Vol. 150, No. 50 — December 10, 2016

ORDERS IN COUNCIL

NATIONAL ENERGY BOARD

NATIONAL ENERGY BOARD ACT

Order — Certificate of Public Convenience and Necessity GC-126 to NOVA Gas Transmission Ltd. in respect of the construction and operation of the 2017 NGTL System Expansion Project

P.C. 2016-962 October 28, 2016

Whereas, on March 31, 2015, NOVA Gas Transmission Ltd. (NGTL) applied to the National Energy Board (Board) pursuant to Part III of the National Energy Board Act for a certificate of public convenience and necessity in respect of the proposed construction and operation of the 2017 NGTL System Expansion Project (Project);

Whereas, on June 1, 2016, having reviewed NGTL’s application and conducted an environmental assessment of the Project, the Board submitted its report on the Project entitled NOVA Gas Transmission Ltd. GH-002-2015 (Board’s Report) to the Minister of Natural Resources pursuant to section 29 of the Canadian Environmental Assessment Act, 2012 and section 52 of the National Energy Board Act;

Whereas, by Order in Council P.C. 2016-578 of June 17, 2016, the Governor in Council, pursuant to subsection 54(3) of the National Energy Board Act, extended the time limit referred to in that subsection by two months to allow for additional Crown consultation with potentially affected Aboriginal groups and the general public;

Whereas the Governor in Council, having considered Aboriginal concerns and interests identified in the Crown Consultation and Accommodation Report, is satisfied that the consultation process undertaken is consistent with the honour of the Crown and that the concerns and interests have been appropriately accommodated;

Whereas the Governor in Council accepts the Board’s recommendation that the Project will be, if the terms and conditions set out in Appendix III of the Board’s Report are complied with, required by the present and future public convenience and necessity and will not likely cause significant adverse environmental effects;

And whereas the Governor in Council considers that the Project would enhance natural gas transmission infrastructure for adequate gas supply and support environmentally sustainable resource development;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources,

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal and objectives

On March 31, 2015, NOVA Gas Transmission Ltd. (NGTL) applied to the National Energy Board (NEB or the Board) under sections 52 and 58 of the National Energy Board Act (NEB Act), requesting that a Certificate of Public Convenience and Necessity (the Certificate) and an Order be issued by the NEB for the 2017 NGTL System Expansion Project (the Project).

The Board recommends that a Certificate of Public Convenience and Necessity be issued for the construction and operation of the Project. The certificate would be subject to 36 terms and conditions that the Board considers necessary or desirable in the public interest, if the Governor in Council were to direct the Board to issue the certificate.

This Order in Council is required pursuant to section 54 of the NEB Act and section 31 of the Canadian Environmental Assessment Act, 2012 (CEAA 2012) to direct the Board to issue Certificate of Public Convenience and Necessity GC-126 (Certificate GC-126) to NGTL for the Project.

Background

The Project is a proposed expansion to the existing NGTL System to receive and deliver sweet natural gas in Alberta. The Project consists of approximately 230 km of pipeline in five pipeline section loops and two compressor station unit additions (together, referred to as the Facilities, pursuant to section 52 of the NEB Act).

The proposed Project would include the following:

The Project will also allow for the proponent to use stockpile sites, contractor yards, access roads and travel lanes, helicopter landing pads, borrow pits/dugouts, laydown yards, and construction camps (pursuant to section 58 of the NEB Act).

The Project will be located in northern Alberta, mostly adjacent to existing disturbances and right-of-way (RoW) and is designed to transport sweet natural gas from emerging supply sources in three areas in northern British Columbia and Alberta, including the Upstream of James River Area, the North of Bens Lake Area and Oils Sands Delivery Area, and additional tight conventional supply sources from the Deep Basin of Alberta. It will allow NGTL to receive natural gas from processing plants in these areas for delivery to oil sands developers in the Fort McMurray area. Natural gas is used by oil sands developers to produce steam used in extraction of bitumen from the subsurface, and as fuel for other oil sands extraction, processing or upgrading activities.

The Project is a “designated project” pursuant to section 2(b) of the CEAA 2012, for which the Board is the responsible authority (RA). As a federal RA under the CEAA 2012, the NEB conducts an environmental assessment (EA) of designated projects it regulates under the NEB Act or the Canada Oil and Gas Operations Act (COGOA), including pipeline projects exceeding 40 km in length. The NEB must ensure that Canadians have the opportunity to participate in the EA, and issue an EA report, which is, in this instance, included in the NEB recommendation report.

Implications

Socio-economic impacts

NGTL estimated that the project will inject $1.29 billion in capital expenditures into the Canadian economy from 2016 to 2017. Operating expenditures and tax revenues paid to municipalities are estimated at $580 million. The Project will generate an estimated $0.8 billion in labour income during the construction and an estimated $1.2 billion in gross domestic product in Canada.

Total Canada-wide employment opportunities during construction will be about 10 731 person-years, with 9 000 jobs created in Alberta. Project operations will require in total 454 person-years, of which 326 will be from Alberta. However, no full-time jobs will be generated during operations. Regarding employment opportunities afforded to Indigenous groups, NGTL is committed to setting aside jobs related to RoW clearing, log hauling, medical and security services for local Indigenous service providers. NGTL indicated that it would apply TransCanada’s established Aboriginal Contracting and Employment Program (ACEP) to the Project. It is expected that under TransCanada’s ACEP, about 8 per cent to 12 per cent of the total construction contracts for the Project would be awarded to qualified Indigenous businesses and partnerships, totalling an estimated $54 to $81 million. NGTL also expects that roughly 8 per cent to 10 per cent of the Project workforce would comprise Indigenous individuals.

With respect to potential impact on service demand, the Board indicated that NGTL adequately identified and considered all relevant impacts on existing infrastructure (roads and highways) and services due to higher demand resulting from the Project. The Board is satisfied that no other participants had concerns with NGTL’s plans in this regard, and that NGTL’s commitment to addressing, in consultation with interested governments, communities and service providers, issues as they arise is satisfactory.

