Ian T. D. Thomson

Near the end of 2016, pipelines were at the top of everyone’s agenda.

The Trudeau government approved two major pipeline projects in Canada— Kinder Morgan’s TransMountain and Enbridge’s Line 3. Environmental and Indigenous activists in North Dakota proclaimed victory as the construction of the Dakota Access Pipeline was halted with plans to reroute the project to avoid Lake Oahe near the Standing Rock Sioux Reservation. Additionally, in his final days in office, outgoing US President Barack Obama and Prime Minister Justin Trudeau announced a joint effort to prohibit off-shore drilling in the Arctic: a move that has upset Republicans who wish to reinvigorate the Trans-Alaska pipeline project. Looking ahead to 2017, incoming US President Donald Trump has indicated his support for the border-crossing Keystone XL pipeline, while environmental activists are looking to take inspiration from the Dakota Access victory and protest the construction of proposed Canadian pipelines.

To greater understand the future of these political (and cylindrical) projects, this explainer investigates the broad realm of Canadian pipelines. In part one, I will examine basic questions about pipelines in Canada. Part two will delve into the specifics of Canadian pipeline regulations and safety measures.

What are pipelines?

Let’s start simple.

Pipelines are large conduits linked with valves, pumps, and control devices that move gas or liquid resources to downstream locations for export or use. These resources are used for energy-related activities, such as heating a house or driving a car.

Pipelines come in various shapes and sizes and are grouped into four types: gathering, feeder, transmission, and distribution. Gathering pipelines move products from extraction wells in the ground source to facilities where material is processed (such as oil batteries). Feeder pipelines move resources from the batteries or facilities to long-distance pipelines known as transmission pipes, which transport the resource to national and international markets. Lastly, distribution pipelines refer to the network built by local companies that delivers natural gas to Canadian homes and businesses. Pipelines also vary based on whether they are transporting a gaseous resource (such as natural gas) or a liquid resource (such as crude oil or propane).

While natural resources are transported via other means (611,000 barrels per day were moved by Canadian rail in 2014), pipelines are the most cost-efficient. Recent research from the University of Alberta found that pipeline transportation is more environmentally-friendly producing 61 to 77 per cent less greenhouse gas emissions than railway transport when shipping higher volumes of oil and bitumen over longer distances.

The loudest news headlines often focus on the construction of transmission pipelines (eg. TransMountain and Keystone), but distribution pipelines affect our daily lives. For example, In Ontario, UnionGas, which distributes natural gas to 1.4 million customers in 400 communities, received approval to increase its charging rates for 2017. Citing Ontario’s recently implemented cap-and-trade system as a reason for the increase in delivery charges, residential consumers will face an annual increase of $56 to $163 to their bill, depending on location. This price increase affects individuals’ and corporations’ budgets and the natural gas resource they receive via UnionGas’ vast distribution pipelines.

Pipelines in Canada

Canada has an extensive network of pipelines with more than 840,000 kilometres (km) of pipelines. The history of Canadian pipelines can be traced back to 1853, with the development of a 25-km cast-iron pipe used to light the streets in Trois-Rivières, Québec. This was the longest pipeline in the world at the time. Additionally, Canada also built one of the world’s first oil pipelines in 1862. The pipeline ran from the oil fields in Petrolia, Ontario to Sarnia, Ontario. However, it wasn’t until the 1950s that Canada’s large network of pipelines expanded west to Alberta, due to large oil and natural gas finds in the area.

Pipelines and the resources they transport are big business for Canada. In 2015, oil and gas generated almost 8 per cent of Canada’s Gross Domestic Product (GDP), employing over 710,000 people. Via federally-regulated pipelines, 1.3 billion barrels are moved per year, carrying over $100 billion in product. Oil and gas contributed another $20.3 billion in revenue to the federal government between 2010 and 2014.

This being said, there are significant fluctuations in this sector, including recently: crude oil prices declined by 50 per cent between 2014 and 2015, which led to significant decreases in GDP for Alberta, Saskatchewan, and Newfoundland and Labrador. Additionally, drilling activity in western Canada has declined by more than 75 per cent compared to two years ago.

While Canadian pipelines are extensive, they only reach as far as Montréal.  Many areas in eastern Canada still do not receive resources from western Canada. Eastern refineries import crude oil via tanker ships from the United States and countries which are members of the Organization of the Petroleum Exporting Countries (OPEC).

Who deals with Canadian pipelines?

Pipelines’ approval, development, and oversight fall under several jurisdictions. Intra-provincial pipelines are regulated exclusively by the respective province. For example, 415,000 km of oil and gas pipelines fall within the jurisdiction of the province of Alberta and the Alberta Energy Regulator (AER).

International or interprovincial pipelines are regulated at the federal level by the National Energy Board of Canada (NEB). The independent agency oversees more than 73,000 km of pipelines. In addition to NEB, the Transport Safety Board of Canada (TSB) also monitors and identifies any safety deficiencies in pipeline engineering for federal pipeline transport, reporting any accidents and incidents for industry and the public.

Our neighbors to the south

Canada only has one major trading partner in regards to oil and natural gas resources: The United States. In 2015, 100 per cent of Canadian natural gas exports and 99 per cent of oil exports were transported south of the border. Currently, there are 70 operating pipelines that cross the Canada-US border and 10-15 in other categories (built but not operating, deactivated, and decommissioned). However, given our strong dependence on US exports, new markets for Canadian energy resources are being explored, including the expansion into the Asian market. In line with this goal, the recent divisive approval of Kinder Morgan’s Trans Mountain Pipeline Expansion Project moves more bitumen from Alberta to the west coast of British Columbia increasing the capacity of the line from 300,000 barrels per day to 890,000 barrels per day. While the government has imposed 157 conditions on the approval, there has been significant political pushback from both the province of British Columbia and the mayor of Vancouver, and widespread public disapproval in the Lower Mainland.

Pipelines are a critical part of the infrastructure of our society that directly affects every single one of us every day. Yet projects such as TransMountain are a point of contention for many based on their safety and environmental impact: a report by Environment and Climate Change Canada estimates the completed project could still emit 20 to 26 megatonnes of carbon dioxide per year.

To better understand the complex policy situation, we need to know about the Canadian regulatory and safety measures of our pipelines. Stay tuned for part two of this explainer.

—

Ian T. D. Thomson is a 2018 Master of Public Policy candidate at the University of Toronto’s School of Public Policy & Governance.  He holds a Bachelor of Science Honours degree in Psychology and a Bachelor of Arts degree in Philosophy from the University of Manitoba. His policy interests include broadcast and telecommunications policy, cultural policy, and fisheries policy.