Facilities – Pipeline Expansion
Pembina Pipeline Corporation (“Pembina”) applied to the AER pursuant to the Pipeline Act to construct and operate the following:
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A 609.6 millimetre (24 inch) pipeline; and
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A 406.4 millimetre (16 inch) pipeline,
(Collectively, the “Fox Creek Pipeline”).
The Fox Creek Pipeline would run parallel to one another in a common ditch for approximately 268 kilometres, carrying up to 420,000 barrels per day of high-vapour pressure hydrocarbons (“HVP”), low-vapour pressure hydrocarbons (“LVP”) and crude oil running from Pembina’s Fox Creek pump station at LSD 08-36-062-20W5M to the Namao Junction pump station at LSD 04-35-054-24W4M.
Pembina applied for 15 pipeline agreements in the area covered by the forested portion of the province of Alberta, that includes the mountains and foothills along Alberta’s Western boundary (the “Green Area”) for access to a permanent right-of-way (“ROW”). Pembina applied for approval of a conservation and reclamation plan including a construction and post-construction reclamation plan along the settled portion of the route within the province of Alberta, encompassing the populated southern, central and Peace River areas (the “White Area”).
The following parties raised concerns, were granted standing, and ultimately participated in the hearing before the AER:
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Alexander First Nation (“AFN”);
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Driftpile First Nation (“DFN”);
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Grassroots Alberta Landowners Association, representing a group of 38 landowners (“Grassroots”);
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Gunn Métis Local 55 (“Gunn Métis”); and
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D. Nielsen, (“Nielsen”).
Issues
The AER set out the following issues that were considered throughout the course of the hearing, pursuant to section 15 of the Responsible Energy Development Act, and section 3 of the Responsible Energy Development Act General Regulation:
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The social and economic effects of the Fox Creek Pipeline;
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The effects of the Fox Creek Pipeline on the environment;
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The interests of landowners;
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The impacts on landowners as a result of the use of the land for the Fox Creek Pipeline.
The AER further considered the following issues in the course of the hearing:
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Adverse impacts of energy resource activity on aboriginal rights not addressed in the above list;
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Whether the project provides for the efficient and orderly development of Alberta’s energy resources;
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Suitability of the proposed route;
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Whether the Fox Creek Pipeline can be constructed and operated safely; and
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Potential risks to or impacts on historical resources.
Orderly Development
The AER noted that the test it applied in considering this issue was two-fold. First it would consider whether the Fox Creek Pipeline was needed. Second, it would consider whether the Fox Creek Pipeline gave rise to any proliferation issues (i.e. that it is not duplicative of other facilities with sufficient capacity to transport the product).
Regarding the need, Pembina submitted that the liquids rich production in the Fox Creek area has grown, and that its current systems are operating at or near full capacity. Pembina also submitted that the Fox Creek Pipeline is supported by executed transportation agreements with shippers for approximately 360,000 barrels per day of capacity on the Fox Creek Pipeline, or 86 percent of project capacity.
None of the interveners presented evidence regarding the need for the Fox Creek Pipeline, or the proliferation of facilities.
The AER therefore held that Pembina’s Fox Creek Pipeline would provide for the orderly and efficient development of Alberta’s energy resources, and that the Fox Creek Pipeline would be in the public interest.
Stakeholder Engagement
Pembina submitted that it began stakeholder consultation in 2013, and had met with approximately 250 landowners requesting consent for surveys and various other permissions to define a potential route. Pembina also submitted that it consulted with affected industry parties, and conducted open houses in six different locations to discuss the Fox Creek Pipeline.
Nielsen submitted that he was not consulted with by Pembina with regard to potential rerouting of the Fox Creek Pipeline to the north of an existing ROW on his land.
Pembina submitted that it provided two alternate routes, one of which crossed Nielsen’s lands. Nielsen rejected any routes that crossed his lands.
The AER determined that the evidence was not sufficiently clear to draw a conclusion regarding the extent to which Pembina consulted with Nielsen on achieving a satisfactory route. The AER however found that Pembina did attempt to be responsive to Nielsen’s concerns, and that there was no evidence that Nielsen made efforts to meet with Pembina to resolve his concerns.