Tolling methodology impacts

NGTL proposed to use a rolled-in tolling methodology (see footnote 1) whereby the project cost would be included in the rate base used to calculate tolls for transportation services on the NGTL System. NGTL argued that the Project is an integral part of the NGTL System, providing an additional source of supply to the NGTL System’s customers. NGTL System shippers would benefit from the Project, which justifies the proposed tolling methodology. No interested parties objected to NGTL’s proposed tolling methodology.

The NEB approved the applied-for rolled-in tolling methodology, as it found it appropriate and consistent with NGTL long-standing tolling practice for system expansions.

Environmental impacts

The Board assessed the environmental impacts of the Project under both the NEB Act and the CEAA 2012. The EA scope includes matters pertaining to physical environment and soils, including water quality and quantity, fish and fish habitat, wetlands, wildlife and wildlife habitat, species at risk, atmospheric and acoustic environment, heritage resources, traditional land and resource use, navigation and navigation safety. The Board scoped out environmental impacts associated with activities occurring upstream and downstream of the Project, including oil sands development operations.

After weighing scientific evidence and participants’ views on these issues, the NEB concluded in its EA that, with the implementation of NGTL’s environmental protection procedures, mitigation measures and the Board’s recommended terms and conditions set out in Appendix III of the Report, the Project is not likely to cause significant adverse environmental effects.

The Project traverses 78 km of three boreal woodland caribou ranges, including the Chinchaga, East Side Athabasca and West Side Athabasca. Boreal woodland caribou is listed as threatened on Schedule 1 of the Species at Risk Act (SARA). The Project is likely to widen existing RoW and create new RoW in undisturbed areas, which could impact the boreal caribou critical habitat. Environment and Climate Change Canada (ECCC) estimates that habitat availability in each range is below that required to maintain a self-sustaining population, with cumulative disturbance in excess of 35 per cent in each of the ranges, a threshold in the Recovery Strategy.

To address the potential impacts of the Project on boreal caribou, NGTL proposed several mitigation measures, including limiting disturbance through project routing and varying the width of the right-of-way of the pipeline, controlling access, re-vegetation with non-high value forage habitat for ungulates, maintaining and restoring connectivity, and consistent with Alberta’s guidance, working outside of restricted activity periods. This is captured in the conditions set out by the NEB. To address potential project effects that would remain after mitigation is implemented, NGTL proposed a Caribou Habitat Restoration and Offsetting Mitigation Plan (CHROMP). The NEB has accepted NGTL’s general approach to habitat restoration and offsetting, noting that in the absence of provincial range plans and any provincial framework for offsets, this plan provides a defensible approach with which to address the remaining residual impacts of the project. The NEB further noted that in the absence of completed provincial range plans, there is a risk that offsets may be lost in the future. To address this, the NEB has indicated that should areas with long-term protection become available in the affected caribou ranges, then offsets should be located there. One of the conditions requires the submission of a revised version of the CHROMP to the NEB for approval and the provision of a copy to ECCC and provincial authorities.

Given the status of caribou and Indigenous groups’ concerns, the Board has imposed 9 conditions specific to caribou and caribou habitat in regard to habitat restoration, offset measures, monitoring, reporting and cumulative impacts on top of NGTL’s own commitments to implementing best practice mitigating measures. These include Certificate Conditions set out in Appendix III of the NEB recommendation report, such as #5 (NGTL to file with the Board, post on its website, and notify interested Indigenous groups its Commitment Tracking Table [CTT] within 90 days of the Certificate date and at least 30 days before starting construction of the pipelines and compressors); #6 (NGTL to file with the Board for approval at least 60 days prior to commencing construction an update of its Environmental Protection Plan); #7 (NGTL to file with the Board for approval a revised version of the CHROMP at least 60 days before construction, and notify interested Indigenous groups, for areas of the Project in critical caribou habitat in the Boundary Lake and Pelican Lake Sections); #11 (NGTL to file with the Board, 30 days before construction of the section 52 Facilities, its Reclamation Plan for Temporary Workspace in the K’ih tsaa?dze Tribal Park); #18 (NGTL to file with the Board and notify interested Indigenous groups a Construction Progress Report every month during construction of section 52 Facilities), #31 (NGTL to file with the Board for approval and notify interested Indigenous groups a Caribou Habitat Restoration Implementation Report and Status Update on or before July 1 after the implementation of RoW habitat restoration measures); #32 (NGTL to file for approval and notify interested Indigenous groups on or before November 1 after the first complete growing season the final Caribou Habitat Restoration and Offset Measures Monitoring Program); #33 (NGTL to file for approval reports outlining results of the CHROMP); and #34 (NGTL to file for approval and notify interested Indigenous groups a Caribou Habitat Offset Measures Implementation Report).

Specific NGTL commitments to implementing best practice mitigating measures for caribou and caribou habitat protection include, among other things, (i) avoiding new construction access and temporary construction facilities where feasible in undisturbed caribou ranges; (ii) avoid working, where feasible, within the restricted time period set by Alberta Environment and Parks; (iii) keeping all potential construction camps on the Boundary Lake Section outside of caribou range; and (iv) minimizing the number of hydrostatic testing locations to the extent possible in caribou habitat.

Impacts on landowners

The Project will be located on private and provincial Crown lands, which account for 7 per cent (or 16.5 km) and 93 per cent (213.5 km) respectively of the Project’s total length. The five proposed pipeline section loops will parallel NGTL’s existing RoW or existing disturbances for approximately 91 per cent of the total route. Both compressor station unit additions will be located at NGTL’s existing compressor stations. NGTL confirmed that all land rights agreements with landowners have been obtained for the pipeline RoW and temporary workspace. All remaining land rights required for valve sites, camp sites, stockpile sites and crossing agreements would be acquired before starting construction. The NEB indicated that no participants, including landowners, had expressed concerns with NGTL’s land acquisition process for the Project.

