Private ownership of pipelines – safer or not? Part 2

Last week, we explored the reasons for private versus public ownership of pipelines. In Canada, pipelines are owned by private companies and this week we’re going to take a look at what that means for safety and sustainability.

To learn more, we spoke again with Glenn Booth, former chief economist and business leader with the National Energy Board, and an independent energy consultant.

Glenn Booth

Q: Do private companies care about safety in the same way that the government would?

Glenn: No pipeline company wants to have a spill on their system – it is costly, they are liable for damages and it hurts their reputation. And, like all of us, people who work for pipelines want a safe, clean environment for both themselves and their children.

Q: Does regulation help protect public safety?

Glenn: As I said above, pipeline companies are motivated to run safe systems, but it is still prudent to ensure that there is a public body looking over them to ensure that they take all steps to maximize safety. Strong regulation ensures that companies pursue best practices with respect to safety.

The record indicates that Canadian pipelines have been operating very safely over the past 60 years, and there is no evidence to suggest that public ownership would result in safer pipelines. A couple of points to bear in mind when it comes to regulation are:

  • Regulators are able to approve expenditures that promote pipeline safety, and allow pipeline companies to earn a return on those investments.
  • Most Pipelines today operate under incentive agreements, and every agreement on federally-regulated pipelines in Canada has to be approved by the National Energy Board. They ensure that the agreements have the appropriate safeguards built into them. The NEB would not approve incentive agreements that undermine pipeline safety. The same goes for pipelines regulated at the provincial level.

Q. Are regulators successful in enforcing safety on pipelines?

Glenn: Definitely – regulators focus on safety as a primary concern, and then they conduct inspections, audits and investigations to ensure that the regulations are being met. Canada has an exceptional safety record. Consider this:

  • There have been no real major oil spills on a Canadian pipeline on the scale of some of the accidents that have occurred in the U.S.
  • There has never been a Canadian public fatality as a result of an oil spill in the NEB’s entire history, dating back to 1959.
  • In the first decade of this century (2000 – 2009), the average spill rate per year, on all federal pipelines, was 642 m3, (642,000 litres), a miniscule quantity of oil compared to the millions of barrels transported every year. Further, the majority of oil was contained on land owned by the pipeline companies.

Safety measures are in place

Canadian pipeline operators are subject to comprehensive and stringent regulation. And the measures in place to enforce those regulations have resulted in Canada’s extremely high safety record. Even though pipelines will always continue to strive for zero incidents, I believe that regulation is doing its job to protect Canadians and our environment.

You can learn more about pipeline safety performance in our 2015 Pipeline Industry Performance Report.

The Canadian Energy Pipeline Association represents Canada’s transmission pipeline companies who operate approximately 117,000 kilometres of pipelines in Canada. In 2014, these energy highways moved approximately 1.2 billion barrels of liquid petroleum products and 5.4 trillion cubic feet of natural gas. Our members transport 97 per cent of Canada’s daily natural gas and onshore crude oil from producing regions to markets throughout North America.