Vol. 151, No. 11 — March 18, 2017

ORDERS IN COUNCIL

NATIONAL ENERGY BOARD

NATIONAL ENERGY BOARD ACT

Order — Certificate of Public Convenience and Necessity GC-127 to NOVA Gas Transmission Ltd. in respect of the construction and operation of the NGTL Towerbirch Expansion Project

P.C. 2017-231 March 10, 2017

Whereas, on September 2, 2015, NOVA Gas Transmission Ltd. (“NGTL”) 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 NGTL Towerbirch Expansion Project (“the Project”);

Whereas, on October 6, 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-003-2015 (“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. 2016-1162 of December 16, 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 three months to allow for additional Crown consultation with potentially affected Aboriginal groups, public engagement and an assessment of the upstream greenhouse gas emissions associated with the Project;

Whereas the Governor in Council, having considered Aboriginal concerns and interests identified in the Crown’s Federal/Provincial Consultation and Accommodation Report for the NGTL Towerbirch Expansion Project dated February 9, 2017, 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 a certificate should be issued given that the Project will be, if the terms and conditions set out in Appendix II of the Board’s Report are complied with, required by the present and future public convenience and necessity under the National Energy Board Act and will not likely cause significant adverse environmental effects under the Canadian Environmental Assessment Act, 2012;

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 NOVA Gas Transmission Ltd. — Towerbirch Expansion Project: Review of Related Upstream Greenhouse Gas Emissions Estimates, 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 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 September 2, 2015, NOVA Gas Transmission Ltd. (NGTL), a wholly owned subsidiary of TransCanada PipeLines Limited (TransCanada) applied to the National Energy Board (NEB or Board) under sections 52 and 58, and Part IV of the National Energy Board Act (NEB Act) requesting the issuance by the NEB of (i) a Certificate of Public Convenience and Necessity (Certificate) for the construction and operation of the NGTL Towerbirch Expansion Project (Project); (ii) a section 58 order to allow for preparation activities and construction of temporary infrastructure associated with the Project; and (iii) a Part IV order regarding a proposed tolling methodology for the Project.

On October 6, 2016, the Board released its Report on the Project recommending that a Certificate be issued for the Project and approving section 58 and Part IV applications, conditional to a Certificate being issued for the Project. An 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 GC-127 to NGTL for the Project.

Background

Project description

The Project is a proposed expansion to the existing NGTL System. The Project consists of approximately 87 kilometres (km) of new bidirectional gas pipeline in two pipeline sections, and additional associated facilities including five proposed meter stations, valve sites and pipeline tie-ins. It would include the following:

The Project would parallel existing NGTL right-of-way (RoW) or existing disturbances on approximately 82% of its length, and 89% of the Project would be located on private lands. The Project is designed to provide the Tower Lake area, within the Montney producing region, access to the NGTL System. This would allow for the transport of the increasing supply of natural gas from the Montney region to markets across North America.

The Project also includes preparatory activities in specified locations and the construction of temporary infrastructure required for pipeline construction including stockpile sites, contractor yards, access roads and borrow pits/dugouts. These were approved directly by the Board, subject to 12 conditions that the Board will monitor and enforce, pursuant to section 58 of the NEB Act.

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, 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.

NEB’s review of the application

Under the NEB Act, when considering applications for a pipeline project, the NEB must review the application, hold public hearings, and then make a recommendation to the Governor in Council on whether the Project is, and will be, required by the present and future public convenience and necessity. The NEB must also conduct an environmental assessment to determine whether the Project is likely to cause adverse environmental effects. In conducting its review of the Project, the Board considered a variety of factors, including the Project’s (i) socio- economic impacts; (ii) environmental impacts; (iii) impacts on greenhouse gas emissions; and (iv) impacts on landowners. Under Part IV of the NEB Act, the Board also assessed the Project’s impacts on NGTL’s pipeline transportation rates (tolls).