The NEB approved the Project routing and found the NGTL’s process for land rights and acquisition acceptable.

Consultations

Process

On July 31, 2015, the NEB issued Hearing Order GH-002-2015, followed by procedural updates that set out the process, and provided a list of issues to be considered.

The Board received and considered a total of 45 applications to participate in the GH-002-2015 hearing for the Project. The Board granted standing to participate to 44 applicants. Out of these 44 hearing participants, 37 participated as Intervenors, which included 15 Indigenous groups, (see footnote 2) 20 commercial parties, (see footnote 3) one federal government department and one provincial government department. (see footnote 4)The remaining 7 applicants participated in the hearing as commenters, which included one Indigenous group, (see footnote 5)4 commercial parties, (see footnote 6) and 2 federal government departments. (see footnote 7) The Board granted one request by an Intervenor to change its status to Commenter partway through the hearing.

The Board received and reviewed 16 applications for funding from Indigenous groups, and allocated funding awards of $331,125 in total.

The Board also provided the opportunity to all Indigenous Intervenors to provide oral traditional evidence to the Board. Six Indigenous groups attended the oral traditional evidence sessions in Fort McMurray, Grande Prairie and Edmonton, Alberta, from October 27 to November 5, 2015.

The Board conducted its public hearing for the Project primarily through a written process, which included two rounds of filing evidence, multiple rounds of information requests, and the submission of final argument, concluding with NGTL’s submission of reply argument.

The evidentiary record for the hearing closed on February 4, 2016, with final and reply arguments concluding March 9, 2016. The NEB recommendation report was released on June 1, 2016.

Stakeholder issues
Commercial parties

The Project generated little debate among commercial parties either regarding its need or the NGTL’s proposed tolling methodology. The Canadian Association of Petroleum Producers (CAPP), a major industry association, agreed with NGTL’s forecasts of natural gas supply growth in the region and transportation capacity shortages, which is the key consideration. Western Export Group also supported the project.

Indigenous groups

Sixteen Indigenous groups who participated in the NEB hearing process mostly opposed the Project due to its potentially significant adverse impacts on their Aboriginal and Treaty rights. These Indigenous groups expressed concerns that fall into four main categories including (i) participant funding was not forthcoming to allow them to carry out timely impact analysis in support of their position; (ii) lack of meaningful consultation by the Crown, NGTL and TransCanada; (iii) the proposed project route will have significant adverse impacts on rights under section 35 of the Constitution; and (iv) potential adverse and cumulative impacts on Indigenous groups’ way of living would be significant. Other issues relate to the importance of traditional knowledge, the lack of employment opportunities for Indigenous groups potentially impacted, and Indigenous monitors during construction, and the need to improve the NEB review process.

Doig River First Nation (DRFN) was concerned with the Project’s impacts in an area of great cultural and spiritual value to them, which they identify as the K’ih tsaa?dze Tribal Park (KTP), and recommended specific measures for activities to occur within the area and active consultation by NGTL. Other groups requested a formal role in monitoring the project operations on an ongoing basis as a mechanism to ensure they would be comfortable with mitigation measures proposed to deal with any issue identified post-construction.

NGTL indicated that it made every reasonable effort to engage all potentially impacted Indigenous groups and that, where appropriate, it reflected comments from Indigenous groups in the Project routing design and planning. NGTL indicated that most of the specific mitigation measures that Indigenous groups requested the NEB include in the terms and conditions are reflective of individual group interests rather than the greater public interest, which is the basis for the NEB decision. NGTL is committed nonetheless to continuing to work with Indigenous groups through the Project implementation to develop practical and mutually convenient mitigation measures.

The Board assessed NGTL’s Indigenous consultation strategy, design, and implementation, and found them to be adequate for the scope and scale of the Project, given that the Project would parallel existing or proposed linear disturbances for approximately 91 per cent of its length. The Board is satisfied that NGTL is committed to continuing to engage potentially affected Indigenous groups over the life cycle of the project. The Board added a number of conditions requiring NGTL to provide Indigenous groups, upon request, with relevant information on the project and to address issues that may arise during ongoing consultation. These include Certificate Conditions #5 (see above), #6 (see above), #12 (NGTL to file with the Board and serve a copy on interested Indigenous groups at least 30 days prior to construction a Plan for Indigenous Participation in Monitoring Construction Activities), #13 (Indigenous Engagement Reports: NGTL will file with the Board at least 30 days prior to construction of pipelines and compressors and every six months thereafter reports outlining NGTL’s engagement activities with potentially affected Indigenous groups); #15 (Filing of programs and manuals with the Board and notifying interested Indigenous groups); and #34 (see footnote 8) (see above).

With respect to potential adverse impacts on Indigenous groups’ interests, including the current use of lands and resources for traditional purposes, the Board is of the view that the Project-specific global effects are not likely to be significant. Nonetheless, the Board is concerned about the cumulative effects of projects on the current use of lands and resources. As a result, the Board would impose Certificate Condition #8, requiring NGTL to file an update on outstanding traditional land use (TLU) investigations for the Project and a description of how information from TLUs would be considered and addressed by NGTL. This requirement would ensure potentially affected Indigenous groups have the opportunity to review NGTL’s report on outstanding TLU investigations for the Project and assess the extent to which NGTL addressed their concerns. It would ensure the NEB is satisfied that NGTL made every effort to consider and reflect information not previously available during the proceedings in the Project design and implementation to adequately address outstanding concerns expressed by potentially affected Indigenous groups. Certificate Condition #8 requires NGTL to show that NGTL revised the TLU Site Discovery Contingency Plan to reflect the findings of outstanding TLU investigations. Unless the NEB is satisfied with the report and approves it, NGTL cannot proceed to start construction. If potentially affected Indigenous groups are not pleased with the report, they could file a complaint with the NEB arguing that NGTL did not fully meet Certificate Condition #8.

