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ARCHIVED – Administrative Monetary Penalty – ConocoPhillips Canada Operations Ltd. – AMP-012-2015

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Administrative Monetary Penalty – ConocoPhillips Canada Operations Ltd. – AMP-012-2015 [PDF 54 KB]

NOTICE OF VIOLATION

REFERENCE NUMBER: AMP-012-2015

Information for Pipeline Company / Third Party / Individual:

Information for Pipeline Company / Third Party / Individual
Name: ConocoPhillips Canada Operations Ltd.
Contact: Ken Lueers
Title: President
Address: 401-9th Ave SW
City: Calgary
Province / State: Alberta,  T2P 2H7
Telephone: Information not available
Fax: Information not available
E-mail: Information not available

TOTAL PENALTY AMOUNT: $28,000

Date of Notice: 02 December, 2015

Regulatory Instrument #:

On Jan 16, 2014 ConocoPhillips Canada Operations Ltd. was observed to be in violation of a NEB regulatory requirement. This violation is subject to an administrative monetary penalty, as outlined below.

1. VIOLATION DETAILS

Date of Violation:
from: 16 Jan 2014 to: 16 Jan 2014
Total Number of Days: 1

Has compliance been achieved?

 X Yes

   No

If no, a subsequent NoV may be issued.

Location of Violation:

e.g. Facility/plant/head office or nearest geographical point
Elmworth Station U to B Pipeline Integrity Project, Beavertail Creek

Short Form Description of Violation
(Refer to Schedule 1 of the AMP Regulations)

Provision and Short-form Description

NEB Act

30(1) Operation of a pipeline without a certificate and leave to open (Type B)

   
Contravention of an Order or Decision made under the Act (ss. 2(2) of the AMP Regulations)
   

Failure to comply with a term or condition of any certificate, licence, permit, leave or exemption granted under the Act (ss. 2(3) of the AMP Regulations)

2. RELEVANT FACTS

Briefly describe reasonable grounds to believe a violation has occurred

1. Subsection 30(1) of the National Energy Board Act (NEB Act) states: "No company shall operate a pipeline unless
(a) there is a certificate in force with respect to that pipeline; and
(b) leave has been given under this Part to the company to open the pipeline."

2. On 19 July 2013, ConocoPhillips Canada Operations Ltd. (ConocoPhillips) made an application under Burlington Resources Canada (Hunter) Ltd. (Burlington) to construct and tie-in a segment (approximately 350 m) of pipe and to decommission an existing segment (approximately 350 ;m) of pipe located at the Beavertail Creek for the Elmworth Station U to B Pipeline Integrity Project (Project).

3. On 26 September 2013, the National Energy Board (NEB or the Board) issued Letter and Order XG-B105-018-2013 pursuant to section 58 of the NEB Act and section 45.1 of the Onshore Pipeline Regulations, approving the Project. In its letter the Board specifically reminded Burlington to apply for Leave to Open pursuant to section 47 of the NEB Act, prior to the facilities being placed in operation.

4. On 20 August 2014, the Board received a letter from ConocoPhillips indicating that the Project (owned and operated by ConocoPhillips) had been "completed and constructed in compliance with all applicable conditions" in Order XG-B105-018-2013. The letter stated that construction and decommissioning of the pipeline was completed on 16 January 2014. ConocoPhillips stated it would be making a subsequent application for a Leave to Open (LTO) for the Project.

5. On 20 November 2014, the Board received a letter from ConocoPhillips applying for LTO of the Project. The letter also stated that ConocoPhillips had accidentally overlooked several conditions contained in Order XG-B105-018-2013. The applicable condition and direction from the Board included:
- submit a LTO pursuant to Section 47 of the NEB Act, prior to facilities being placed in operation; and
- file with Board, within 30 days of the Project being placed into service, a confirmation that the Project was completed and constructed in compliance with all applicable conditions of the Order.

6. This letter stated "operation of the pipeline resumed in March 2014". This letter also included ConocoPhillips assessment of the conditions that led to the non-compliances, the steps ConocoPhillips would take to prevent reoccurrence of similar non-compliances and corrective actions underway.

7. On 24 November 2014, the NEB sent ConocoPhillips an information request (IR) #1 regarding its LTO application. The information request sought to confirm that NEB requirements relating to safety and pipeline integrity had been met. The NEB indicated responses should be provided by 28 November 2014.

8. On 4 December 2014, after being granted an extension, the NEB received a reply from ConocoPhillips to the NEB's IR #1.

9. On 9 December 2014, the NEB sent ConocoPhillips IR #2 regarding its LTO application. This IR asked ConocoPhillips to provide additional, specific information related to pressure testing of the pipe and evidence of non-destructive examination (NDE) of all welds. The NEB also required ConocoPhillips to:

  • "Provide details regarding the operating history of this project, including date that construction was completed, date hydrostatic pressure testing completed, date project placed into service, date project ceased service (if applicable) and other details regarding operation of this project until present day."

10. On 19 December 2014, the NEB received a reply from ConocoPhillips to the NEB's 9 December 2014 IR #2 . Among other things, ConocoPhillips again confirmed in its response that it had placed the Project into service in March of 2014, without first obtaining leave to open from the Board.