The AFN also raised concerns regarding Pembina’s consultation efforts.
Pembina submitted that it engaged in a number of meetings with AFN representatives, and investigated potential reroutes at the request of AFN leadership. However, after a breakdown in communication, Pembina submitted it was told not to contact AFN, except through its senior regulatory coordinator, and that all future meetings be attended by the president and chief executive officer of Pembina.
The AER determined that Pembina was not responsive to the AFN’s request. However, the AER held that the evidence demonstrated that Pembina engaged in efforts to consult with AFN, and the panel stated that it hoped the parties would continue to engage in a meaningful way.
Accordingly, the AER held that Pembina’s consultation efforts were adequate.
Emergency Response Plans
The AFN submitted that they had not been included in Pembina’s Emergency Response Plan (“ERP”) mandated by Directive 071: Emergency Preparedness and Response Requirements for the Petroleum Industry (“Directive 71”).
Pembina submitted that it had developed and filed an ERP pursuant to Directive 71, which was deemed technically complete by the AER on January 26, 2015.
The AFN submitted that it was a “local authority” under Directive 71, and ought to have been consulted. The AFN also submitted that Pembina was required to consider the AFN’s future land use operations in planning its ERP.
The AER clarified that Directive 71 requires “licensees” to include members of the public and local authorities within and adjacent to the planning zone. Therefore, the AER determined that AFN would be one of a number of local authorities that Pembina will have to notify and consult with in preparing its ERP for approval prior to commencing operation of the Fox Creek Pipeline. However, the AER held that Pembina is not required to base its ERP or emergency planning zone calculations on future land use, but noted that companies must update their ERP annually, so that plans can accommodate growth near facilities requiring an ERP.
Social and Economic Impacts
The AER noted that Pembina provided limited evidence on the economic and social effects of the project, noting that the majority of the evidence the panel found useful was elicited from written information requests and through oral examination concerning employment estimates, community investment, capital costs, and opportunities for First Nations.
Pembina estimated the capital cost of the Fox Creek Pipeline was approximately $2.4 billion. The panel noted that related expenditures from oil and gas producers expected to use the infrastructure were not provided.
Pembina provided letters of support from Woodlands County and Whitecourt, two communities that stated they expected to benefit economically from the construction and operation of the Fox Creek Pipeline.
Pembina submitted that it had spent $15 million to date to support local aboriginal businesses, but did not provide an estimate of total spending as part of its aboriginal procurement strategy for the Fox Creek Pipeline.
The AFN, DFN and Gunn Métis provided evidence that the Fox Creek Pipeline may alter the timing of harvesting activities, or inhibit the use of traditional-use areas for a period of time.
The AER found that such impacts on traditional use by first nations would be limited to the construction period, which it noted was temporary and imposed for safety reasons. The AER held that Pembina had also committed to mitigate any such impacts.
With respect to the post-construction period, Pembina submitted that incremental royalties from production that would otherwise be shut-in due to transportation constraints were an economic benefit due to the Fox Creek Pipeline. However, Pembina did not provide any specific amounts or estimates of such benefits.
Pembina submitted that the Fox Creek Pipeline would result in the creation of 12 to 15 full time jobs in the local area. Pembina also submitted that it expected to increase its charitable an non-profit investment in the local area by approximately $150,000 per year.
The DFN provided evidence of harmful economic effects on local trappers, who are required to pay fees to maintain trap lines, and that in disturbed areas, they are often not able to trap enough animals to cover their costs, but did not provide specific estimates of such impacts.
The AER held that any negative social or economic impacts from the Fox Creek Pipeline were expected to be short term, temporary and localized, and would be offset by short and long term positive regional and provincial economic effects.
Routing
Pembina submitted that it took into consideration the following factors to develop its preferred route:
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Avoiding residences and other developments;
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Crossing roads, highways and railways at right-angles;
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Minimizing the number of crossings;
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Avoiding wet, rocky or forested areas;
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Crossing rivers with stable banks and where the river is not likely to migrate over time;
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Following existing disturbances;
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Reducing construction by using temporary workspaces on existing disturbances; and
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Using as short and direct a route as reasonably possible.
