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Administrative Monetary Penalty – Canadian Natural Resources Ltd. – AMP-001-2018

Administrative Monetary Penalty – Canadian Natural Resources Ltd. – AMP-001-2018 [PDF 143 KB]

NOTICE OF VIOLATION

REFERENCE NUMBER: AMP-001-2018

Information for Pipeline Company / Third Party / Individual:

Information for Pipeline Company / Third Party / Individual
Name: Canadian Natural Resources Ltd. (CNRL)
Contact: Tim McKay
Title: President
Address: Suite 2100, 855 – 2 Street SW
City: Calgary
Province / State: Alberta, T2P 4J8
Telephone: Information not available
Fax:  
E-mail: Information not available

TOTAL PENALTY AMOUNT:

40,000

Date of Notice:

25 June, 2018

Regulatory Instrument #:

XG-C357-09-2010

On Feb 1, 2017 Canadian Natural Resources 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): Feb 1, 2017 (to): Feb 1, 2017
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
Ojay Pipeline Project transporting sweet natural gas from British Columbia to Alberta.

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

Provision and Short-form Description

 

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

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)

Condition 15 of Order XG-C357-09-2010, as amended.

2. RELEVANT FACTS

As per condition 15 of Order XG-C357-09-2010, as amended, CNRL failed to conduct environmental post-construction monitoring in 2016, and submit to the National Energy Board (the Board) their Post-Construction Environmental Monitoring Report (PCEMR) for the sixth growing season. The PCEMR was due on 31 January 2017 for the Ojay Pipeline Project (the Project).

Condition 15 of Order XG-C357-09-2010, as amended by AO-001-XG-C357-009-2010, AO-002-XG-C357-009-2010 and AO-003-XGC357- 009-2010 reads:


"On or before 31 January after each of the first, [fourth] and [sixth] complete growing seasons following the commencement of operation of the Project, [CNRL] shall file with the Board a post-construction environmental monitoring report that:

  1. describes the methodology used for monitoring,
  2. the criteria established for evaluating success and the results found;
  3. assesses the effectiveness of the mitigation measures applied during construction against the criteria for success;
  4. identifies any deviations from plans and alternate mitigation applied as approved by the Board;
  5. identifies locations on a map or diagram where corrective action was taken during construction and the current status of corrective actions; and
  6. provides proposed measures and the schedule [CNRL] shall implement to address any unresolved concerns."

Background:
On 18 November 2009, Canadian Forest Oil Ltd. (CFOL) filed an application pursuant to section 58 of the NEB Act to construct the Ojay Pipeline Project. The Ojay Pipeline consists of an eight inch (219mm) sweet natural gas pipeline that transports gas from British Columbia to Alberta, and measures approximately 12.1km (12,077 metres) in length, covering 13.7 hectares (33.8 acres). The pipeline route crosses the Mistanusk Creek, Compass Creek, and an unnamed tributary in British Columbia. There are no permanent residents living within the vicinity of the project lands.

On 4 May 2010, the Board approved the Project by Order XG-C357-09-2010.

On 20 October 2011, the Board approved a name change from Canadian Forest Oil Ltd. to Lone Pine Resources Canada Ltd. (Lone Pine) by Amending Order AO-001-XG-C357-009-2010.

On 7 August 2014, NEB approved and issued Amending Order AO-002-XG-C357-009-2010 to vary Condition 15 of Order XGC357-09-2010. The filing schedule for the subsequent reports was extended to on or before 31 January after each of the fourth and sixth complete growing seasons following the commencement of operation of the Project.

On 12 August 2014, Lone Pine sold the Ojay Pipeline asset to CNRL.

On 8 October 2014, CNRL (new owner) submitted its fourth year PCEMR.

On 10 October 2014, the NEB received an application from Lone Pine for the transfer of ownership and s. 21 request under the NEB Act for a variance to the Order.

On 9 December 2014, the Board approved a transfer of ownership of the Ojay Pipeline from Lone Pine to CNRL, and issued amending order AO-003-XG-C357-009-2010.

On 31 January 2017, as per condition 15 of the amended Order XG-C357-009-2010, the sixth year PCEMR was due. CNRL failed to submit the Year 6 PCEMR by the required due date.