11. On 22 January 2015, the NEB sent IR #3 to ConocoPhillips regarding its LTO application. This IR again sought information in order to confirm NEB requirements related to safety had been met. The NEB indicated responses should be provided by 30 January 2015. On 29 January 2015, the NEB received a reply from ConocoPhillips to the NEB's IR #3 which provided satisfactory information confirming requirements had been met.

12. On 29 May 2015, ConocoPhillips submitted an application for transfer of ownership from Burlington to ConocoPhillips for the Project as approved in Order XG-B105-018-2013. This Project was not included in a previous application by ConocoPhillips in 2014 of existing lines from Burlington to ConocoPhillips. On 31 July 2015, the Board issued a letter and amending order AO-001-XG-B105-018-2013 approving the transfer of ownership for the Project from Burlington to ConocoPhillips.

13. On 7 August 2015 in response to the NEB's IR #4 seeking clarification as to the in-service date of the Project, ConocoPhillips indicated in its response to the IR that the pipelines had actually begun operation on 16 January 2014 rather than the original date of March 2014 provided in its LTO application.

14. On 12 November 2015, the Board sent a letter to ConocoPhillips approving its LTO application for the Project.

3. PENALTY CALCULATION

(a) BASELINE PENALTY (Gravity Value = 0)

(a) BASELINE PENALTY (Gravity Value = 0)
Category Individual Any Other Person
(Type A)     $1,365     $5,025
(Type B)     $10,000  X  $40,000

[Refer to AMP Regulations, Subsection 4(1)]

(b) APPLICABLE GRAVITY VALUE

[Refer to AMP Regulations, Subsection 4(2)]

Mitigating Aggravating
-2 -1 0 +1 +2 +3
 X  Other violations in previous seven (7) years -- --  X          --
N/A
 X  Any competitive or economic benefit from violation -- --  X          --
N/A
 X  Reasonable efforts to mitigate / reverse violation’s effect          X          --
N/A
 X  Negligence on part of person who committed violation -- --      X      --
Failure to exercise due diligence contributed to the commission of the violation.
 X  Reasonable assistance to Board with respect to violation      X              --
Although there was a delay in reporting the violation to the Board, ConocoPhillips was cooperative in responding to the NEB staff's information requests and providing the necessary information about the in-service date of the Project.
 X  Promptly reported violation to Board          X          --
N/A
 X  Steps taken to prevent reoccurrence of violation      X              --
In its LTO of October 21, 2014, ConocoPhillips indicated that it had overlooked several conditions contained in Order XG-B105-018-2013, and provided an assessment of the conditions that led to the violation. The company provided the Board with steps it would take to prevent re-occurence of a similar non-compliance, and the corrective actions that were already underway.
 X  Violation was primarily reporting / record-keeping failure          X  -- -- --
N/A
 X  Any aggravating factors in relation to risk of harm to people or environment -- --  X             
N/A
(c) TOTAL GRAVITY VALUE
-1

(d) DAILY PENALTY
(The baseline penalty, adjusted for the final gravity level)

$28,000

(e) NUMBER OF DAYS OF VIOLATION
(If more than one day, then the justification must be provided.)

1

Notes to explain decision to apply multiple daily penalties, or "Not Applicable"

N/A

4. TOTAL PENALTY AMOUNT

$28,000

Note: The total penalty amount shown is based on the period described in Step 1 above. If compliance has not been achieved, a subsequent Notice of Violation may be issued.

5. DUE DATE

(30 days from receipt of Notice of Violation)
05 January, 2016

Notes

You have the right to make a request for a review of the amount of the penalty or the facts of the violation, or both, within 30 days after the Notice of Violation was received.

If you do not pay the penalty nor request a review within the prescribed period, you are considered to have committed the violation and you are liable for the penalty set out in the Notice of Violation. The penalty is due on the date indicated above.

The unpaid penalty amount is a debt due to the Crown and may be recovered by collection procedures stipulated in the Financial Administration Act.

The information regarding the violation may be posted on the NEB website:

  1. 30 days from the date this Notice of Violation was received or;
  2. upon issuing a decision following a Request for Review.

To Make Payment:

You may remit your fee payment by Electronic Funds Transfer (EFT) or by cheque payable to the order of Receiver General for Canada.

EFT payments can be arranged by contacting the Director of Financial Services, Monday to Friday, from 09:00 to 16:00 Mountain Time:

  • Telephone: 403-606-0779 / 800-899-1265
    Fax: 403-292-5503 / 877-288-8803

Cheques should be made out to the "Receiver General for Canada" and mailed to:

  • National Energy Board
    Attention: Finance
    Centre 10, 517 - 10th Avenue SW
    Calgary, Alberta
    T2R 0A8

Your completed Payment form should be enclosed with your payment.

To Request a Review

Pursuant to the NEB Act, Section 144, you may file a request for a review of this Notice of Violation by the Board.

The date of filing is the date on which the document is received, as indicated by the date on an e-mail submission or the stamped on the document by a NEB employee.

If you elect to make a request for a review, complete and submit the attached Request for Review form to:

  • Administrative Monetary Penalty - Reviews
    National Energy Board
    Centre 10, 517 - 10th Avenue SW
    Calgary, Alberta
    T2R 0A8

For more information on reviews, please see the Administrative Monetary Penalties Process Guide available on the NEB's website.

Sincerely,

Robert Steedman

Designated Officer
Administrative Monetary Penalties

403-299-3178

Date modified: