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Pipe dreams

By Vanessa Chris
| www.cos-mag.com

Unravelling the issues surrounding Alberta's controversial Keystone Pipeline project and what's fuelling the opposition

Whether you’re educated on the topic of the Keystone Pipeline or not, you likely have some sort of opinion on it — even if it’s as simple as being for it or against it. When it comes to oil, it seems, there’s no middle ground.

The pipeline — which would essentially transport diluted bitumen from the Alberta oil sands all the way down to refineries in Texas, and eventually to markets overseas — would mean great things for the Canadian economy. It would also help the U.S. eliminate its reliance on foreign oil.

On the downside, transporting oil — regardless of how it’s moved, or what type of oil it is — is a risky endeavour. One that’s not immune to spills, explosions and other hazards. But regardless of which side of the argument you find yourself on — regardless of your views on politics, economics or the environment — the crux of the Keystone pipeline argument essentially boils down to safety.

Opponents of the project typically argue that it’s unsafe — it’s a danger to the environment, the communities it passes through, and even its workers. Proponents will highlight that most forms of transporting fuel are unsafe, and pipelines are by far the safest option. New advances in pipeline technology — from construction to operation practices — have made it even safer. And Canada’s recent push toward tougher regulations is designed to make sure that accidents, if they do happen, are handled as efficiently as possible.

But are the benefits enough to outweigh the risks? And are they enough to warrant an investment in a fuel source that many argue is going the way of the dinosaur?

The issues

One of the biggest arguments in favour of pipelines is that they’re typically safer than any other mode of transport. One only has to look as far back to July’s Lac-Mégantic train derailment in Quebec — which caused the crude oil tanks it was carrying to explode killing dozens of people — to see merit in that point of view.

Today’s pipelines are different than those installed 50 years ago. For starters, they’re now made of high-strength, low alloy steels that feature improved toughness, weldability, ductile fracture resistance and cost effectiveness, according to the Oil and Gas Journal. While there was some controversy surrounding how these pipeline materials interact with diluted bitumen, a recent report by the National Research Council of the Sciences Academy (NAS) reveals that transporting bitumen via pipeline is no more dangerous than transporting crude oil.

The ways in which pipelines are constructed and operated are also changing. When it comes to construction, mechanized and automated techniques are becoming more popular — particularly mechanized welding. Companies are also starting to pay more attention to how pipelines are laid across sensitive environmental areas.

Today’s pipelines use computers to monitor pressure, flow and energy consumption, allowing them to close emergency valves, shut off pumps or alert repair crews should a leak occur. Since spills are an oil company’s worst PR nightmare, operators across the world are making changes to their operational and maintenance processes to ensure new and existing pipelines are managed more efficiently.

Still, with all these improvements, pipelines aren’t perfect. The argument that they’re the safest form of transporting oil could be true, but it’s difficult to prove with data kept by the Transportation Safety Board (TSB). While you can see the number of accidents that occur in a given year per transportation method, there’s no common denominator. For example, there are no numbers to say how many accidents occur per barrels transported.

In 2012, there were seven reported pipeline accidents in Canada (where an “accident” denotes a major spill or rupture) according to the TSB — and these only include federally regulated pipelines. Pipelines that don’t cross provincial borders are governed by provincial regulatory bodies. The situation is the same, if not worse, in the U.S. That’s why Jim Murphy, senior counsel for the National Wildlife Federation, has put together a petition to strengthen regulations surrounding pipelines.

“The safest pipeline is no pipeline,” he says. “With the Keystone 1 pipeline (which became operational in 2010 and runs from Alberta to Illinois) they predicted one incident in the first year. There were 14, and some of them were quite sizable.”

While spills happen —many of which go unpublicized — others have the potential to wreak havoc on the environment and surrounding communities. Probably the worst case against the Keystone XL, and pipelines in general, dates back to June 25, 2010, when a 40-foot segment of an Enbridge pipeline ruptured in Marshall, Mich., and spilled bitumen into the river.

While alarms sounded immediately at the company’s Edmonton headquarters, the spill was inexplicably ignored. It took 18 hours for an employee at the Michigan plant to notice the spill and for the company to become aware of it. When the first responders did eventually show up, they were prepared for a crude oil spill not a bitumen spill, which tends to sink in water, and is therefore a very different beast to clean up.

The poor response time and miscommunication led to one of the biggest onshore oil spills in U.S. history. More than three million litres of oil leaked into the wetlands, Talmadge Creek and the Kalamazoo River when all was said and done. The costs of the clean-up soared to an estimated $1 billion, more than Enbridge is insured for.

The Enbridge spill had a terrible PR effect on the bid for the Keystone XL pipeline. Not only did it give the project’s opponents more ammunition for their arguments, but it also put the onus on governments, regulators and the oil companies to prove to the public this type of accident is a rare occurrence rather than the norm.

Tighter regulations

Canada’s neighbours to the south have always been a little less enthused by excessive government regulation, so it’s not really a surprise that many consider the regulations surrounding pipelines to be on the weak side. While the U.S. Congress has been working to tighten regulations over the past decade, there’s still a lot of work to be done. 

The National Wildlife Federation’s main concerns are reflected in its recent petition for increased pipeline regulations. Basically, the organization — along with many others — wants stronger safety requirements for the transportation of bitumen, more disclosure on the part of industry (in terms of what they’re pushing through their pipelines), stronger industry spill response plans and more transparent pipeline inspections, among many other things.