On October 6, 2016, following its hearing and review of the Project, the Board issued its Report and recommendations to the Minister of Natural Resources. The Board concluded that the Project would be in the public interest and recommended that a Certificate be issued for the construction and operation of the Project. The Certificate would be subject to 24 terms and conditions that the Board considers necessary or desirable to ensure the safe construction and operation of the pipeline, mitigate environmental impacts and address potential impacts on Indigenous rights and interests identified during the Board’s review of the Project.

(i) Socio-economic impacts

NGTL estimates that the Project will inject $439 million in capital expenditures into the Canadian economy over approximately one year starting in 2017. NGTL also estimates that the Project will generate $285 million in labour income during construction and $75.5 million in federal and provincial tax revenue, with 66% of this tax revenue going to the federal government and 33% to the provinces (Alberta and British Columbia together). During the peak construction period, an aggregate construction workforce of approximately 700 to 750 workers will be required. However, no full-time jobs will be generated during operations. During its operational phase, NGTL estimates that it will contribute $1.29 million per year in property taxes to the Peace River Regional District of British Columbia, and $210,000 per year to Saddle Hills County, in Alberta.

(ii) Environmental impacts

The Board assessed the environmental impacts of the Project under both the NEB Act and the CEAA 2012. The EA scope included 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.

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 II of the Report, the Project is not likely to cause significant adverse environmental effects.

(iii) Impacts on greenhouse gas emissions

An assessment submitted by NGTL to the NEB estimated direct annual greenhouse gas (GHG) emissions from operating the Project at 0.01 megatonnes of carbon dioxide equivalent per year (Mt CO2e/year). The effects of the Project construction and operation on GHG emissions would be reduced by adopting standard mitigation and management practices, including minimizing unnecessary idling of equipment and vehicles, and a leak detection and repair program to reduce fugitive emissions.

(iv) Impacts on landowners

In an attempt to minimize impacts on the environment and landowners, the Project would be routed adjacent to linear disturbances and the size of the temporary work spaces would be reduced. The Project would be located primarily on freehold private land owned by individuals and corporations (89%) with the rest on provincial Crown land (11%). NGTL has already secured more than 80% of the land required for the Project and does not anticipate difficulties in obtaining the remainder of the land.

(v) Impacts on tolling

NGTL proposed to use a rolled-in tolling methodology (see footnote 2) whereby the project cost would be included in the rate base used to calculate tolls for transportation services on the entire NGTL System. Some commercial parties objected, arguing instead for an incremental tolling methodology, whereby users of the expansion would pay the entire costs of the expansion. The majority of the Board agreed with NGTL’s proposed toll treatment. One Board member provided a dissenting opinion, citing that the proposed methodology was not in accordance with the user-pay principle, as argued by those commercial parties. The Board imposed a condition for NGTL to reapply for approval of a tolling methodology if current circumstances change.

NEB’s consultations

The NEB conducted an Enhanced Aboriginal Engagement initiative for the 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 NEB’s regulatory process and how to participate in that process. The Board carried out its engagement activities for the Project commencing on May 29, 2015, when it received the Project description. The Board sent letters to 27 potentially affected Indigenous communities and organizations.

Applications to participate in the NEB hearing were accepted in November 2015 and the Board issued Hearing Order GH-003-2015 on December 22, 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 could participate in the hearing. The Board received and considered a total of 39 applications to participate in the GH-003-2015 hearing for the Project, and granted standing to participate to all applicants, 25 as intervenors and 14 as commenters. Intervenors submitted evidence and questions to NGTL and other intervenors, while commenters provided letters of comment on the Project.

Intervenors included 5 Indigenous groups, 14 commercial parties, 1 landowner association, 3 government organizations, and 2 individuals. Commenters included 10 commercial parties, 1 Indigenous group and 3 government organizations. The Board received 4 Participant Funding Program applications, from 3 Indigenous groups and 1 landowner association, for a total of $591,920. Following a review of the applications by the Funding Review Committee, which was independent of the Project regulatory review process, funding awards totalling $200,000 were made.