Governments
Environment and Climate Change Canada (ECCC)

ECCC wrote a Letter of Comment to the NEB providing advice and recommendation on a number of issues, including species at risk and migratory birds, emergency response, and management of pipeline accidents or malfunctions.

As noted above, the project traverses 78 km (93 per cent in existing RoW or disturbances) of identified boreal caribou critical habitat and is likely to affect three boreal caribou local populations in three different ranges in northern Alberta. These local populations are categorized in the SARA Recovery Strategy for the Woodland Caribou Boreal Population in Canada as not self-sustaining, and cumulative population declines for each local population have exceeded 70 per cent in the last two decades. In addition, habitat availability in each range is well below that required to maintain a self-sustaining population, with cumulative disturbance in excess of 35 per cent in each of the ranges, a crucial threshold in the recovery strategy that presents a major challenge to the recovery of these local populations.

To address the potential impacts of the project on boreal caribou and caribou habitat, NGTL proposed several mitigation measures, including limiting disturbance through project routing and varying the width of the right of way of the pipeline, controlling access, revegetation, maintaining and restoring connectivity, consistent with Alberta’s guidance, working outside of restricted activity periods, and a caribou habitat restoration and offsetting mitigation plan. During the NEB hearing process, ECCC reviewed the proposed measures and commented that offsetting measures be put in place within each of the caribou ranges affected by the project.

After considering these interventions, the NEB developed nine project conditions (see above) to mitigate the concerns raised. With these conditions and commitments from NGTL, the NEB concluded there would be no residual significant negative environmental impacts. The NEB further indicated that it expects NGTL to offset all potential direct and indirect residual effects and to follow best practices applicable as identified in the SARA Recovery Strategy for the Woodland Caribou Boreal Population in Canada, in order to ensure no net loss of caribou habitat and no incremental increase in negative cumulative effects. The NEB will review NGTL’s environmental protection plan and restoration and offsetting measures, monitor compliance with commitments made in the plan, and review NGTL’s reports on how ECCC was consulted to ensure ECCC’s advice and recommendations on offsets are adequately met.

Regarding migratory birds, ECCC indicated that while there is a high risk of encountering nesting birds between May 1 and August 10, the risk is between moderate to low outside these dates, which clarifies NGTL’s view that nesting will only occur between these dates. ECCC recommends that additional appropriate measures be taken should anyone have knowledge of active nesting activities outsides these dates. As a result, the construction schedule excludes the nesting period, i.e. between May 1 and August 10.

Health Canada (HC)

Health Canada submitted a Letter of Comment expressing concerns with regard to air quality and noise associated with the project. HC recommended that a number of measures be taken, including that NGTL carry out quantitative assessments of air quality during the construction and decommissioning phases of the project, and that NGTL include noise from construction of the pipeline and compressor in its noise assessment. The NEB imposed two certificate conditions, including Conditions 6 and 14, related to noise concerns. Condition 6 requires NGTL to file with the NEB for approval an Environmental Protection Plan (EPP) where NGTL can demonstrate that it has consulted with all relevant government authorities (as appropriate) on mitigating measures it proposes to implement to address their concerns. Condition 14 would require NGTL to file an update on construction noise mitigation with the NEB. NGTL would have to consult with HC to ensure concurrence from HC on its proposed mitigating measures. The NEB is of the view that any adverse effects of noise on human health are not likely to be significant, as the standard mitigation measures NGTL has committed to implementing would address the majority of impacts to human health from noise during construction.

Interim measures for project reviews

On January 27, 2016, the Government of Canada introduced interim measures outlining how it would consider major projects undergoing review. Besides its commitment to review the environmental assessment process and modernize the NEB, the Government has also committed to undertaking deeper consultation with Indigenous peoples and providing funding to support participation in these consultations. To live up to its commitment towards deeper consultation, the Governor in Council authorized a two-month extension to the three-month statutory time limit required by the NEB Act through Order in Council P.C. 2016-578 of June 17, 2016. As a result, the Governor in Council has until November 1, 2016, to make a decision. This additional time provided for deeper Crown consultation with Indigenous groups and the public in addition to assessing the GHG emissions associated with the Project.

Greenhouse gas (GHG) emissions

ECCC assessed the GHG emissions associated with the upstream activities directly related to the Project. ECCC projects that the GHG emissions in Canada resulting from the extraction, gathering and processing of natural gas to be transported by the Project could range from 1.2 to 1.4 megatonnes of CO2 equivalent per year (Mt CO2e/year). This would account for 0.6 per cent to 0.7 per cent of total GHG emissions associated with oil and natural gas production in Canada, based on 2014 levels. Compared to GHG emissions in Canada and Alberta, it would account for about 0.2 per cent and 0.4 per cent respectively, based on 2014 levels. As the Project is intended to offset declining production in other parts of the Prairies, upstream GHG emissions are not expected to be incremental.

NGTL estimated GHG emissions associated with the construction of the Project at 0.104 Mt CO2e, which accounts for 0.2 per cent of Canada-wide GHG emissions associated with natural gas production and processing in Canada, based on 2014 levels. This would also represent about 0.05 per cent of GHG emissions generated by oil and gas industry in Canada, based on 2014 levels. NGTL estimated GHG emissions associated with the Project operations at 0.210 Mt CO2e per year, which represents 0.4 per cent of Canada-wide GHG emissions associated with natural gas production and processing, based on 2014 levels, and 0.1 per cent of GHG emissions generated by the oil and gas production. (see footnote 9)

Public consultation

The Major Projects Management Office (MPMO) at NRCan produced an online questionnaire and web portal to solicit public input on the project. The portal accepted public input from June 1 to August 1, 2016. A total of 47 responses were submitted and 15 people completed the questionnaire. A majority of respondents were in favour of the project, citing the public interest and economic benefits for Canada.