“In the U.S., the current regulatory structure is weak, but it’s also designed to deal with conventional crude. We’ve asked that the regulatory structure be fixed — the current structure is inexcusable,” says Murphy. “It’s irresponsible to go forward with projects without protecting communities.”

Paul Parfomak, a specialist in energy and infrastructure policy, recently made similar recommendations to Congress in his report, Keeping America’s Pipelines Safe and Secure.

“Both government and industry have taken numerous steps to improve pipeline safety and security over the last 10 years. Nonetheless, the (National Transportation Safety Board) has identified improvement of federal pipeline safety oversight as a ‘top ten’ priority for 2013,” he says in the report. “The leading pipeline industry associations have concurred. Whether renewed efforts by industry, combined with additional oversight by federal agencies, will further enhance the safety and security of U.S. pipelines remains to be seen.”

But while the regulatory situation in the U.S. is one thing — and something that, if revamped, could cause great headaches for proponents of the Keystone XL — pipeline safety in Canada has to be better, doesn’t it? It’s getting there. Recently, the federal government has taken great strides to make pipeline safety a priority in Canada — but only after a scathing 2011 report by Canada’s Federal Environment and Sustainable Development Commissioner, Scott Vaughan. The government body audited the National Energy Board (NEB), the body responsible for regulating pipelines, cradle to grave.

“We found that… the National Energy Board needs to improve their oversight of regulated companies and organizations,” he said in a press conference about the report. “Where deficiencies have been identified, they have done little follow-up to ensure that corrective measures have been taken.”

According to Vaughan’s report, in 2011-2012, each NEB employee was responsible for 1,000 kilometres of pipeline — too much for one person. Employees weren’t able to fully examine all the regulatory compliance reports and emergency procedure manuals that were coming across their desks. Those documents that were examined, and where infractions were found, weren’t being followed up.

A variety of major “deficiencies” were just being ignored, including “no identification of the hazards posed by the operation of the facilities; no assessment of the risks posed by the hazards identified; no list of residents in a potential accident zone; no map of the nearby residences or evacuation routes; no description or location of emergency response equipment; no description of any environmentally sensitive areas potentially affected by an incident; and no explanation of governmental roles in an emergency response.”

Since that report, things have changed. The federal government has made pipeline safety a part of its Economic Action Plan, and has since: increased the number of NEB pipeline inspections by 50 per cent; doubled the number of safety audits; authorized penalties between $25,000 and $100,000 for each day a company doesn’t comply with the Canadian Environmental Assessment Act, the Nuclear Safety and Control Act and the National Energy Board Act; and ensured all pipeline companies have access to at least $1 billion dollars in case of a spill. Companies are also required to have transparent and publicly-accessible emergency and environmental plans.

When a company puts in a bid to build a federally regulated pipeline — one that will cross provincial or U.S. borders — the NEB assigns a project working group to that bid. The group will determine how the company plans to meet regulations.

“If a pipeline is approved, we monitor the construction cycle,” says Patrick Smyth, business leader for operations at the NEB. “We send out inspectors that focus on safety, security, integrity management, emergency management, the environment and a host of other things. They’ll audit the company’s plan, and make sure they’re meeting all the regulations.”

Once the pipeline is operational, the NEB will periodically go into the field with the intention of either taking a look at a “snapshot in time” — by sending an inspector over, unannounced — or audit the company’s entire system. TransCanada, the company behind the Keystone XL bid, is currently undergoing an NEB audit.

Top-down safety culture

The new Canadian regulations have also strengthened the emphasis on worker safety by ensuring sound safety management systems are in place before an application is even approved. For a company to get the go-ahead to start pipeline construction, they have to prove to the NEB that they have management systems in place for safety, emergency management and security management, among other things.

Policies and procedures must be in place to address all hazards that might come up in reference to safety — whether it be the safety of pipeline workers or people who live or work near pipelines. As part of this emphasis on management systems, the NEB also requires companies to have internal reporting policies in place that allow employees to freely come forward — without the risk of being fired — should they identify safety hazards in the workplace. Proper training is also an element of a sound safety management system.

Once these policies are written and approved by the NEB, they’re also prone to enforcement. Like all operational aspects of a pipeline, management systems are also regularly inspected and audited. In fact, the NEB will spend eight months inspecting TransCanada’s safety management system as part of the company’s recent audit. The emphasis on company safety is just part of a greater evolution that has occurred in the oil and gas industry over the last 20 years, but more so in the last four, says Smyth.

“Regulators and operators are coming to terms with the fact that there needs to be greater focus on not only management systems but safety culture — where the two are essentially intertwined,” he says. “That’s one of the conversations that the NEB is having right now with its regulated companies.”

The regulator recently hosted Safety Forum 2013 to talk about the issues surrounding company safety and the importance of creating a top-down culture that prioritizes it. He says the industry is very much on board, with many CEOs contributing to the discussion at the recent forum.

“Our expectation is that a company has a robust safety culture in place and that it starts at the top and permeates right through the organization to the individual who delivers the mail,” says Smyth. “I think that’s probably one of the biggest changes we’ve seen in the industry, and it’s come out of the recent disasters in the last four years or so.”

Vanessa Chris is a freelance writer based in Toronto. You can contact her at vachris@rogers.com.

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