Community Discussion Presentation
Energy East Consultation and Review
Part Two
January 2015

1. Background and Context for Today’s Meeting
• Role of the OEB
• TransCanada’s proposed Energy East Pipeline Project
• What the OEB was asked to Consider (Impacts and Principles)
• National Energy Board and OEB Processes
2.
OEB’s Approach: A Two-Part Process
• Part One and Key Observations
3.
OEB’s Technical Advisors and Preliminary
Assessments
4. Next Steps
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• The Ontario Energy Board (OEB) has regulatory oversight of the Ontario natural gas and electricity sectors.
• The OEB is supported by expert staff in the areas of regulatory economics, finance, energy pricing, accounting, engineering, law, and environmental issues.
• In November 2013, Ontario’s Minister of Energy asked the
OEB to examine and report on TransCanada’s proposed
Energy East Pipeline from an Ontario perspective.
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TransCanada’s proposed
Energy East Pipeline
On October 30, 2014, TransCanada filed its application with the National
Energy Board to move forward on its Energy East Pipeline:
• ~$12B project to transport crude oil from Western Canada to Eastern
Canada (New Brunswick & Québec)
• Conversion of ~3,000 km of natural gas pipeline
• Construction of ~1,600 km of new pipeline (~1,600 km includes 100 km of lateral and interconnections)
• Construction of new pump stations
Proposed Project in Ontario:
• Conversion of ~1900+ km of natural gas pipeline
• Construction of ~100+ km of new pipeline
• Construction of ~30 new pump stations
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TransCanada’s Proposed Route in Ontario
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The OEB is Not the Decision Maker,
The National Energy Board Is
The federal government makes the final decision about whether the Energy East Proposal can go ahead
• The National Energy Board is now in its hearing process.
• The National Energy Board will review the application and submit a report to the Federal Government (Cabinet) that sets out recommendations and conditions regarding the proposed Energy
East Pipeline.
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Impacts the OEB was asked to Consider
1. The impacts on Ontario natural gas consumers in terms of prices, reliability and access to supply, especially those consumers living in eastern and northern Ontario
2. The impacts on the natural environment and pipeline safety in Ontario
3. The impacts on local communities and Aboriginal communities in Ontario
4. The short and long term economic impacts of the project in Ontario
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Six Principles the OEB was asked to Consider
1.
Pipelines must meet the highest available technical standards for public safety and environmental protection;
2.
Pipelines must have world leading contingency planning and emergency response programs;
3.
Proponents and governments must fulfil their duty to consult obligations with Aboriginal communities;
4.
Local communities must be consulted;
5.
Projects should provide demonstrable economic benefits and opportunities to the people of Ontario, over both the short term and long term; and
6.
Economic and environmental risks and responsibilities, including remediation, should be borne exclusively by the pipeline companies, who must also provide financial assurance demonstrating their capability to respond to leaks and spills.
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NEB Review Process OEB Consultation Process
GRAPHIC TO BE UPDATED
Participation in the OEB community discussions does not constitute participation in the
NEB process and is not a substitute for any duty to consult with First Nations and Métis communities that may rest with the federal government or others.
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OEB’s Approach: A Two-Part Process
Part One – Impacts Important to Ontarians and Aboriginal
Communities
• Public, First Nations & Métis, Stakeholders’ input sought on impacts.
• Technical Advisors generate background report to help OEB understand the impacts.
Part Two – OEB’s Understanding of Impacts
• Technical Advisors share preliminary assessment of TransCanada’s application in light of Part One f eedback and Minister’s six principles.
• Further feedback sought from Public, First Nations & Métis, and
Stakeholders.
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Part One
Approximately 2,500 people participated in Part One, including:
 26 Organizations at the Province-Wide Stakeholder Meeting
 780 Participants at the Community Discussions
 40 Local Presentations at the Community Discussions
 239 Written Submissions received
 1212 Form Letters/Petitions received
 70 Participants at the First Nations & Métis Community Discussions
Academic Community
Agriculture
Business
Community Associations
Construction
Electricity Distributors
Environment Organized Labour
First Nations & Métis Communities
Public Health
Large-Volume Gas Users
Religious Institutions
Landowners
Residential Gas Consumers
Mining
Social Justice
Municipal Government
Tourism
Oil/Gas Industry
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Key Observations from Part One –
Community Discussions
• Adverse impacts on water and other environmental risks.
• The importance of jobs and other economic impacts.
• A range of confidence in pipeline safety.
• Interest in a new national energy strategy and concern about climate change.
• Impacts on access to supply and natural gas prices.
• Process concerns.
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Key Observations from Part One –
First Nation and Métis
• Treaty and Aboriginal Rights (including Duty to Consult and
Accommodate, and Traditional Land Use Practices).
• Pipeline safety and environmental protection.
• NEB timeline and impact on meaningful participation.
• Proximity of proposed route to wetlands and waterways.
• Limited short and long-term benefits.
• Revenue sharing opportunities.
