Category Archives: Energy

Tolling Methodologies On Federally Regulated Pipelines In Northeast British Columbia

By: Nigel Bankes

PDF Version: Tolling Methodologies On Federally Regulated Pipelines In Northeast British Columbia

Matters Commented On: (1) National Energy Board (NEB), Letter decision on the Application of Westcoast Energy Inc for Review of the Decision of Members Ballem and Lytle, in Report GH-003-2015 (Towerbirch Report), Respecting the Toll Treatment of the Tower Lake Section (TLS), and (2) NEB letter to NOVA Gas Transmission Ltd (NGTL), Westcoast Energy Inc (Westcoast) and Alliance Pipeline Ltd (Alliance), re Examination to Determine Whether to Undertake an Inquiry of the Tolling Methodologies, Tariff Provisions and Competition in Northeast BC, 16 March 2017 (the Tolling Methodology Process Letter).

Northeast British Columbia is an area of expanding natural gas production due to a number of significant shale gas plays in the area including Horn River, Liard, and Montney.

Historically this area of the province was first served for conventional sour gas production by Westcoast Transmission. Westcoast offered producers a bundled service including sour gas processing as well as mainline transmission down to the lower mainland and on to serve markets in the Pacific Northwest. This entire system has long been federally regulated by the National Energy Board (NEB), a practice that was legally and constitutionally confirmed by the majority judgement of the Supreme Court of Canada in Westcoast Energy Inc. v. Canada (National Energy Board), [1998] 1 SCR 322, 1998 CanLII 813 (SCC). More recently the area has also come to be served by Alliance’s “bullet pipeline” and by extension of the NGTL system from Alberta into BC. The Alliance Pipeline is a point-to-point pipeline which transports liquids rich gas from this area and northwest Alberta to the Chicago market hub. Alliance came on stream in 2000. Its construction was backed by 15 year contracts. Few shippers elected to renew and “accordingly, Alliance developed its New Services Offering (NSO), which incorporated new services and tolling methodologies on the pipeline. Alliance applied for Board approval of the NSO in 2014.” The Board’s Reasons for Decision on that matter (RH-002-2014) are available here. The NGTL system is the old NOVA intraprovincial transmission system which began life in the 1950s under the name Alberta Gas Trunk Line (AGTL) and subsequently morphed into NOVA before merging with TransCanada PipeLines (TCPL) in 1998. Historically, AGTL and NOVA were provincially regulated until brought under federal regulation in 2009: see ABlawg post here. The AGTL\NOVA business model was quite different from that of Westcoast. NOVA focused its attention on the transmission system and left the producers to assume responsibility for owning and constructing in-field processing facilities to produce pipeline quality gas for delivery to the AGTL\NOVA system.

The result of these developments is that the natural gas transmission scene in northeast BC no longer looks like a natural monopoly, and has not for some long time. Instead, there is competition for natural gas production and competition to fill transmission systems with gas. No pipeline system feels this more acutely than the NGTL system and its sister, the TCPL mainline, which needs additional volumes of gas to make up for the declines in conventional gas production in the western Canadian Sedimentary Basin (WCSB). Continue reading →

The Alberta Utilities Commission Rules on Its Jurisdiction to Assess Crown Aboriginal Consultation

By: Kirk N. Lambrecht Q.C.

PDF Version: The Alberta Utilities Commission Rules on Its Jurisdiction to Assess Crown Aboriginal Consultation

Decisions Commented On:

  • AUC Ruling on jurisdiction to determine Questions stated in Notices of Questions of Constitutional Law, October 7, 2016, and Sent to Parties Currently Registered in Proceeding 21030 Fort McMurray West 500-kV Transmission Project Proceeding 21030 Applications 21030-A001 to 21030-A015 (Appendix J); and
  • AUC Decision 21030-D02-2017, Alberta PowerLine General Partner Ltd. Fort McMurray West 500-Kilovolt Transmission Project, February 10, 2017

Introduction

This post offers critical analysis of the first Ruling of the Alberta Utilities Commission (AUC) to grapple with the issue of whether the AUC has jurisdiction to consider the adequacy of Crown Aboriginal consultation in the course of AUC proceedings (the Preliminary AUC Ruling). The Preliminary AUC Ruling was issued on October 7, 2016. It was followed on February 10, 2017, with a ruling on the merits of the Application (the AUC Ruling on the Merits). Both are discussed here. The Preliminary AUC Ruling is attached as Appendix J to the AUC Ruling on the Merits.

The AUC is a quasi-judicial regulatory tribunal with power to determine all questions of law and constitutional law which arise in the course of its regulatory functions. It exercises a final approval function in relation to the construction of the Fort McMurray West 500-kV transmission line Project. The Project is generally described here. Appendix A to the current Alberta policy on Aboriginal consultation suggests that large-scale regional transmission line projects have high impact and require extensive consultation (see The Government of Alberta’s Guidelines on Consultation with First Nations on Land and Natural Resource Management, July 28, 2014). A deep consultation requirement of this kind is consistent with the description of the Project as critical in nature. It is also consistent with the finding of the AUC, described below, that the Project would introduce industrial development which would adversely impact Aboriginal groups in way which is not easily mitigated.

