1. Pipeline Regulations Susan Miller Enbridge Technology Inc.
Vice President, Technology - International
October 2005

2. Presentation Outline 1. Canadian & USA Pipeline Integrity Regulations
2. Standards and Codes
3. Canadian Regulatory Developments

3. Canadian Regulations Federal Regulations Provincial Regulations
“Onshore Pipeline Regulations, 1999 (OPR-99)”
Governed by the National Energy Board Act of Canada (“NEB Act”)
Applicable to all cross-provincial or cross-border pipelines that transport hydrocarbons that are not in an offshore area
Provincial Regulations
Each Province has pipeline Act and Regulations applicable to all intra-provincial pipelines
Energy Utility Board of Alberta (“EUB”)
Oil and Gas Commission of British Columbia (“OGC”)
Ministere des Ressources Naturelles de Quebec
Ontario Energy Board (“OEB”)
others
There are two levels of regulators in Canada:
1) Federal (National Energy Board)
- as per slide
2) Provincial (intra-provincial)

4. Canadian Regulations National Energy Board (“NEB”) Responsibilities
Regulatory
Design, construction and operation of pipelines (includes environment and safety)
Transportation, tolls and tariffs for pipelines
International trade in oil, gas and electricity
Oil and gas regulation
Advisory
Monitor energy sector
Advice to federal government
Issues public reports
The National Energy Board regulates over 60,000 kms of oil and gas pipelines that cross provincial and international boarders.
Its two key responsibilities for the public and the oil and gas industry are as follows: …………as per slide

5. Canadian Regulations NEB Act proclaimed in November 1959
NEB Regulations ensure engineering, safety and environmental requirements are met. The board audits and inspects the construction, start-up and operation of pipelines.
The NEB shares responsibility with the Transportation Safety Board for incident investigation of pipelines.
Through the investigation of significant pipeline incidents, regulations have been modified.
Recent investigations (NEB Stress Corrosion Cracking Inquiry) resulted in new additions to the pipeline regulations in the area of pipeline integrity management.
As per slide

6. Pipeline Integrity Regulation - National Energy Board Requirements
NEB, Section 40 and 41of OPR-99:
A company shall develop a pipeline integrity management program.
If defects are found in excess of that allowed by CSA Z662, “Oil and Gas Pipeline Systems”, then the company shall document the particulars, its likely cause, and corrective action.
The company shall be
prepared to submit this
documentation to the
Board.
As mentioned by the National Energy Board guidance notes for Section 40,
“A company should take reasonable steps to maintain an effective Integrity Management Program and to address the integrity of its pipeline system throughout this program.”
“Pipeline systems should be inspected periodically and repaired if necessary…”

7. NEB Integrity Management Program Requirements
Guidance Notes: The Integrity Management Program includes the following four components:
Management System.
Working Records System.
Condition Monitoring
Program.
Mitigation Program.
The key components of and Integrity Management System include a working records management system, condition monitoring and mitigation.
The following four-slides will discuss these four components of the NEB Integrity Management Program.

8. Management System
The integrity management program’s ‘management system’ should consider:
the program scope, description of pipelines, goals and objectives;
the organizational lines of responsibility;
the training and qualifications of management and staff;
the qualifications of consultants and contractors;
the methods of keeping abreast of industry practices and research;
change management;
measure the effectiveness of the program.
as per slide

9. Working Records System
The integrity management program’s ‘working records system (WRS)’ should consider:
the requirements of applicable Standards such as CSA Z662;
the maintenance of a WRS that allows access to historical pipeline records;
the identification of applicable Standards and Codes;
the documentation of condition monitoring and mitigation programs;
reviews of the integrity management program’s effectiveness.
as per slide

10. Condition Monitoring Program
The integrity management program’s ‘condition monitoring program’ should consider:
the use of internal in-line inspection tools and data;
an engineering assessment of facilities to address pipeline integrity;
the use of risk assessment methods;
where appropriate, monitoring programs for slope movements, river crossings, depth of cover, etc.;
a program to minimize third party damage;
the procedures used to track, analyze and trend the condition of the pipeline.
as per slide

11. Mitigation Program
The integrity management program’s ‘mitigation program’ should consider:
the criteria and procedures for defect assessment and prioritization of repairs;
the criteria and procedures used for
pipe replacement (cut-outs),
repair (grinding, sleeve, re-coating),
hot work, hot taps, welding and maintenance welding,
excavation procedures,
hydrostatic testing,
operating pressure reductions (temporary or permanent);
an outline of short-term (1-3 yrs.) and long-term (4-10 yrs.) mitigation program plans and priorities.
as per slide

12. Provincial Regulations - Alberta’s EUB
Alberta’s Energy Utility Board (EUB) Pipeline Integrity Requirements:
Alberta Pipeline Act and
Regulations adopts the latest
edition of CSA Z662.
The CSA Standards are
supplemented in the
Regulation to address specific
Alberta needs.
The EUB is responsible for the regulation of pipelines that reside inside provincial borders. Integrity requirements are set forth in the Alberta Pipeline Act and reference CSA Z662.

