first formally recognized standard in underground storage.

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Kemm Yates

The National Energy Board (NEB) has charted a new course for cost of capital determination. In a decision released on March 19, 2009 regarding the 2007 and 2008 cost of capital of Trans Québec & Maritimes Pipeline Inc. (TQM), Decision RH-1-2008 (TQM Decision), the NEB departed from its long-standing, formulaic methodology and adopted a market-based approach for TQM, based on an After Tax Weighted Average Cost of Capital (ATWACC) methodology. Stikeman Elliott acted as counsel to TQM.

The TQM Decision has potentially significant ramifications for other pipelines regulated by the NEB and for the returns allowed to other regulated utilities in Canada.

Continue Reading...

• Comments
• Trackbacks
• Email This
• Print
• Share Link

C. Kemm Yates, Q.C. andLisa McDowell

The National Energy Board (the NEB) has granted TransCanada PipeLines Limited's (TransCanada) application to shift regulation of the NOVA Gas Transmission Ltd. system (the Alberta System) from the Alberta Utilities Commission to the NEB. The NEB's GH-5-2008 Decision (the Decision), issued on February 26, 2009, determined that the Alberta System is properly within federal jurisdiction and subject to NEB regulation.  Stikeman Elliott acted for TransCanada.

The Alberta System is an existing natural gas pipeline system consisting of over 23,500 km of pipeline, associated compression and other facilities, located entirely within Alberta. In 2007, it carried over 10 billion cubic feet of natural gas per day, accounting for approximately 66% of natural gas production from Western Canada, or about 16% of the total North American production. Natural gas flowing through the Alberta System moves through connecting pipelines to markets in Western and Central Canada, and the United States West, MidWest and NorthEast.

Continue Reading...

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Ruth Elnekave

As countries worldwide search for ways to make deep cuts in carbon dioxide (CO2) and other greenhouse gas (GHG) emissions, carbon capture and storage (CCS) technology is being recognized by governments, research institutions and industry as a potentially key tool for such emissions reduction.

The world's leading body of experts on climate change, the Intergovernmental Panel on Climate Change,¹ believes that CCS is among the most promising tools to control GHG emissions. In Canada, with the recent re-election of Prime Minister Stephen Harper, the development of CCS is expected to proceed as planned as a cornerstone of the government's green plan.

Continue Reading...

• Comments
• Trackbacks
• Email This
• Print
• Share Link

Dan Murdoch

On April 29, 2008, the Ontario Energy Board (OEB) released its decisions on Natural Gas Storage Allocation Policies for Enbridge Gas Distribution Inc. and Union Gas Limited (EB-2007-0724 and 0725). An oral hearing had taken place December 17-20, 2007.

The hearing addressed certain issues arising from the OEB's 2006 Natural Gas Electricity Interface Review (NGEIR) decision, in which the OEB had ordered Union and Enbridge to submit new storage allocation policies on the basis that existing rules, in particular Union's policy of applying the aggregate excess method for semi-unbundled customers, were not consistently applied. The aggregate excess method permits customers with seasonal loads to balance constant supply, allowing them to inject storage all summer and then withdraw all winter.

Continue Reading...

• Comments
• Trackbacks
• Email This
• Print
• Share Link