The AER held that Pembina’s route selection criteria were appropriate.
Pembina submitted that after its review of route options, it preferred to parallel the Alliance Pipeline Ltd. (“Alliance”) pipeline for a significant portion of the route. Pembina submitted that paralleling its existing Peace pipeline would be problematic due to the proximity to residential access roads, residential developments and Highways 37 and 43, which would cause construction issues, and result in a greater number of road crossings.
Pembina submitted that the Alliance route and the Peace pipeline route were approximately equivalent in length, and Pembina preferred the Alliance route due to fewer construction constraints and fewer crossings.
The AER held that Pembina considered appropriate alternative routes, and that Pembina followed relevant and appropriate routing criteria for its applied-for route.
Safe Operation of the Fox Creek Pipeline
With respect to the safe operation of the Fox Creek Pipeline, the AER determined that the hearing participants did not raise specific issues related to the design of the Fox Creek Pipeline. Accordingly, the AER determined that upon review of the engineering and design of the Fox Creek Pipeline, that Pembina met or exceeded the regulatory requirements and applicable standards, for design and construction, leak detection, integrity management and valve placement.
The AER imposed a condition on Pembina to install additional block valves in the vicinity of the Paddle River to limit any potential damage in the event of an accidental leak, citing Pembina’s commitment to install an additional block valve on each pipeline at the Paddle River.
Environmental Effects
The Fox Creek Pipeline would traverse both the Green Area and the White Area. Pembina noted that the Fox Creek Pipeline had the potential to affect a number of components of the physical environment, including vegetation, terrestrial and aquatic species.
Pembina proposed to construct both pipelines of the Fox Creek Pipeline within a single ditch in a ROW that is 35 metres in width, with an additional 10 metres of temporary workspace.
Several interveners raised concerns about the width of the ROW, arguing that it was unnecessarily wide, and recommended that the width be reduced to 25 metres.
Pembina maintained that the 35 metre ROW would be necessary for long-term operations and pipeline integrity excavations throughout the life of the project. However, Pembina did narrow the ROW to 25 metres in areas where the proposed pipeline route paralleled existing ROWs for additional workspace.
Pembina submitted that it would not undertake ongoing vegetation management or brush control for tree species in key wildlife and biodiversity zones (“KWBZ”) following construction.
The AER held that it did not have specific requirements for ROWs for pipelines, but noted that it had the authority to direct the reduction of a ROW size where appropriate. The AER held that Pembina planned the ROW to ensure that pipeline integrity activities could be done safely, and accordingly accepted the ROW width for construction.
However, the AER also noted its concern for ongoing brush control over a 35 metre ROW, especially in the Green Area. The AER held that through the creation of a revised operation vegetation management plan, the long-term footprint of the Fox Creek Pipeline could be reduced.
With respect to routing options, Pembina submitted that it selected its preferred route partially with a view to using existing disturbances, corridors or ROWs and avoiding water bodies to the extent practical to reduce environmental impacts. However, Pembina submitted that it was not planning on reducing its ROW width in environmentally sensitive areas, due to its aforementioned integrity assessment requirements.
The AER found that Pembina’s overall mitigation efforts were reasonable, such as paralleling existing disturbances. The AER also encouraged Pembina to examine opportunities to narrow or not to clear the entire ROW, revegetate the ROW and other workspaces within the environmentally sensitive areas, or to consider other approaches to construction to further reduce environmental impacts.
Pembina submitted that with respect to wildlife, the Fox Creek Pipeline would traverse approximately 14.2 kilometres of KWBZ in the Green Area, and approximately 2.5 kilometres in the White Area, resulting in a total disturbance area of 41.9 hectares. In order to reduce impacts on waterways in KWBZs, Pembina proposed to use horizontal drilling techniques to avoid impacts to habitat in waterways.
The AER held that the horizontal drilling approach was reasonable, provided that Pembina replace any tree species cleared at the drilling entry and exit points.
The DFN raised concerns about several species of wildlife that would be impacted by the Fox Creek Pipeline. The DFN raised concerns that the proposed route traversed 81.4 kilometres of grizzly bear habitat.