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The OEB’s Technical Advisors
The OEB has retained a number of Technical Advisors to assess
TransCanada’s application:
• Natural Gas Impacts – Elenchus, Ziff Energy
• Economic Impacts – Mowat Centre
• Climate Change – Navius Research
• Pipeline Safety and Integrity, and Natural Environment
Considerations – DNV GL
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Work of OEB’s Technical Advisors
• TransCanada filed its application on October 30, 2014 and additional technical materials will be filed with the NEB over the coming months.
• The OEB’s Technical Advisors are reviewing the application to assess how it addresses the four areas of potential impacts identified by the Minister, as well as the potential impacts identified in Part One by local and Aboriginal communities.
• The Technical Advisors will also consider the Minister’s six principles in assessing pipeline projects.
• The Technical Advisors have begun their work based on the information that is available to them, and today will share their preliminary assessment for discussion and feedback.
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Preliminary Assessment – Economic
Impacts
• Economic benefits are expected from the Energy
East project but TransCanada’s estimates are likely inflated.
• Results from TransCanada’s economic models only show benefit of the spending, and do not consider other costs, broader policy issues, or externalities.
• Local benefits are expected but the benefits may be small, especially on the section in northern
Ontario that is converted.

Preliminary Assessment – Climate Change
• Impact in Ontario is likely to be minimal as main new source of emissions is from the operation of the pipeline.
• Will likely increase emissions from “well-to-tank” (i.e., emissions from oil extraction, oil transport and petroleum refining) in the rest of Canada, but impact is likely to be relatively modest.
• Increase in Canadian GHG emissions from “well-to-tank” are mostly offset by a decline in the rest of the world.
• Increase in global emissions from final consumption (“tank-towheels”).

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1. Background
• Who We Are
• What the OEB Asked us to Do
• Approach to the Assessment
2. Pipeline Integrity
3. Emergency Management
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DNV GL is a leading technical advisor to the global oil and gas industry, the world’s leading ship and offshore classification society, and a leading expert for the energy value chain including renewables and energy efficiency. Operating in more than 100 countries, our
16,000 professionals are dedicated to helping our customers make the world safer, smarter and greener.
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The OEB retained DNV GL to provide independent expert advice on the pipeline safety considerations that relate to the Energy East Pipeline project.
Our work focused on two main aspects of pipeline safety:
• Pipeline integrity.
• Emergency management.
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• Consider risk:
– Probability of failure (Pipeline Integrity).
– Consequences (Emergency Management).
• Consider principles in Minister’s letter:
– Pipelines must meet the highest technical standards for public safety and environmental protection.
– Pipelines must have world leading contingency planning and emergency response programs.
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Factors that affect probability of a pipeline failure:
• Threats (failure modes) to the pipeline.
• Measures for managing threats.
Relevant elements of Energy East application:
• Mechanical properties of the pipe.
• Pipe manufacturing process.
• Coating system.
• In-line inspection.
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• The specifications for the new pipeline meet or exceed the requirements of the national pipeline standard.
• The existing pipeline inherently has a higher resistance to fracture initiation and propagation than would a new oil pipeline manufactured in accordance with the current pipeline standard.
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100% of the existing pipeline was manufactured using the double submerged arc welding (DSAW) process.
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~ 95% of the existing pipeline is coated with
Fusion Bond Epoxy
(FBE).
~ 5% is coated with double wrap polyethylene coating.
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46 47 49 50 51 52 53A 54 55 56 57 58 59 60 61 62 65 66 67 69 71 72 73 74
74 75 76 76A 77 78 79 80 82 83 84 85 86 87 88 89 90 92 93 95 97 99 100 101
101 102 103 104 105 106 106A 107 108 109 110 111 111A 112 114 115 116 1201 1202 1203 1204 1205 1206 1207
1208 1209 1210 1211 1212 1213 1214 1215 1216 1217 1218 1219 1401
Disclaimer: Pump Station locations are not finalized
#
Legend
Line 100-4
Line 100-3
Line 1200-2
Taped Section
Compressor Station
Proposed Pump Station
1207
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MLV 58-59
MLV 60-61
MLV 74-75
Tape-Coated Sections
MLV 76A-77
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Modern in-line inspection tools can reliably detect and size corrosion.
Environmentally assisted cracking (SCC) are more difficult to accurately detect and size.
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Preliminary Assessment:
The primary integrity-related issue for the Energy East pipeline in Ontario is the potential for stress corrosion cracking on tape-coated sections.
For consideration:
Hydrostatically test Line 100-3 between MLV 58 and 59 prior to operation to verify the findings from the planned crack detection in-line inspections.
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Key factors that affect the consequences of a pipeline failure:
• Volume of product released.
• Location.
• Product type.
Relevant elements of the Energy East application:
• Valve type and placement.
• Lead detection system.
• Emergency response.
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• Preliminary valve locations and types have been chosen.
• The Energy East Application indicates that valve site locations will be confirmed during detailed design, taking into consideration site-specific factors and feedback from regulatory authorities, landowners, stakeholders and Aboriginal communities.
