Vol. 149, No. 23 — June 6, 2015

ORDERS IN COUNCIL

NATIONAL ENERGY BOARD

NATIONAL ENERGY BOARD ACT

Order — Certificate of Public Convenience and Necessity GC-124 to NOVA Gas Transmission Ltd., in respect of the construction and operation of the Wolverine River Lateral Loop (Carmon Creek Section) Project

P.C. 2015-646 May 28, 2015

Whereas on March 25, 2014, NOVA Gas Transmission Ltd. (“NGTL”) applied to the National Energy Board (“Board”) pursuant to Part III of the National Energy Board Act (“NEB Act”) for a certificate of public convenience and necessity to be issued in respect of the construction and operation of approximately 61 kilometres of new pipeline and associated works and temporary infrastructure required for construction, for the Wolverine River Lateral Loop (Carmon Creek Section) (“Project”);

Whereas the Board reviewed NGTL’s application and conducted an environmental assessment of the Project under section 22 of the Canadian Environmental Assessment Act, 2012;

Whereas, on March 5, 2015, the Board submitted its report pursuant to section 52 entitled NOVA Gas Transmission Ltd. GH-003-2014, dated March 2015, on the Project, to the Minister of Natural Resources;

Whereas the Governor in Council accepts the Board’s finding that the Project will be, if the terms and the conditions set out in Appendix II of the Board’s Report are complied with, required by the present and future public convenience and necessity;

And whereas the Governor in Council considers that the Project would provide the Peace River area with natural gas transmission infrastructure to secure adequate gas supply and promote resource development, including oil sands;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources, pursuant to section 54 of the National Energy Board Act, directs the National Energy Board to issue Certificate of Public Convenience and Necessity GC-124 to NOVA Gas Transmission Ltd., in respect of the construction and operation of approximately 61 kilometres of new pipeline and associated works and temporary infrastructure required for construction, for the Wolverine River Lateral Loop (Carmon Creek Section) Project, subject to the terms and conditions set out in Appendix II of the National Energy Board Report entitled NOVA Gas Transmission Ltd. GH-003-2014, dated March 2015.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal and objective

This Order in Council is required pursuant to section 54 of the National Energy Board Act (NEB Act) to direct the National Energy Board (Board or NEB) to issue a Certificate of Public Convenience and Necessity (Certificate) to Nova Gas Transmission Ltd. (NGTL) authorizing the construction and operation of its Wolverine River Lateral Loop (Carmon Creek Section) Pipeline Project (Project) and related facilities under section 52 of the NEB Act (section 52 facilities).

Background

On March 25, 2014, NGTL filed an application with the Board, under section 52 of the NEB Act, requesting that a Certificate of Public Convenience and Necessity be issued for the Project.

The Project (or section 52 facilities) would include

The section 52 facilities will be located approximately 35 km northeast of Peace River, Alberta. The Project would be alongside of existing linear disturbances (see footnote 1) over approximately 57 km or 94.8% of its length, leaving 4 km for required new ROWs. The estimated capital cost of the Project is $144 million. It will add 344 million cubic feet per day (MMcf/d) of natural gas transportation capacity to the NGTL system in the region.

NGTL also requested an order, pursuant to section 58 of the NEB Act, exempting NGTL from the application of paragraphs 31(c) and 31(d) and section 33 of the NEB Act. This order is not subject to the Governor in Council’s approval.

Subject to regulatory approval, pipeline construction is scheduled to begin in the fourth quarter of 2015, and to be completed in the second quarter of 2016.

Implications

Economic impacts

The Project will inject $144 million in direct investment into the Canadian economy. It is anticipated to create 475 jobs at peak for Canadians and provide modest contracting and employment opportunities to local Aboriginal communities. NGTL is committed to providing training and employment opportunities to members of potentially affected Aboriginal communities.

Given the current decline in local natural gas production and growing gas demand from oil sands operations in the Peace River region of Alberta, NGTL forecasted that local gas supply would be insufficient to meet demand in the region. Hence, the Project is required as one of several steps to meet gas demand in the future. Because it is an expansion of the NGTL system, it will allow natural gas to flow from other parts of the system. If the Project does not proceed as planned, this could hinder oil sands development in the near future. If approved, the Project will provide the 344 MMcf/d additional gas transportation capacity required to address the current gas transportation shortage and to contribute to the pursuit of planned oil sands development programs.

During the construction phase of the Project, there will likely be a temporary increase in worker population in the Peace River region of Alberta, which could cause an increased demand for goods and services, including housing/accommodation, public transportation (which would increase traffic volumes), clean water supply, waste disposal services, protective service needs, and emergency services. This could put some pressure on limited local public service resources to accommodate increased demand for public services in a short time frame. However, this is not the first NGTL project in the region, and it can be expected that NGTL and its contractors will work with local authorities to implement measures to mitigate adverse socio-economic impacts. For instance, NGTL indicated considering the construction and operation of a temporary work camp for the construction of the Project to address the increased accommodation needs.

The NEB recognized the likelihood of increased traffic and noise during construction, but noted that these are transitory and acceptable impacts.