The hearing consisted of both written and oral portions. The oral portion of the hearing was held in Dawson Creek, British Columbia, on May 31, 2016, and in Calgary, Alberta, from June 6 to 9, 2016. Oral traditional evidence was presented by one Indigenous Intervenor during the Dawson Creek portion of the hearing. The Board noted the value and unique perspective that Indigenous groups can provide in determining the effectiveness of mitigation measures, partly based on their traditional knowledge.

NEB’s recommendations report on the application

In its recommendations report, the NEB recommended 24 Project-specific conditions to enhance public safety and environmental protection, and address concerns raised by Indigenous groups. The NEB recommended specific conditions that would be part of the Project certificate based on evidence provided by Indigenous groups. These include (i) NGTL must file an Aboriginal Monitoring Plan describing the participation by Aboriginal groups in monitoring during construction and post-construction of the Project (Condition 8); (ii) requiring that any outstanding traditional land use investigations be completed before commencing any construction work (Condition 9); (iii) NGTL must file an Aboriginal Monitoring Report summarizing the participation by Aboriginal groups in monitoring during construction of the Project (Condition 20); (iv) NGTL must file an Aboriginal Employment, Contracting and Procurement Report summarizing Aboriginal employment and procurement opportunities (Condition 21); and (v) NGTL must file a Post- Construction Environmental Monitoring Report that includes Aboriginal monitoring outcomes and summarizing how NGTL addressed and responded to concerns and issues raised by Aboriginal groups during consultations (Condition 23). 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.

Considerations

On January 27, 2016, the Government of Canada introduced interim measures outlining how it would consider major projects undergoing review, including further consultation measures.

(i) Public consultation

The Government sought to engage the public directly on the Project, to add to public input received during the NEB hearings. A questionnaire created on the Natural Resources Canada (NRCan) website solicited additional public comments on the Project. The period during which public comments were sought began with the release of the NEB report on October 6, 2016, and closed on November 26, 2016. Sixty-one people completed the questionnaire; the majority of responses came from Western Canada. A number of respondents pointed to the positive economic impact of the Project and the need for market access for natural gas, while others expressed concerns related to the construction of pipelines in general and with hydraulic fracturing.

(ii) 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 offered consultations with potentially impacted Indigenous groups, following the release of the NEB report, to discuss any outstanding issues and potential mitigation measures. The Crown considered the NEB review process to identify concerns.

The Crown’s consultation process is outlined in the Consultation and Accommodation Report (CAR). The document outlines 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 CAR was approved by the Minister of Natural Resources at the time he made his recommendation to the Governor in Council. The report was provided to all members of the Governor in Council to support their decision of the Project. Before finalization, the CAR was shared with potentially impacted Aboriginal groups to confirm the accuracy and completeness of their views presented in the Report.

The Governor in Council, having considered Aboriginal concerns and interests identified in the CAR, 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.

(iii) Upstream GHG emissions assessment

Environment and Climate Change Canada (ECCC) assessed the upstream GHG emissions associated with the Project and included the estimated future impacts of the policies and measures taken by federal, provincial and territorial governments as of November 1, 2016. The report found that upstream GHG emissions associated with the production, gathering, and processing of the additional volume of natural gas due to the Project are estimated to be between 2.7 and 2.8 Mt CO2e/year. While the Project is expected to cause incremental upstream emissions relative to a case in which the Project is not built, it is not expected to increase Canada’s projected emissions beyond ECCC’s Canada’s 2016 greenhouse gas emissions Reference Case because the increased level of production is already reflected in the NEB’s Canada’s Energy Future 2016: Update production forecast on which the projection is based. In addition, if the project is built, there is the possibility that upstream GHG emissions associated with the Project might not be incremental. Upstream gas production may displace other more GHG-intensive natural gas sources in North America or be offset by production declines in other regions.

ECCC released a draft upstream GHG assessment report for public comment on October 6, 2016. ECCC received public comments on the draft report until October 28, 2016, and posted a final report in February 2017.

Departmental contact

For more information, please contact

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

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