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• If an alarm cannot be conclusively explained as a non-leak within 10 minutes, a pipeline shutdown is immediately initiated.
• Pipeline shutdowns, including pump shutdown and valve closure, are expected to be completed within 12 minutes of the initiation of a shutdown.
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• TransCanada (in the Application) has committed to developing emergency response plans (ERP) in consultation with emergency service agencies and communities along the route.
• TransCanada to file the final ERPs with the
National Energy Board and distribute them to applicable emergency service agencies, as necessary, before Project commissioning.
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For consideration:
• With respect to valve placements, demonstrate that potential release volumes are as low as reasonably practicable.
• Provide a list of water crossings in Ontario that will be protected by additional valves.
• Confirm conformance with CSA Z662 Annex E.
• Provide performance specifications for the leak detection system and provide evidence that specifications are met or exceeded in operation.
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For consideration:
• Conduct detailed analysis of potential spill release and trajectory for critical locations in Ontario and perform a response capability assessment to demonstrate that
TransCanada will be able to respond effectively and that impacts can be mitigated to acceptable levels.
• Demonstrate financial capability ($1Billion) to respond to a pipeline failure and remedy the situation .
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• The OEB asked DNV GL to review
TransCanada’s Energy East Application with respect to impacts on the natural environment in Ontario.
• We reviewed about 2,500 pages of the
Application (including the ESA) to assess how well it addressed industry best practices and environmental issues raised by First
Nations and the general public.
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The Application was reviewed in regards to:
• the six principles stated in the Minister’s letter;
• the Part One Public Consultation Report by Swerhun Inc.;
• the Part One First Nations and Métis Report by Counsel
Public Affairs;
• the Background Environmental Considerations Report prepared by TERA;
• the NEB Filing Manual; and
• professional judgement.
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• The Application is incomplete. Additional information is expected in the New Year.
• It is premature to assess:
1.
t he Application’s conclusion of “no significant adverse environmental effects”;
2.
if the Application meets “the highest available technical standards for environmental protection”; and
3.
if the Application reflects “world leading contingency planning”.
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• The converted pipeline portion only addresses 28 new pump stations and roads,
2 trenchless river crossings and operations/maintenance.
• No distinction in routing an oil pipeline vs. a gas pipeline even though the NEB has recognized the importance of route selection in mitigating environmental impacts of oil pipelines.
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• The Application is incomplete with respect to impacts on drinking water.
• Trout Lake, Rideau River and Private Well Clusters in Rideau Area and other water wells are recognized but rest of route not covered.
• 102 water crossings identified on 104 km new pipeline portion.
• Alternative route north of St. Lawrence River has not been examined.
• Application commits to provide alternative sources of drinking water in event of a spill.
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For consideration:
• Conduct a full-bore rupture modelling.
• Map all surface water intakes and springs.
• Consult with public and First Nations.
• Reroute where pipeline may be too close to sensitive water resources such as in the vicinity of the St. Lawrence River.
• Designate significant water crossings, valve spacing and
Emergency Response Plans (ERP).
• Prepare source water protection plans and watercourse crossing management plans.
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• Rideau Canal recognized as National Historic
Park and UNESCO World Heritage Site.
• Rideau River recognized as a Canadian
Heritage River.
• Application proposes a trenchless crossing with a contingency open-cut if the trenchless technique proves infeasible.
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For consideration:
• Prepare a detailed Rideau Canal
Trenchless Crossing Environmental
Protection Plan complete with open-cut crossing protection measures if the trenchless crossing methodology proves infeasible.
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• Application indicates that no significant effects are anticipated except potential for cumulative effects on woodland caribou habitat at two pump stations in Kesagami
Range.
• Application proposes offset measures consistent with the Woodland Caribou
Recovery Program to compensate for habitat loss but details not provided.
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• Converted pipeline crosses 8 Provincial
Parks, 4 Conservation Reserves and 4
Conservation Areas but no details provided.
• Application addresses wetlands at a high level but no detail on impacts or mitigation.
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For consideration:
• Provide detailed park protection plans.
• Provide detailed wetland studies addressing avoidance, function, mitigation, monitoring and compensation for wetland loss.
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• Application describes and maps agricultural soils and land use but no detailed Emergency Response Plans for land based spills are provided.
• No drain tile noted on new pipeline segment.
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For consideration:
• Develop a project specific Emergency
Response Plan.
• Map and repair any drain tiles crossed.
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• Complete Traditional Ecological Knowledge
(TEK) and Traditional Land Resource Use
(TLRU) studies and demonstrate how they have been integrated into the ESA and changed project planning.
• Study the 125+ km of power lines that serve pump stations and remotely controlled mainline valves and incorporate mitigation into this project.
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Next Steps
• Stakeholder Forum to be held on January 29 & 30,
2015. To provide a broader provincial perspective.
• Deadline for Part Two written submissions is Friday,
February 6, 2015.
• The OEB will Report to the Minister in Spring 2015.
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