On 2 February 2017, NEB staff followed up with CRNL via email inquiring about the Year 6 PCEMR. On 14 February 2017, CNRL responded that it had not been completed and requested an extension in order to get the work done in the summer. NEB staff advised them to submit a formal request to the Board to vary the condition requirement, and to include the reason(s) for not undertaking the post-construction monitoring as specified by the condition requirement, and dates for planned implementation of the condition.

On 21 March 2017, CNRL submitted an application to vary timing of the Year 6 PCEMR. They stated that they were unable to submit the Year 6 PCEMR in 2016 due to flooding that occurred in the Tumbler Ridge area, creating very wet conditions and limiting ROW access to conduct the post-construction environmental monitoring activities. Since post-flood efforts were focused on identifying and rectifying any exposed pipelines, CNRL stated that the year 6 PCEMR will be completed in June or July 2017 to see full vegetative growth conditions. CNRL expected to have the monitoring report completed and submitted to the Board by the end of August 2017.

On 18 April 2017, the Board approved the request for a variance and issued Amending Order AO-004-XG-C357-009-2010, which directed CNRL to file its post-construction environmental monitoring reports on or before the 31st of January after the seventh complete growing season following commencement of operation of the Project (due 31 January 2018).

On 26 October 2017, CNRL submitted the 7th Year PCEMR, which was reviewed by NEB staff on 27 November 2017. CNRL did not remove construction matting as committed to in the NEB inspection CV1415-346 dated 23 September 2014, and the CNRL Post Construction Environmental Monitoring Report Year 4 – filed with the Board on 8 October 2014. As a result, a Notice of Non-Compliance was issued with corrective action for CNRL to remove the matting at 3 locations as per their Environmental Protection Plan.

On 7 March 2018, CNRL requested relief from NNC requirement to remove construction matting at 2 of the 3 locations due to the detrimental effect it would cause to the environment as per the environment assessment conducted.

On 23 April 2018, the Board granted a variance to Order XG-C357-09-2010 and relief from NNC requirement to leave construction mats in place at 2 locations given the supporting documentation. However, the Board did note that, given the passage of time, removal of the construction waste would be more detrimental to the environment, but that CNRL failed to follow up on the commitments made in their 4th Year PCEMR pursuant to condition 15 of the Order, in which construction waste was to be removed.

The requirement to submit a PCEMR requires the company to be on site to assess the environmental landscape post-construction and monitor the growth conditions of the reclaimed project and return the site to pre-construction conditions. CNRL failed to properly address construction waste in a timely manner as committed to in their 4th Year PCEMR, rendering that commitment more difficult with the passage of time. Notwithstanding the weather conditions that may have prevented CNRL from conducting environmental assessments in 2016, the company did not take appropriate measures to notify the Board on a timely basis that it considered itself unable to complete the year 6 PCEMR, and to request an extension to Condition 15 in advance of the due date.

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)]

(b) APPLICABLE GRAVITY VALUE
Mitigating Aggravating
-2 -1 0 +1 +2 +3
 X  Other violations in previous seven (7) years -- --      X      --
CNRL received a Notice of Violation in May 2014, AMP-002-2014, for non-compliance with ss. 25(1) of the Onshore Pipeline Regulations (OPR), which requires direct supervision of a company or its appointed agent during pressure testing.
 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      --
CNRL operates the Ojay Pipeline pursuant to AO-003-XG-C357-009-2010 that contains specific deadlines for post-construction monitoring and reporting. If CNRL was unable to meet the reporting deadline of January 31, 2017, the reasonable course of action was to inform the Board of why it was unable to meet the deadline, and seek a variance to the amending order, well before the deadline passed. In failing to do so, CNRL was negligent.
 X  Reasonable assistance to Board with respect to violation      X              --
When notified of the non-compliance on 2 February 2017 by Board staff, CNRL responded and submitted a request under s. 21 of the Act to vary their Order to extend the timing of the Condition 15 requirement.
 X  Promptly reported violation to Board          X          --
N/A
 X  Steps taken to prevent reoccurrence of violation          X          --
N/A
 X  Violation was primarily reporting / record-keeping failure      X      -- -- --
This is the final PCEMR required by condition 15 of the amending order.
 X  Any aggravating factors in relation to risk of harm to people or environment -- --  X             
N/A

(c) TOTAL GRAVITY VALUE

0

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

$40,000

(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"

4. TOTAL PENALTY AMOUNT

$40,000

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)

30 July, 2018

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: 403-919-4743 / 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

1-800-899-1265 or 403-292-4800

Date modified: