As energy industry insiders know, there’s much more to Canada than frigid winters, red Mountie serge, maple syrup and hockey. Today, the country is building a significant reputation on the world stage as it positions itself to become a key international energy supplier.

But with the approval of each major pipeline project or liquefied natural gas (LNG) export license comes scrutiny from both the public and private sectors. Enter the National Energy Board (NEB), which is charged with ensuring proposed projects under its jurisdiction are carried out responsibly.

Abundant supplies of crude oil and natural gas are presenting new opportunities for Canada, and the NEB, based in Calgary, Alberta, is bracing itself for a busy year as requests to build new midstream infrastructure come flooding in. With those applications comes a host of challenges, says NEB Chair Gaétan Caron.

“Canada is a country that is growing,” Caron tells Midstream Business. “The economy is growing, there are more natural resources available, and this requires more infrastructure. We expect to be continually busy reviewing applications, which we have the freedom to approve or deny or recommend for denial to the federal cabinet.

“We also need to respond to the growing interest in our work. Canadians are well informed, their attitudes are shifting and there is an increased expectation of environmental accountability. There are good questions being asked all the time about pipeline safety,” he adds.

The NEB works to satisfy a variety of interests by ensuring midstream infrastructure is constructed in an environmentally responsible and safe manner. As the industry becomes more dynamic, so does the role of Canada’s energy watchdog. It continues to perform the critical task of regulating the international and interprovincial aspects of the energy industry, says Canada’s Department of Natural Resources Canada (NRCan). It is doing so during a time of tremendous growth and change.

“There is a strategic imperative for Canada to diversify its energy markets that will require it to expand its pipeline network,” Jacinthe Perras, an NRCan spokeswoman, tells Midstream Business.

“Existing pipeline infrastructure is nearing capacity, and the Canadian economy is losing tens of billions annually as a result of the discount at which Canadian crude oil sells in the U.S. Midwest compared to the international price.

“A key factor in Canada’s long-term economic prosperity and standard of living will be ensuring safe and reliable access to new markets for Canada’s growing oil and gas production,” she says.

Streamlined process

While it can take several years to obtain project approval in the U.S.—even aside from TransCanada’s Keystone XL pipeline extension proposal—regulations are in place to prevent major applications from stalling in Canada. New rules under the NEB Act make it a legislative requirement to process major project applications within 15 months of the time the NEB determines it has a complete application. For pipelines, “major” is classified as more than 40 kilometers (25 miles) long.

Projects involving less than 40 kilometers of new pipeline are reviewed under section 58 of the NEB Act, and the decision to approve or deny such projects is entirely up to the NEB.

The time it takes to process each application is contingent on a myriad of factors.

“It depends on complexity, it depends on safety and environmental risks and it depends on people who are directly affected by a project or have relevant information that will help the NEB make its decision,” says Caron. “If they have something to say, the board always listens to both sides of a project—those who support it, those who might oppose it and people who question it.”

With the exception of the Mackenzie Gas Project and Northern Gateway, which included a parallel joint review panel, all NEB hearings during the past eight years have been completed within 15 months from the issuance of the hearing order to the release of the reasons for decision.

Every year, the NEB considers an average of 260 applications for pipelines, power lines and tolls or tariffs. It received 44 export and import applications last year as well.

After the NEB issues a recommendation on whether a major pipeline project should proceed, the Governor-in- Council, the executive branch of Canada’s government made up of the federal cabinet, must make a final decision on the project, on the recommendation of Minister of Natural Resources Joe Oliver. After receiving the NEB’s recommendation, the Governor-in-Council has three months to make a decision.

“The Governor-in-Council could either direct the NEB to issue a certificate, dismiss the application or send the recommendations or any of the terms and conditions back to the NEB for reconsideration,” says Perras. “In the case of the Northern Gateway Pipelines Project, the Government of Canada will consult with aboriginal groups and thoroughly review the NEB’s recommendations before making a final decision on the project by June 2014.”

Enbridge Inc. has proposed the 1,177-kilometer (730- mile), C$6.5 billion Northern Gateway system to move heavy oil sands production west to the Pacific Coast at Kitimat, British Columbia, for export. A parallel line would move imported condensate east to thin the heavy bitumen produced in northern Alberta.