Crown consultation

The Crown has a legal duty to consult and, where appropriate, accommodate when the Crown contemplates conduct that might adversely impact potential or established Aboriginal or Treaty rights. The Crown relied on the NEB review process and its own consultative activities to discharge its duty to consult potentially impacted Indigenous groups. The Crown consultation with potentially impacted Indigenous groups was carried out in four phases, including

To evaluate the adequacy of the Crown’s consultation, including accommodation, NRCan drafted a Crown Consultation and Accommodation Report (CCAR). The CCAR includes an analysis of issues raised, proposed mitigation measures, the NEB response and NEB conditions. The CCAR documents the Crown’s consultation process with Indigenous groups, issues raised, potential impacts on Aboriginal rights, and accommodation measures.

NEB approval

The Board’s Panel recommended that a Certificate of Public Convenience and Necessity (Certificate) be issued under section 52 of the NEB Act for the construction and operation of the proposed Project. The Certificate is valid for two years. If NGTL does not proceed with the construction of the Project, the sunset clause provides that the Certificate shall expire two years from the date of the Certificate, unless construction in respect of Section 52 Facilities has commenced by that date (Condition 4).

The Board recommends that a Certificate of Public Convenience and Necessity (Certificate) be issued for the construction and operation of the Project. The Certificate would be subject to 36 terms and conditions that the Board considers necessary or desirable in the public interest, if the Governor in Council were to direct the Board to issue the Certificate.

Pursuant to section 29 of CEAA 2012, the Report also states that the Board is of the view that with the implementation of NGTL’s environmental protection procedures, and full compliance with the Board’s recommended terms and conditions, the Project is not likely to cause significant adverse environmental effects. The Report includes the Board’s recommended follow-up program to be implemented in respect of the Project.

Department contact

For more information, please contact

Terry Hubbard
Director General
Petroleum Resources Branch
Natural Resources Canada
Telephone: 343-292-6165

[50-1-o]

NATIONAL ENERGY BOARD

NATIONAL ENERGY BOARD ACT

Order — Certificate of Public Convenience and Necessity OC-63 to Enbridge Pipelines Inc. in respect of the proposed construction and operation of the Line 3 Replacement Project

P.C. 2016-1048 November 25, 2016

Whereas, on November 5, 2014, Enbridge Pipelines Inc. (“Enbridge”) applied to the National Energy Board (“the Board”) pursuant to Part III of the National Energy Board Act for a certificate of public convenience and necessity in respect of the proposed construction and operation of the Line 3 Replacement Program (“the Project”);

Whereas, on April 25, 2016, having reviewed Enbridge’s application and conducted an environmental assessment of the Project, the Board submitted its report on the Project entitled Enbridge Pipelines Inc. OH-002-2015 (“the Board’s Report”) to the Minister of Natural Resources pursuant to section 29 of the Canadian Environmental Assessment Act, 2012 and section 52 of the National Energy Board Act;

Whereas, by Order in Council P.C. 2016-314 of May 6, 2016, the Governor in Council, pursuant to subsection 54(3) of the National Energy Board Act, extended the time limit referred to in that subsection by four months to allow for public engagement and additional Crown consultation with potentially affected Aboriginal groups;

Whereas the Governor in Council, having considered Aboriginal concerns and interests identified in the Crown Consultation and Accommodation Report dated October 31, 2016, is satisfied that the consultation process undertaken is consistent with the honour of the Crown and that the concerns and interests have been appropriately accommodated;

Whereas the Governor in Council accepts the Board’s recommendation that the Project will be, if the terms and conditions set out in Appendix III of the Board’s Report are complied with, required by the present and future public convenience and necessity and will not likely cause significant adverse environmental effects;

Whereas the Governor in Council, having considered the estimated upstream greenhouse gas emissions associated with the Project and identified in Environment Canada’s report entitled Enbridge Pipelines Inc. - Line 3 Replacement Program: Review of Related Upstream Greenhouse Gas Emissions Estimates, and the Government of Alberta’s Climate Leadership Plan committing to cap oil sands emissions at 100 megatonnes of carbon dioxide equivalent per year, is satisfied that the Project is consistent with Canada’s commitments in relation to the Paris Agreement on Climate Change;

And whereas the Governor in Council considers that the Project would result in safer pipeline infrastructure for oil transmission and export and support environmentally sustainable resource development;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources,

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal and objective

On November 5, 2014, Enbridge Pipelines Inc. (Enbridge) applied to the National Energy Board (NEB or the Board) under sections 52 and 58 of the National Energy Board Act (NEB Act) and section 45.1 of the National Energy Board Onshore Pipeline Regulations requesting that a Certificate of Public Convenience and Necessity and an Order be issued by the NEB for the Enbridge Line 3 Replacement Project (the Project).

The Board recommends that Certificate of Public Convenience and Necessity be issued for the construction and operation of the Project. The Certificate would be subject to 37 terms and conditions that the Board considers necessary or desirable in the public interest, if the Governor in Council (GIC) were to direct the Board to issue the Certificate.

This Order in Council is required pursuant to section 54 of the NEB Act and section 31 of the Canadian Environmental Assessment Act, 2012 (CEAA 2012), to direct the NEB to issue Certificate of Public Convenience and Necessity OC-063 (the Certificate) to Enbridge.

Background

The Project consists of the replacement of approximately 1 096 km of oil pipeline from Hardisty, Alberta, to Gretna, Manitoba, and extends in the United States to Superior, Wisconsin.

Designed to replace aging oil pipeline infrastructure, in service since 1968, with pipeline constructed to modern standards, the replacement pipeline would follow the existing corridor, with minor route adjustments. Enbridge has already replaced approximately 20 km of Line 3 segments near Cromer, Manitoba, under a separate integrity program.

Approximately 88% of the right-of-way for the replacement pipeline (or 968 km) will be alongside and contiguous to existing linear disturbances, including Enbridge’s Line 67. Route deviations from the established pipeline corridor serve to avoid land-use conflicts and environmentally sensitive areas.

Additional facilities that will accompany the replacement pipeline include 3 new oil storage tanks at the Hardisty terminal in Alberta and 18 new pump stations and associated infrastructure along the pipeline route, and the installation of 55 new remotely operated sectionalizing valves.