The AUC has not been at the center of Alberta’s policy development in relation to Aboriginal consultation. That development has tended to focus on the Alberta Energy Regulator, rather than the AUC. In this proceeding, absent guidance from Provincial policy, the AUC concluded that it had no jurisdiction in relation to Crown consultation and accommodation. Continue reading →

Independent Operations, Holdings and Common Ownership: A Letter Decision of the Alberta Energy Regulator

By: Nigel Bankes and Heather Lilles

PDF Version: Independent Operations, Holdings and Common Ownership: A Letter Decision of the Alberta Energy Regulator

Decision Commented On: AER, Request for Regulatory Appeal by Westbrick Energy Ltd., Regulatory Appeal No. 1852713, 25 May 2016

Last week, ABlawg announced a new three-step project which will present the Alberta Energy Regulator’s (AER’s) published procedural and participatory letter decisions in a more usable and accessible form. As noted in that post, step one of the project, which collates the summaries of these decisions in a searchable PDF document, is now complete.

The objective of this post is to provide an example of the potentially valuable nuggets of information discoverable in this large group of decisions. The post concerns a letter decision which, while ostensibly dealing with procedural matters, also contains discussions of holdings, common ownership and independent operations within the meaning of the 1990 CAPL Operating Procedure. As such, the decision confirms the importance of publishing these decisions insofar as joint operating agreements (JOAs) are common in the industry as is the practice “going penalty”. But the decision also illustrates some confusion between the threshold question of standing and the decision on the merits. In this case it appears to us that the AER panel actually decided the merits of Westbrick’s application and then somewhat perversely denied it standing. Continue reading →

Announcing a New Resource for the Letter Decisions of the Alberta Energy Regulator

By: Nigel Bankes, Amy Matychuk, and David Rennie

PDF Version: Announcing a New Resource for the Letter Decisions of the Alberta Energy Regulator

Decisions Commented On: The Participatory/Procedural Decisions of the AER

Several years ago now, ABlawg published a series of posts that were critical of the failure of the Alberta Energy Regulator (AER) and its predecessor the Energy Resources Conservation Board to publish its letter decisions in a systematic way: see here, here and here. Whether in response to that criticism, or for its own good reasons, the AER began posting what it refers to as participatory/procedural decisions (presumably a sub-set of a broader category of letter decisions) in the fall of 2015. When this venture began, the decisions were simply listed with no attached descriptor whatsoever. Now the AER does provide a brief description of the matter at hand but it is still a laborious task to click and retrieve each document and assess its significance.

Having asked the AER to provide this information it accordingly seemed appropriate to try and present it in a more usable and accessible form. Hence this project. The project has three steps. Step one is to provide a digest of each decision. Given the number of these decisions (already over 170) we have not attempted to synthesise or précis these decisions, rather the exercise has been more of a cut-and-paste job hewing closely to the AER’s actual text. We have added key words which are listed below. There is no additional commentary. The result of that exercise has been collated into a PDF document which is available here and is fully searchable. Step two will be to present this information as a set of web-pages. That is a work in progress. Step three will be to write what we anticipate will become a short annual survey of these decisions, assessing trends and perhaps highlighting some of the more important decisions. That too is a work in progress. It goes without saying that while step one is complete until the end of January 2017 we also aim to populate it with new decisions from time to time.

David Rennie (JD 2017) began this work as a summer student in 2016 preparing digests of the first 85 decisions and Amy Matychuk (JD 2018), also a summer student in 2016, continued the work for the latter part of the summer and through the fall. Nigel Bankes provided direction and supervision.

We hope that readers of ABlawg and other researchers will find this tool useful and we welcome your feedback, either by way of a comment on this post or to ndbankes@ucalgary.ca Continue reading →

Assessing Adaptive Management in Alberta’s Energy Resource Sector

By: Martin Olszynski

PDF Version: Assessing Adaptive Management in Alberta’s Energy Resource Sector

Research Commented On: “Failed Experiments: An Empirical Assessment of Adaptive Management in Alberta’s Energy Resources Sector” (UBC L Rev) (Forthcoming)

It was three years and six months ago – almost to the day – that I published my first ABlawg post. The Joint Review Panel (JRP) assigned to conduct the environmental assessment of Shell’s then-proposed Jackpine oil sands mine expansion project had just released its report. That report was notable for several reasons, including that it was the first to conclude that an oil sands mine was likely to result in “significant adverse environmental effects” pursuant to the Canadian Environmental Assessment Act 2012, SC 2012, c 19 (CEAA, 2012). In Shell Jackpine JRP Report: Would the Real “Adaptive Management” Please Stand Up?, however, I focused on the role that adaptive management had played in the Joint Review Panel’s determination of the project’s environmental effects. Briefly, adaptive management is defined by the Canadian Environmental Assessment Agency as “a planned and systematic process for continuously improving environmental management practices by learning about their outcomes.” The concern that I have expressed over the past few years is that, as practiced in Canada, adaptive management appears to be seldom planned or systematic. The problem was that I couldn’t show this to be the case – until now.

In a recent paper, I examine the implementation and effectiveness of adaptive management in Alberta’s energy resources sector. Using freedom of information processes, publicly available documents, and communication with the relevant regulator, I collected the environmental impact statements, environmental assessment reports (e.g. the Shell Jackpine JRP Report), statutory approvals and required follow-up reports for thirteen energy projects in Alberta: two coal mines, three oil sands mines, and eight in situ oil sands operations. In each case, the proponent proposed adaptive management for at least one environmental issue or problem. I then analyzed these various documents to determine the conception, implementation, and, to the extent possible, effectiveness of adaptive management with respect to each project throughout the regulatory cycle (i.e. from the proposal stage through to approval and reporting). Simply put, I set out to determine how adaptive management was actually being applied in this context.

Unfortunately, the results confirm longstanding concerns about the implementation of adaptive management in natural resources development. Continue reading →