A final approval by the Governor-in-Council is also required before any long-term natural gas or LNG export license issued by the NEB can come into effect.

Regulator harmony

Though some U.S. industry executives have complimented Canada for an approval process they view as more streamlined, Caron disagrees. He says the two countries’ regulations are more similar than they are different. The countries often work together and share the same goals.

Canada’s relationship with U.S. regulators is not merely a paper exercise. Every year, NEB has annual reviews with the Federal Energy Regulatory Commission (FERC) and the federal Pipeline and Hazardous Materials Safety Administration. The NEB has memorandums of understanding with several U.S. bodies, including FERC and the Bureau of Safety and Environmental Enforcement of the Department of the Interior.

“We are very close to U.S. regulators,” says Caron. “Our staffs meet regularly. Much of the discussion is about safety, environmental protection and how we can have regulatory schemes that resemble each other. Harmony is a word I would use to describe how we work together. We have the same goals, slightly different [means] and work toward the same outcomes,” he adds.

If Canada appears more streamlined, says Caron, it is simply a matter of the language it uses and the adaptive style of its regulations. However, that doesn’t make Canada’s evaluation process any easier.

“The requirements for the filing of a complete application are very stringent, comprehensive,” he says.

Increasingly, the NEB is becoming tasked with processing applications to transport gas abroad. These requests come as Canada’s gas supply exceeds national demand, meaning excess gas is likely to find a home in Europe or Asia.

In 2013, the NEB approved five, 25-year LNG export licenses. LNG Canada Development Inc., Prince Rupert LNG Exports Ltd., Pacific NorthWest LNG Ltd., WCC LNG Ltd. and Woodfibre LNG Export Pte. Ltd. projects received approval.

The NEB reviews LNG export applications on a caseby- case basis. When making its decision, one of the main considerations is that North America’s gas resource base can accommodate Canadian demand, the requested amount of LNG exports and potential demand increases.

“We ask ourselves the very same question when we deal with an application,” says Caron. “We need to be satisfied before we approve the application that the gas resource base in Canada as well as its connections with North Americans (is sufficient).”

Facing criticism

Like most energy-related entities, the NEB has its critics. Last December, Canada’s largest energy sector union, Unifor, accused the board of being “out of touch with Canadians.” It lashed out at the board after the NEB recommended approval of the controversial Northern Gateway project.

The NEB approved the projects with conditions. However, Unifor National President Jerry Dias said the conditions won’t solve the project’s key problems.

“In spite of overwhelming opposition from Canadians, the National Energy Board has opted to approve the Northern Gateway Project,” said Dias. “The NEB has shown just how out of touch it is with Canadians. It is once again ignoring very valid concerns.”

However, Caron says the NEB encourages public opinions and takes them into account when making its decisions.

“We always welcome feedback about how we perform,” he says. “We’re delighted to answer questions when people have doubts. We have Canadian citizens and other citizens who are well-informed and we like to know what they think. We embrace it any time, whether it is positive or critical.”

Safety first

One of the NEB’s main mandates is to ensure pipeline activity is carried out in a safe and environmentally sound manner. If statistics are any indication, the board appears to be accomplishing its goal. It has seen a steady decrease in workplace injuries and fatalities have averaged one per year, mostly related to motor vehicle accidents.

Today, the NEB is challenged to think more creatively in promoting safety and environmental compliance, says Caron.

“As a safety regulator, we’re never totally happy with what we can do,” he says. “One thing that people ask is what keeps me awake at 4 a.m., when I wake up and can’t fall back asleep. It’s always the same answer. I say ‘What about those ideas we haven’t had yet that could in fact protect a life, prevent an injury or protect a piece of the environment? What is it we haven’t thought of yet that we could do?”

“Therefore we are totally committed to improving and encourage people to give it their best shot in being creative and effective.”

While the NRCan is eager to expand markets for its resources, Perras says it knows it has to do so responsibly.

“The bottom line is that no major pipeline projects will proceed unless it is safe for Canadians and safe for the environment,” she adds.