VANCOUVER – Major pipeline companies will have to show federal regulators that they have access to $1 billion to cover the costs of an oil or gas spill, under new rules aimed at easing public concerns about pipeline safety.
Natural Resources Minister Joe Oliver said the federal government will also enshrine in law the “polluter pay” principle for oil and gas pipelines to ensure taxpayers are not left on the hook for cleanup costs.
“We will ensure that all companies operating pipelines have the capacity to respond to any incident and to remedy damages,” Oliver said Wednesday in Vancouver.
The funds can be in the form of insurance, financial assets, third-party guarantees, lines of credit or other assured sources. The new rules will apply initially to new pipelines that fall under federal regulation, but the requirement will be expanded to existing major oil and gas pipeline companies over a transition period.
Federally regulated pipeline companies will also have to appoint a senior manager who will be held accountable for ensuring the company is in compliance with regulations.
As of July 3, under previously announced revisions to federal regulations, the National Energy Board will have the authority to directly fine companies up to $100,000 a day for infractions and individuals up to $25,000 a day. That is in addition to the ability to pursue criminal charges in cases of negligence, he said.
Canada has a robust safety system in place, Oliver said, but changes and improvements are always ongoing.
He suggested the changes are not in response to the opposition that has greeted several major pipeline projects, from the Keystone XL line that would take Alberta oil sands products south, to the Northern Gateway line that would deliver it to a tanker port on the B.C. coast.
But he reiterated that Canada is losing billions of dollars a year because western Canadian oil is not reaching Asia and other countries.
Natural resources are a driver of the Canadian economy, Oliver said, accounting for nearly one-fifth of all economic activity in Canada, and more than half of exports.
“If Canadians are to benefit fully from this resource potential, we need a safe and reliable transportation infrastructure including pipelines and tankers so our products can reach Asia, the United States and around the world.”
The announcement comes two days after federal review panel hearings concluded on the controversial Northern Gateway proposal. The panel’s report to the minister is due by the end of the year.
Evidence is closed, and the panel members’ decision will not take into account Oliver’s announcement on Wednesday.
“We want to continue to improve the safety and security of our pipeline system and our maritime system as well. You can’t just snap your fingers and get things done instantly,” Oliver said in response to questions about the timing.
Other measures have been announced previously, he said, including a similar announcement last week about a minimum liability for oil tankers.
He pointed out that last year the number of pipeline inspections conducted by the National Energy Board increased from 100 to 150 and the number of safety audits doubled, from three to six. There has not been any incident in Canada where a company has not paid the cost, Oliver said.
Opponents of the Northern Gateway project said the changes are too little, too late.
“Enbridge (TSX:ENB) proved in the hearings that they are completely ill-prepared to deal with oil supertankers navigating our coast,” said Nikki Skuce, of ForestEthics.
“Previous federal cuts to emergency response and the Coast Guard just added to evidence that our coast would be devastated by guaranteed mishaps if this project were to go through.”