Pembina stated that its use of existing disturbances would minimize the creation of linear disturbances and thereby limit further human access to the grizzly bear habitat. Pembina also committed to place barriers at existing access points to restrict access to the ROW.
The Gunn Métis and DFN submitted evidence that the construction of the Fox Creek Pipeline would cause habitat fragmentation, affecting game species such as moose, elk and grouse that are harvested by its members. DFN submitted evidence describing the difficulty in harvesting sufficient quantities of moose to support cultural activities.
Pembina submitted that it would conduct clearing and construction during winter, which would reduce the impacts on grouse nesting, and would verify the locations of salt lick locations used by moose and committed to ensure that effects on such locations are mitigated.
The AER held that it was satisfied that Pembina’s mitigation measures would minimize risks to wildlife, including the grizzly bear.
Landowner Impacts
The Grassroots group of landowners did not oppose the development of the Fox Creek Pipeline, but did have a large number of concerns.
Pembina stated that it typically enters into private agreements with landowners to develop appropriate strategies and mitigation measures, but stated that it had been prevented from meeting with most Grassroots members to view their lands.
The AER noted that many of the individual concerns raised by Grassroots are ones for which the AER had no specific requirements. However, the AER determined that appropriate mitigation measures were most effectively determined through on-site evaluation and direct discussions. Accordingly, the AER declined to rule on the concerns raised by landowners related to: depth of cover, tile drainage issues, access during construction, cattle crossings, reclamation of water sources for cattle, and microrouting issues, among others.
Pembina later filed a table of commitments in response to concerns raised by landowners, which the Grassroots members indicated were satisfactory upon initial review.
The AER therefore held that Pembina’s commitments to landowners were reasonably responsive to landowners’ site specific concerns and would minimize environmental impacts.
Aboriginal Impacts
The DFN and Gunn Métis submitted that the project should not be approved, citing its evidence of impacts on traditional land use given in oral testimony. The DFN submitted that the cumulative effects of other resource development within their territory had created significant impacts on traditional land use, and expressed concerns about the impacts of a spill on their lands. The DFN submitted that the AER must take steps to ensure that the project does not take up land in its traditional territory in a manner that would impair the quality or nature of its lands or the ability of those lands to support the meaningful exercise of Treaty rights held by DFN.
Pembina did not respond to DFN’s arguments, stating only that Pembina should not be made to compensate or answer for the fact that existing development has negatively affected DFN’s ability to exercise its rights closer to its reserve lands. Pembina also submitted that there was no evidence on the record that demonstrated that the impacts to the DFN could not be mitigated.
The DFN requested a number of conditions to the Fox Creek Pipeline, which Pembina substantially committed to provide to the DFN, including advance notice of construction activities, further consultation, and establishing buffer zones around environmentally sensitive areas.
The AER concluded that there may be short-term localized impacts, caused mainly by construction of the Fox Creek Pipeline, which may impair the DFN’s ability to carry out traditional practices. The AER concluded that some impacts may be appropriately mitigated, and ordered Pembina to conduct post-construction monitoring of the effectiveness of its reclamation and revegetation methods for the recovery of traditional plant ecosystems.
The AER declined to impose a condition on Pembina to work with a mutually agreed upon ethnobotanist with the Gunn Métis, noting that this would be duplicative of the conditions it already imposed with respect to vegetation management and post-construction monitoring.
Order
In conclusion, the AER held that the Fox Creek Pipeline was needed, that it could be constructed and operated safely, and was environmentally responsible. The AER held that the impacts on landowners and aboriginal peoples could be mitigated to a level consistent with responsible development.
Accordingly, the AER approved the Fox Creek Pipeline on the following conditions:
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Pembina must reduce the permanent ROW on the Nielsen property from 35 meters to a maximum of 25 meters;
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Pembina must install additional block valves to reduce the potential release volumes into the Paddle River;
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Pembina must submit a vegetation management control plan for review within 120 days of the issuance of this decision; and
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Pembina must comply with other conditions as set out by Alberta Environment and Parks related to KWBZs.