13. Provincial Regulations - Alberta’s EUB
To address Pipeline Integrity, the EUB expects the pipeline operator to:
Understand and comply with the EUB requirements and expectations.
Anticipate pipeline integrity threats.
Address such threats and document decisions and actions.
Have available such documentation for evaluation by the EUB.
As per slide

14. Canadian Standards Association
CSA Standard Z662-03, “Oil and Gas Pipeline Systems”
CSA Standard Z , “Steel Pipe”
CSA Standard Z , “Steel Fittings”
CSA Standard Z , “Steel Flanges”
CSA Standard Z , “Steel Valves”
CSA Standard Z , “External Fusion Bond Epoxy Coating for Steel Pipe”
CSA Standard Z , “External Polyethylene Coating for Pipe”

15. Canadian Standards Association
CSA Z662-03, “Oil and Gas Pipeline Systems”:
Covers the design, construction, start-up, operations and maintenance of oil and gas industry pipeline systems;
Includes offshore and onshore pipelines, tank farms, pump / compression stations, measuring stations.
Establishes essential requirements and minimum standards.
Closely referenced throughout NEB’s OPR-99 and other provincial acts / regulations.
Z662 Standard is intended to establish the essential requirements and minimum standards for the design, construction and operation of oil and gas industry pipeline systems.
This Standard is reference for compliance standards in many instances throughout the National Energy Board Regulation, OPR-99.
Both of these documents, OPR-99 - the Regulation, and Z662 - the Standard, are integral to adhere to for a Company’s overall Pipeline Integrity regulatory compliance in Canada.

16. Other Integrity Related Standards and Codes used in Canada
NACE International - The Corrosion Society (NACE)
corrosion control, cathodic protection
American Petroleum Institute (API)
tanks, line pipe, inspection
American Society of Mechanical Engineers (ASME) International
B31.4, B31.8, B31G
Pipeline Research Council International (PRCI)
corrosion evaluations (RSTRENG)
ASTM International
materials, testing

17. Industry Associations
Canadian Energy Pipeline Association (CEPA)
CEPA represents the 12 major Canadian transmission pipeline companies on key pipeline issues (Enbridge a member)
Committees established to monitor and develop areas such as HSE, Land and ROW, Technical, Tolls, Pipeline Integrity.
Canadian Association of Petroleum Producers (CAPP)
Represents over 140 oil and gas producers in Canada, small pipeline companies, associate members
Committees established in similar areas to CEPA
CEPA works closely with members, governments, communities and stakeholders to analyze key issues and represents members interests for the pipeline transmission industry in Canada.
The Canadian Association of Petroleum Producers (CAPP) is the voice of the upstream oil and natural gas industry in Canada. CAPP represents 140 member companies who explore for, develop and produce more than 97 per cent of Canada's natural gas, crude oil, oil sands and elemental sulphur.

18. Other Canadian Industry and Government Representation
Workshops and Seminars
NACE Pipeline Integrity Management Seminar
Banff Pipeline Integrity Workshop,
CSA Z Seminars, OPR-99 Seminars
Conferences
ASME International Pipeline
Conference (“IPC”)
Committees
CSA, NACE, API, ASME,
PRCI (AGA), CGA, etc.

19. USA Regulations
In the USA, transmission pipelines are regulated by the Department of Transportation’s Office of Pipeline Safety (OPS)
The mission of OPS is “To ensure the safe, reliable and environmentally sound operation of the nation’s pipeline transportation system.”

20. USA Codes
The governing code for all gas and hazardous liquid pipelines under the jurisdiction of the OPS is the Pipeline Safety Code of Federal Regulations (CFR) Title 49, part 186 – 199.
Effective February 15, 2002 for liquid lines and February 14, 2004 for gas lines, all operators must have Integrity Management Programs in place.

21. USA Integrity Management Programs
Key features are:
Classification of high consequence areas (HCA) that require accelerated or enhanced assessments
Documentation of the basic framework and process for continual improvement of an Integrity Management Program
Operators must be able to satisfy government auditors that the program complies with all applicable regulations
The government’s and industry’s desire to increase assurances to the general public that gas and liquid pipelines are safe

22. USA Integrity Management Programs (IMP) for Gas Pipelines
There are 16 essential elements that must be included:
Identification of all high consequence areas
Baseline assessment program
Identification of possible threats to each segment
A direct assessment plan
Provisions for remediating conditions found during assessments
A process for continual evaluation and assessment
A confirmatory direct assessment plan
A process to identify and implement mitigation programs

23. USA IMP for Gas Pipelines (cont’d)
There are 16 essential elements that must be included:
A performance plan using specific target measures
Record keeping provisions
Management of change process
Quality Assurance process
Communication plan
Procedures for providing regulators with copies of risk assessments or the IMP
Procedures to minimize environmental or safety risks during integrity assessments
A process to ensure continued assessment of possible high consequence areas.