The existing Line 3 is 48 years old. To reduce the risk of leaks the company is operating it at reduced pressures and flow rates (e.g. 390 000 barrels per day). The $4.83 billion Project would allow the pipeline to operate at its original operating capacity of 760 000 barrels per day (b/d), resulting in additional Canada–to–United States oil export capacity of 370 000 b/d, and access to additional continental markets.

The replacement pipeline will also prevent the need for frequent integrity digs and will be designed to include modern safety standards, such as thicker pipeline walls, more robust construction with advanced coating and welding methods, and the use of the latest technologies to minimize impacts on water crossings and the prevention and detection of leaks.

The Project is a “designated project” pursuant to section 2(b) of the CEAA 2012, for which the Board is the responsible authority (RA). As a federal RA under the CEAA 2012, the NEB conducts an environmental assessment (EA) of designated projects it regulates under the NEB Act or the Canada Oil and Gas Operations Act (COGOA), including pipelines projects exceeding 40 km in length. The NEB must ensure that Canadians have the opportunity to participate in the EA, and issue an EA report, which is included in the NEB recommendation report.

Consultation

National Energy Board

The NEB conducted an Enhanced Aboriginal Engagement initiative for the Line 3 Project review, aimed at providing proactive early engagement with Indigenous groups that may be affected by the proposed Project, and to help Indigenous groups understand the Board’s regulatory process and how to participate in that process. The Board carried out its engagement activities for the Project between July 18, 2014, when it received the Project Description, and April 16, 2015. The Board sent a letter to 102 potentially affected Indigenous communities and organizations.

Applications to participate in the hearing were accepted in March 2015 and the Board issued Hearing Order OH-002-2015 on May 4, 2015, which established the process for the public hearing for the Project. Pursuant to section 55.2 of the NEB Act, the Board determined who may participate in the hearing. In total, 78 parties participated in the NEB’s review of the Project, 50 as intervenors and 28 as commenters. Intervenors submitted evidence and questions to Enbridge and other intervenors, while commenters provided letters of comment on the Project.

Intervenors included 35 Aboriginal groups, (see footnote 10) 8 commercial parties, (see footnote 11) 5 government participants (see footnote 12) and 2 individuals. The Board received 33 eligible Participant Funding Program applications totalling $2.6 million (31 from Indigenous groups and 2 from landowners). Following a review of the applications by the Funding Review Committee, which was independent of the Project regulatory review process, funding awards totalling $999,000 were made.

The hearing consisted of both written and oral portions. The oral portion of the hearing was held in Winnipeg, Manitoba, from November 30 to December 3, 2015, and in Calgary, Alberta, from December 7 to December 10, and December 14, 2015.

On April 25, 2016, the NEB released its final report, concluding that the Project is in the public interest and recommending its approval by the GIC. The NEB imposed 89 project-specific conditions to enhance public safety and environmental protection, and address concerns raised during consultations with Indigenous groups. Thirty-seven conditions relate to the construction of the replacement pipeline, and the remaining conditions relate to the decommissioning of the existing pipeline and the construction of project-related facilities. The conditions will be monitored and enforced through regular reports to the NEB, before construction begins, during construction and during the operation phase of the Project.

Chapter 1 of Volume II of the NEB Line 3 Report Enbridge Pipelines Inc. OH-002-2015 describes the hearing, and chapters 5 and 6 address public consultation and Indigenous matters, respectively. While some Indigenous groups expressed support for the Project, several Indigenous groups expressed concerns relating to the effects of the Project on traditional land use activities, such as hunting, plant harvesting and fishing; impact on sacred areas; and environmental effects from Project construction as well as from a potential oil spill. Specifically, some Indigenous participants requested a more meaningful involvement in the Project, such as serving as environmental monitors during the construction and operation of the Project. Indigenous groups have also expressed some concerns about continued consultations after the Project’s construction.

Oral traditional evidence was presented by 14 Indigenous groups during the Winnipeg and Calgary portions of the hearing. The NEB set specific conditions that would be part of the Project certificate that are the result of evidence provided by Indigenous groups. These include requiring that any outstanding traditional land use investigations be completed before commencing construction (Condition 10), that Enbridge continue to consult with groups in advance of construction and through the operation phase of the Project, including identifying how outstanding concerns may be addressed (Conditions 11 and 29), and that Enbridge facilitate the participation of groups in monitoring the construction of the Project (Condition 12).

Interim strategy

On January 27, 2016, the Government of Canada introduced interim measures outlining how it would consider major projects undergoing review. Under the interim approach, five principles were used to guide the Government’s decisions on energy projects: (i) no project proponent will be asked to return to the starting line; (ii) decisions will be based on science, traditional knowledge of Indigenous peoples and other relevant evidence; (iii) the views of the public and affected communities will be sought and considered; (iv) Indigenous peoples will be meaningfully consulted, and where appropriate, impacts on their rights and interests will be accommodated; and (v) direct and upstream greenhouse gas (GHG) emissions linked to the projects under review will be assessed.

Public consultation

An online questionnaire and web portal to solicit public input on the Project accepted public input from May 25 to September 15, 2016. The online questionnaire was viewed by 3 170 people and 1 911 people completed it. A majority of responses came from individuals living along the pipeline route and were in favour of the Project, citing the safety advantages of a replacement pipeline, economic benefits and jobs.

Crown consultation

The Crown has a legal duty to consult with Indigenous people and, where appropriate, accommodate their impacts when contemplating conduct that could adversely impact potential or established Aboriginal or treaty rights. The Crown relied on the NEB review process and its own consultative activities to discharge its duty to consult potentially impacted Indigenous groups. The Crown consultation with potentially impacted Indigenous groups was carried out in four phases:

To achieve deeper consultation with Indigenous peoples, on April 25, 2016, the Minister of Natural Resources announced additional consultations on the Enbridge Line 3 Replacement Program, and on May 6, 2016, the GIC approved a four-month extension to the legislated timelines for a decision on the Project, to November 25, 2016. This additional time provided for additional public engagement and Crown consultations on the Project. After almost two years of consultations, the Government of Canada has determined that its consultation process provided reasonable opportunities to hear from potentially impacted Indigenous groups and did not see any reasonable prospect that additional time for consultations would identify further issues that had not already been discussed.