Tolling methodology impacts on shippers

NGTL proposed to use a roll-in tolling methodology to determine tolls because the Project is an expansion of the NGTL system. A roll-in toll methodology is based on the principle that an expansion project is an integrated component of the system, which will be used by virtually all shippers on the system. Therefore, its capital cost is added to that of the existing system to determine the total cost of providing services. To calculate tolls based on the cost-of-services approach, the regulator, i.e. the Board, would allow the company to recover its costs-of-services and earn a reasonable return on its investment, as approved by the Board. The cost-of-services plus the revenues required to earn an approved rate of return on investment equal the total revenue requirements, which are the tolling basis. These revenue requirements are generally divided by the volumes of gas transported over a period to determine tolls.

Under the proposed roll-in tolling methodology, the Project shippers would pay the same tolls as other shippers on the NGTL system. NGTL indicated that the Project would have minimal impacts on existing NGTL system shippers.

The NEB has approved NGTL’s proposed tolling methodology, as it is deemed appropriate for the Project. No participant to the Board’s hearing has expressed any concerns with NGTL’s proposed tolling methodology.

Environmental impacts

Because the proposed pipeline is over 40 km in length, it is a designated project under the Canadian Environmental Assessment Act, 2012 (CEAA 2012). Pursuant to CEAA 2012 requirements, the NEB posted a Notice of Commencement of an Environmental Assessment (EA) on the Canadian Environmental Assessment Registry Internet Site (CEARIS) on May 1, 2014, followed by a description of the factors to be taken into account in the EA on July 17, 2014. The NEB conducted a rigorous and comprehensive EA, having regard to potential adverse environmental and socio-economic impacts and the adequacy of the Project proponent’s environmental protection strategies. Issues included environmental protection, land use, lands and resources for traditional uses, impacts on vegetation, wildlife and wildlife habitat, fish and fish habitat, atmospheric and acoustic environment, water quality and quantity and heritage resources.

The Board’s review shows that the Project will have a limited environmental footprint in terms of its impacts on vegetation, wildlife, land use, water supply and cumulative impacts. This is in part due to the fact that the Project will parallel existing ROWs over 95% of its length. Furthermore, NGTL is committed to implementing NEB-approved mitigating measures as well as complying with the Certificate conditions to minimize these impacts and make them socially acceptable. (see footnote 2)

The NEB concluded that, with the implementation of NGTL’s environmental protection procedures and mitigation measures, along with the Board’s recommended conditions, the Project is not likely to cause significant adverse environmental effects.

Impacts on landowners

The Project will cross the Northern Alberta Lowlands Region and the Northern Alberta Uplands Region, and is entirely located on provincial lands, which means that no privately owned lands will be required or affected. Consequently, no landowner will be affected.

Consultation

The NEB advised NGTL of the completeness of the application on May 5, 2014. The NEB issued Hearing Order GH-003-2014 on July 17, 2014, which set out the process and framework — addressing procedural matters and providing a list of issues to be considered — for the public hearing. The oral portion of the hearing was scheduled to occur on November 5, 2014. However, pursuant to Hearing Order GH-003-2014, and subsequently in consultation with all interested parties, the Board conducted a written review of the Project, which closed on December 3, 2014.

In light of the evidence gathered through the written hearing and after balancing all relevant considerations, the NEB concluded that the Project was in the Canadian public interest. (see footnote 3) Hence, the NEB recommended that Certificate GC-124 authorizing the construction and operation of the Project and its related facilities be issued to NGTL.

Stakeholder issues

The Woodland Cree First Nation (WCFN) expressed concerns in several regards with this Project. The WCFN was concerned that the Project would cross seven trap lines, (see footnote 4) six of which belong to the WCFN, and argued that the Project would reduce land available for its traditional activities, as well as increase access to its traditional territories. The NEB acknowledged these claims, but noted that all the previously mentioned mitigating measures, NGTL’s commitment to build and operate the pipeline in accordance with the National Energy Board Onshore Pipeline Regulations and industry standards and complying with the certificate conditions could effectively mitigate any adverse impacts on Aboriginal interests. Four of these conditions are specifically designed to address Aboriginal concerns: (a) No. 5 — related to outstanding traditional land use investigations; (b) No. 6 — regarding Aboriginal consultation reports; (c) No. 7 — Aboriginal monitoring plan; and (d) No. 8 — Aboriginal and local employment and contracting monitoring reports.

Board approval

With respect to environmental and socio-economic impacts, the NEB noted that “with the implementation of NGTL’s environmental protection procedures and mitigation measures, NGTL’s commitments to address impacts to the use of lands and resources for traditional purposes, and the conditions included by the Board in Appendices II and III, any potential Project impacts on Aboriginal interests are likely to be minimal and will be appropriately mitigated.” (see footnote 5)

The Board also concluded that the Project was in the Canadian public interest, that is, its benefits more than outweigh its environmental and socio-economic impacts.

Therefore, the Board recommended that the Governor in Council, under section 54 of the NEB Act, order the Board to issue Certificate GC-124 regarding the section 52 facility component of the Project.

NGTL also requested an order pursuant to section 58 of the NEB Act exempting NGTL from paragraphs 31(c) and 31(d) and section 33 of the NEB Act in respect of certain temporary infrastructure required for construction of the section 52 facilities. The Board also approved NGTL’s application for the order pursuant to section 58 of the NEB Act.

Departmental contact

For more information, please contact

Terry Hubbard
Director General
Petroleum Resources Branch
Natural Resources Canada
Telephone: 613-992-8609

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