24. USA IMP for Hazardous Liquid Pipelines
There are 8 essential elements that must be included:
Identification of all high consequence areas
Baseline assessment program
A process for continual evaluation and assessment
An analytical process that integrates all available information about integrity and failure consequences
Repair criteria
A process to identify and evaluate the measures chosen to protect high consequence areas
Methods to measure the IMP’s effectiveness
A process for review of results and data by a qualified individual

25. Comparison of Regulatory Styles
Self audit
Company determined
Outcomes
Self regulation
Objective criteria
Risk Based
Measures
Performance based
Professional
Judgement + acceptance
criteria
Risk informed
Goals
Goal Oriented
Check List
Deterministic
Means
Prescriptive
Compliance
Obtained by
Risk Approach
Defines
Regulatory Style
(Vollman IPC 2000)

26. Prescriptive versus Goal-based Regulations
Prescriptive regulations:
Specify the methods to be used to attain a required level of safety or environmental protection. No alternatives.
Goal-based regulations:
Specify the goals or results which must be achieved regarding safety and environmental protection. Methods employed are tied to individual circumstances.
Goal-based regulations:
Regulated companies responsible for meeting the regulation
Flexibility to use technology advances, alternative approaches, and innovation
Reliance on audits and inspections

27. An example of a Goal-Oriented Regulation:
Onshore Pipeline Regulations-99
Regulatory requirement:
“the pipeline shall develop a pipeline integrity program” Section. 40
Goal:
“to ensure the pipelines are suitable for continued safe, reliable and environmentally responsible service.”
Guidance Note:
Should have in place a management system, a working records management system, proactive condition monitoring, and mitigation.
Since 1999, the NEB has moved towards a more ‘goal-oriented’ regulatory environment.
The regulations provide the framework and goals
They promote or rely on consensus standards, such as CSA Standards, for clarity and consistency.
An example of a goal-oriented regulation is as follows:
as per slide
It is important to note that a “goal-oriented” regulation can be thought of as a hybrid between ‘Prescriptive’ and ‘goal-based’ regulation.
Note: Goal-oriented is a hybrid approach between Prescriptive and Goal-based (Performance based).

28. Canadian Regulatory Developments, Goal-Based Regulations
Canadian Regulators will move towards goal-based regulation.
Is one that specifies measurable outcomes or performance goals
Has certain elements that need to be covered
Requires a company to keep documentation
Needs to be clear and meaningful
Requires cooperation between regulated companies and the regulator
In the future, there could be less NEB regulations because of the move towards goal based regulation.
In the evolution of regulations, you go from a regime of little to no regulations to prescriptive regulations. The regulations may have conservative statements that address the most common cases. However, the special cases are often not addressed. The intent of goal based regulation is to address the special cases. With goal based regulations, companies have the ability to tailor their management systems to meet their special case.

29. Canadian Regulatory Developments, Goal-Based Regulations
Goal or performance based regulations mean the industry must take more responsibility in meeting the intent of regulations
Industry and regulators need a common understanding of what the goals are and how these goals will be met
For the most part, industry welcomes goal based regulations because everyone has different and unique operating conditions.
Other potential benefits of goal based regulations includes:
Regulations may stay current longer,
Ownership of compliance is with the regulated companies,
Ease of understanding.

30. Goal-Based Regulations
Issues to be Resolved:
No clear definition on goal-based regulation.
How do we develop meaningful performance measures?
How can compliance and performance be measured? Are goals achieved?
Public perspective and input on goal-based regulation is required.
Are companies really prepared to take on more responsibility?
No clear definition on goal based regulation.
- to be developed.
How do we develop meaningful performance measures?
Meaningful performance measures must be developed to determine if the intent of the goal based regulation has been achieved.
How can compliance and performance be measured?
Defining the goals should be a joint effort between industry, the regulators and the public. Other goal based models (British, ISO 9000, etc.) should be consulted when developing a goal based model.
Public perspective and input is required.
- We see a lot of interest in the community with respect to the safety of pipelines. People have many specific questions and want to see measurable results. We must maintain or increase public confidence in what we do; they must be involved in the process.
Are companies prepared to take on more responsibilities?
Goal based regulations require the company to assume more responsibility for compliance. However, there may be times where goal based regulation may be appropriate to address their unique issues.

31. Thank You