To evaluate the overall adequacy of Crown consultations and to identify any potential requirements for accommodation, a Crown Consultation and Accommodation Report (CCAR) was prepared by the MPMO. The CCAR documents the Crown’s consultation process with Indigenous groups, including the issues raised by groups, as well as the assessment of potential impacts on Aboriginal rights and proposed accommodation measures, including the NEB conditions. The CCAR determined that potential impacts to Aboriginal rights are reasonably accommodated by the NEB conditions and other measures put in place by the Government.

Upstream GHG impacts

Environment and Climate Change Canada (ECCC) assessed the upstream GHG emissions associated with the Project, and examined various scenarios for the composition of oil delivered by the pipeline, market conditions and alternative means of oil transportation.

ECCC released a draft upstream GHG assessment report for public comment on April 25, 2016, and posted a final report on October 21, 2016. It found that upstream GHG emissions associated with the production and processing of crude oil transported by the Project to be between 21 and 27 megatonnes of carbon dioxide equivalent per year (CO2e). This assessment refers to the full capacity of the pipeline of 760 000 b/d. Based on the incremental 370 000 b/d of additional capacity, between 10 and 13 mega- tonnes of CO2e per year of upstream GHG would be generated. Under most scenarios, ECCC concluded that the upstream emissions would likely occur regardless of whether the Project is constructed. However, the report considered a possibility of the construction of multiple pipeline projects having cumulative effects on upstream GHGs and indirectly on global oil supply. The Government of Alberta announced its Climate Leadership Plan on May 24, 2016. Under this plan, greenhouse gas emissions from the oil sands will be capped at 100 megatonnes of CO2e per year to limit growth in upstream oil and gas emissions.

Implications

Socio-economic impacts

Enbridge estimates Canada-wide employment (measured in full-time equivalents) as a result of the Project to be 24 493 direct and indirect temporary jobs, the majority of which would be in Alberta and Saskatchewan. Federal, provincial and local taxes generated as a result of the construction phase of the Project are estimated at $514.3 million, with approximately $5.7 million (1%) generated in British Columbia, $216.5 million (42%) in Alberta, $183.9 million (36%) in Saskatchewan and $108.2 million (21%) in Manitoba.

Environmental impacts

The NEB Recommendation Report states, pursuant to section 29 of CEAA 2012, that the Board is of the view that with the implementation of Enbridge’s environmental protection procedures and mitigation measures, and the Board’s conditions, the designated project is not likely to cause significant adverse environmental effects. The Report includes the Board’s recommended follow-up programs to be implemented in respect of the designated project.

The Board decided that the Section 58 Facilities (i.e. 18 new pump stations, 9 sending and receiving trap facilities and expansion work at the Hardisty Terminal in Alberta, encompassing 3 new storage tanks with associated facilities) are only necessary and in the public interest provided that the GIC directs the Board to issue the Certificate for the Project. Accordingly, the Board Order approving the Section 58 Facilities would only be issued following GIC approval of the Section 52 Pipeline and related Facilities.

Climate change impacts

A third-party assessment submitted by Enbridge to the NEB estimated direct annual GHG emissions from operating the Project at 420 000 tonnes of CO2 equivalent. This represents 0.057% of GHG emissions in Canada, based on the last known (2014) annual levels. Emissions during the construction phase will be approximately 265 000 tonnes of CO2 equivalent.

Decommissioning impacts

With the GIC’s approval of the Certificate, the NEB will issue an Order under section 45.1 of the National Energy Board Onshore Pipeline Regulations to allow for the decommissioning of the Existing Line 3 Pipeline, as defined in the Report, subject to the conditions set out in Appendix V of the Report.

Impacts on landowners

Landowner groups support the Project, which traverses 1 046 km of privately owned land. Approval of the Project would avoid the need for frequent and disruptive integrity digs and repairs to the existing Line 3 Pipeline, which inconvenience farmers and other landowners. Enbridge has acquired 98% of the land required for the Project and is engaging with the remaining affected landowners to acquire the outstanding 2%. Approximately 88% of the right-of-way for the replacement pipeline (or 968 km) will be alongside and contiguous to existing linear disturbances, including Enbridge’s Line 67 Pipeline. Route deviations from the established pipeline corridor serve to avoid land-use conflicts and environmentally sensitive areas. Ninety-five percent of the Project is on private land, mainly farmland, with the remainder on crown land.

Departmental contact

For more information, please contact

Terry Hubbard
Director General
Petroleum Resources Branch
Natural Resources Canada
Telephone: 343-292-6165

[50-1-o]

NATIONAL ENERGY BOARD

NATIONAL ENERGY BOARD ACT

Order — Certificates of Public Convenience and Necessity OC-060 and OC-061 to Northern Gateway Pipelines Inc. in respect of the Northern Gateway Pipeline Project

P.C. 2016-1047 November 25, 2016

Whereas, on May 27, 2010, Northern Gateway Pipelines Limited Partnership applied to the National Energy Board (“Board”) pursuant to section 52 of the National Energy Board Act (“the Act”) for two certificates of public convenience and necessity to be issued in respect of the construction and operation of a terminal at Kitimat, British Columbia and two parallel pipelines between Bruderheim, Alberta and Kitimat (“Project”);

Whereas, on January 20, 2010, a review panel (“Panel”) was jointly established by the Minister of the Environment and the Board to conduct an environmental assessmentof the Project under the Canadian Environmental Assessment Act, chapter 37 of the Statutes of Canada, 1992, and to consider the application for the certificates under the Act in accordance with the Agreement Between the National Energy Board and the Minister of the Environment Concerning the Joint Review of the Northern Gateway Pipeline Project;

