Pipeline operators required to have $1bn to cover potential spills

TORONTO – Canada’s Conservative federal government will, in future, require existing and new pipeline companies to have at least $1-billion financial capability on hand to cover any spills on Canadian soil.

Natural Resources Minister Joe Oliver made the announcement in Vancouver on Wednesday, a week after he announced government would raise the absolute liability for energy companies operating offshore Atlantic Canada and Arctic Canada to C$1-billion to align accountability with international standards.

He also announced new safety rules for pipelines and new financial penalties which would soon come into force for individuals and companies that violate environmental laws.

Pipelines spillOliver added that government planned to enshrine the currently implicit “polluter pays” principle, in law.

“The measures announced today strengthen Canada’s already strong pipeline system even further. Our vast resource wealth is being developed responsibly, supporting Canada’s growth and generating revenue for critical social programmes,” he said.

Other measures announced by the Minister included requiring companies to appoint an accountable senior officer, whose duty would be to ensure that management systems and programmes were compliant, and to ensure companies’ emergency and environmental plans were transparent and easily available to the public.

The penalties to companies and individuals for a range of infractions would range from $25 000 to a maximum of $100 000.

Canada is desperately seeking alternative oil transport networks to its inadequate rail infrastructure, as the country aimed to more than double crude production to about 5.2-million barrels a day by 2030, much of which would come from the bountiful oil sands deposits in Alberta.

The recently elected Liberal government of British Columbia (BC), under the leadership of Premier Christy Clark, recently rejected the $5.5-billion Northern Gateway pipeline project on environmental concerns.

Energy giant Enbridge’s pipeline project, which entailed the construction of two pipelines stretching 1 177 km from the Alberta oil sands to a tanker port on the North Coast of BC, with the capacity to move 525 000 bbl/d of oil, was deemed to hold too great an oil-spillage risk, and its proponents presented too little evidence that risk factors would be mitigated, provincial Environment Minister Terry Lake said.

Environmentalists agreed. Canadian lobby group Environmental Defence climate and energy programme manager Adam Scott told Mining Weekly Online that the environmental risks of oil pipelines “by far” outweighed the potential economic benefits gained from developing a fossil fuel driven economy.

“Of all the recent high-profile oil spills, none are ever fully cleaned up, leaving the environment and the people living there worse off.

“By increasing contingencies or safety standards, government misses the point. The country is wasting the opportunity to invest in a green economy that would create even more jobs and would be sustainable for future generations,” he said.

“BC’s government is conducting its own review of pipeline safety and we are working with them. These federal measures being announced today are a major contribution to the combined efforts of both [provincial and federal] levels of government on this issue,” Oliver said.

Further, he also said he welcomed a report, entitled ‘Effects of Diluted Bitumen on Crude Oil Transmission Pipelines’, which had found that oil-sands-diluted bitumen was no more corrosive than other heavy crudes in transmission pipelines.

“We welcome the findings of the latest scientific report. This independent study by the internationally recognized National Academy of Sciences and sponsored by the US Transportation Department builds on extensive research conducted by Natural Resources Canada and others.

“The science is settled. The myth that oil sands crude is more corrosive has been consistently proven false by objective research. We hope all groups will base their comments on the facts. Pipelines are a safe and efficient method of transporting large volumes of crude oil and petroleum products,” Oliver noted.

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