Whereas, pursuant to the Canadian Environmental Assessment Act, 2012, the environmental assessment by the Panel of the Project is continued under the process established under that Act and the Project is considered to be a designated project for the purposes of that Act and Part 3 of the Jobs, Growth and Long-term Prosperity Act;

Whereas, on December 19, 2013, the Panel submitted its report in two volumes entitled Connections: Report of the Joint Review Panel for the Enbridge Northern Gateway Project, Volume 1 and Considerations: Report of the Joint Review Panel for the Enbridge Northern Gateway Project, Volume 2 (“the Report”) to the Minister of Natural Resources;

Whereas the Governor in Council, by Order in Council P.C. 2014-809 dated June 17, 2014, directed the Board to issue Certificates of Public Convenience and Necessity OC-060 and OC-061 to Northern Gateway Pipelines Inc., on behalf of Northern Gateway Pipelines Limited Partnership;

Whereas the Federal Court of Appeal quashed Order in Council P.C. 2014-809 and Certificates of Public Convenience and Necessity OC-060 and OC-061 in its decision Gitxaala Nation v. Canada, 2016 FCA 187, and remitted the matter to the Governor in Council for redetermination, subject to the time limit referred to in subsection 54(3) of the Act;

Whereas the Governor in Council, by Order in Council P.C. 2016-836 dated September 23, 2016, extended until November 25, 2016 the time limit referred to in subsection 54(3) of the Act for making the order referred to in subsection 54(1) of that Act;

Whereas the Governor in Council has taken into account the Report in accordance with the Act, the Canadian Environmental Assessment Act, 2012 and Part 3 of the Jobs, Growth and Long-term Prosperity Act;

Whereas the Report identified impacts from the Project that the Panel believed would be likely to cause significant adverse environmental effects for certain populations of woodland caribou and grizzly bear;

Whereas evidence was received by the Panel on the unique and irreplaceable nature of the ecosystem of the Great Bear Rainforest, which includes the Douglas Channel;

Whereas the Governor in Council is of the view that the waters of the Douglas Channel are part of a sensitive ecosystem that must be protected from spills of crude oil from tankers;

Whereas the Report disclosed that the Project would result in 220 tankers annually transiting the waters of the Douglas Channel carrying crude oil, diluent, or condensate, or any combination of them;

Whereas the Governor in Council does not accept the Panel’s finding that the Project, if constructed and operated in full compliance with the conditions set out in Appendix 1 of Volume 2 of the Report, is and will be required by the present and future convenience and necessity, and does not accept the Panel’s recommendation;

And whereas the Governor in Council is of the view that the Project is not in the public interest;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources,

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal and objective

Pursuant to the National Energy Board Act (the Act) and the Canadian Environmental Assessment Act, 2012, the Governor in Council decides that Northern Gateway Pipelines Limited Partnership’s proposed Northern Gateway Project is not in the public interest and directs the National Energy Board (NEB) to dismiss the Northern Gateway Pipelines Limited Partnership’s application for certificates of public convenience and necessity. In addition, the Governor in Council, having decided that the Project is not in the public interest, also decides that the significant adverse environmental effects the Project would have been likely to cause are not justified in the circumstances.

Background

On May 27, 2010, Northern Gateway Pipelines Limited Partnership applied to the National Energy Board (Board) pursuant to section 52 of the National Energy Board Act for two certificates of public convenience and necessity to be issued in respect of the construction and operation of a terminal at Kitimat, British Columbia and two parallel pipelines between Bruderheim, Alberta and Kitimat (the Project).

On January 20, 2010, a joint review panel (the Panel) was established by the Minister of the Environment and the National Energy Board to conduct an assessment of the environmental effects of the Project and to consider the Project’s application for certificates.

On December 19, 2013, the Panel submitted its Report in two volumes. The Panel’s environmental assessment was conducted pursuant to the Canadian Environmental Assessment Act, 2012. The Panel recommended, pursuant to the National Energy Board Act, that the Governor in Council direct the National Energy Board to approve the Project by issuing the two certificates subject to 209 conditions.

On June 17, 2014, the Governor in Council directed the National Energy Board to issue certificates of public convenience and necessity to Northern Gateway Pipelines Inc. on behalf of Northern Gateway Pipelines Limited Partnership.

On June 23, 2016, the Federal Court of Appeal quashed Order in Council P.C. 2014-809 and Certificates of Public Convenience and Necessity OC-060 and OC-061 in its decision Gitxaala Nation v. Canada, 2016 FCA 187, and remitted the matter to the Governor in Council for redetermination. The Governor in Council extended the time limit for its decision to November 25, 2016, through Order in Council P.C. 2016-836 dated September 23, 2016.

Implications

The Governor in Council has taken into account the Report with respect to the environmental assessment in accordance with the Act, the Canadian Environmental Assessment Act, 2012 and Part 3 of the Jobs, Growth and Long-term Prosperity Act.

The Report identified impacts from the Project that the Panel believed would be likely to cause significant adverse environmental effects for certain populations of woodland caribou and grizzly bear, and it disclosed that the Project would result in 220 tankers annually transiting the waters of Douglas Channel, carrying crude oil and diluent.

The Governor in Council is of the view that the waters of the Douglas Channel constitute part of a sensitive ecosystem that must be protected from spills of crude oils from marine tankers, and does not accept the Panel’s finding and recommendation that the Project, if constructed and operated in full compliance with the conditions set out in Appendix 1 of Volume 2 of the Panel Report, is and will be required by the present and future convenience and necessity. As a result, the Governor in Council is of the view that the Project is not in the public interest.

Consultations

The Department of Natural Resources consulted with the Canadian Environmental Assessment Agency and the National Energy Board as the parties that formed the Joint Review Panel.

Departmental contact

Samuel Millar
Director General Operations
Major Project Management Office
Natural Resources Canada
Telephone: 343-292-6172
Email: samuel.millar@canada.ca

[50-1-o]