Administrative Monetary Penalty – Minell Pipeline Ltd. – AMP-001-2023
Administrative Monetary Penalty – Minell Pipeline Ltd. – AMP-001-2023 [PDF 853 KB]
Notice of Violation
REFERENCE NUMBER: AMP-001-2023
Information for Pipeline Company/Third Party/Individuals
| Name: | Minell Pipeline Ltd. |
|---|---|
| Contact: | Jay Grewal |
| Title: | President and CEO |
| Address: | 360 Portage Ave, 22nd Floor |
| City: | Winnipeg |
| Province / State: | Manitoba, R3C 0G8 |
| Telephone: |  |
| E-mail: | |
TOTAL PENALTY AMOUNT:
$52,000
Date of Notice:
September 20, 2023
Regulatory Instrument #:
GC-24, as amended
On October 5, 2021 (date violation was detected)
Minell Pipeline Ltd.
Was observed to be in violation of a CER regulatory requirement. This violation is subject to an administrative monetary penalty, as outlined below.
Section One – Violation Details
X Single-day violation:
Date of Violation:October 5, 2021
Multi-day Violation:
(from): [Date]
(to): [Date]
Total Number of Days: 1
Has compliance been achieved?
Yes No X Ongoing
If no, a subsequent NOV may be issued.
Location of Violation: McAuley, Manitoba
Short Form Description of Violation
(Refer to Schedule 1 of the AMP Regulations)
Act or Regulation/Section:
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)
Not applicable
Section Two – Relevant Facts
Briefly describe reasonable grounds to believe a violation has occurred
Executive Summary:
The Minell Natural Gas Pipeline (Minell Pipeline) is a Canada Energy Regulator (CER)-regulated 70 km long natural gas pipeline that runs through agricultural land from a point near Moosomin, Saskatchewan to Russell, Manitoba. It is owned by Minell Pipeline Ltd., a subsidiary of Manitoba Hydro-Electric Board (Manitoba Hydro) and operated by Manitoba Hydro.
While the CER permits holders of regulatory authorizations to build and operate pipelines to contract out pipeline operations, the regulatory instrument holder (Minell Pipeline Ltd.) remains responsible at all times for compliance with all applicable requirements of the CER’s regulatory framework. As a result, any references to Manitoba Hydro in this Notice of Violation are factual and reflect actions taken or information provided by Manitoba Hydro to the CER on Minell Pipeline Ltd.'s behalf, as the operator of the Minell Pipeline and owner of Minell Pipeline Ltd. References to Manitoba Hydro in this Notice of Violation should not be read in any way to relieve Minell Pipeline Ltd. of their responsibilities under the CER Act and associated regulations.
On October 5, 2021, a third party was conducting activities in a drainage channel using a tractor with a ground-scraping blade and contacted the Minell Pipeline, causing a release of approximately 84,000 m3 of natural gas. The incident location was in a section of agricultural land near McAuley, MB with the closest residence 1.7 km away from the damage.
Inspection Officer Order (IOO) MEL-001-2021 was issued by the CER shortly after the incident as Minell Pipeline Ltd. could not demonstrate that hazards posed by agricultural activities near the pipeline were being appropriately mitigated. Specifically, the company had insufficient information about the pipeline’s depth of cover (DOC) in other locations along the Minell Pipeline.
In accordance with section 7 of the DPR–O, companies must identify specific locations where the operation of vehicles or mobile equipment across pipelines for agricultural purposes could impair the pipeline’s safety or security. Companies must also notify:
- Landowners of the identified locations; and
- Persons that are engaged in agricultural activities, rent or lease the land or work as service providers or employees at the identified locations.
Multiple compliance oversight activities conducted by the CER following the incident indicate that, prior to the incident date on October 5, 2021, Minell Pipeline Ltd. had not been:
- monitoring and conducting DOC surveys based on land use on an interval that prevented damage to the pipeline;
- identifying and monitoring locations where the operation of vehicles or equipment for agricultural purposes can adversely affect the safety or security of the Minell Pipeline; and
- providing notification to affected parties of these locations with information that they would, as a result of the safety and security issues identified at these locations, require the company’s approval to operate vehicles or mobile equipment.
Based on the information I have reviewed, in relation to the specific location where the incident occurred as well as several others as described below, I believe that Minell Pipeline Ltd. was, on October 5, 2021, in violation of section 7 of the DPR-O.
Relevant Facts:
Post-incident, the DOC measured at the incident location was observed to be less than 30 cm, which is insufficient cover for certain agricultural ground disturbance activities allowable under federal regulations as well as other types of activities. This means Minell Pipeline Ltd. was required to either rectify and increase the DOC or notify landowners and other persons as per section 7 of the DPR-O about these locations.
The 2021 DOC survey required by Specified Measure 2 of IOO MEL-001-2021 identified six locations along the Minell Pipeline right-of-way (ROW) with DOC less than 60 cm and four locations with DOC less than 65 cm that required remediation, as well as 26 sites with DOC between 65-75 cm that require further monitoring. Each of the ten locations with DOC less than 65 cm were in quarter sections owned by different landowners. Of these ten locations, the land type for nine of them were classified as ‘field’ (including prairie grass and crops) and one location was classified as a wetland.
Prior to October 2021, the last complete DOC survey for the Minell Pipeline ROW was completed in 2009, and the next complete DOC survey was not scheduled until 2024. A partial DOC survey had been conducted in 2018 between the TC Energy Moosomin compressor station and Manitoba Hydro’s McAuley gate station prior to conducting integrity digs in the area.
Manitoba Hydro stated that its DOC surveys are prioritized based on the year of installation, presence of high consequence areas and the year of the last survey performed. It reviewed the survey frequency in 2018 and increased overall program funding. With the funding increase, Manitoba Hydro indicated that it was in the process of transitioning to a survey frequency of 10 years. Manitoba Hydro further indicated that frequency change was an internal decision because it felt that 15 years was too long.
Manitoba Hydro stated that there are several ways in which it identifies locations where the operation of vehicles or mobile equipment for the purposes of performing agricultural activities could impair the Minell Pipeline’s safety and security, including a vehicle/equipment loading assessment (performed in 2012), DOC surveys, annual leak detection surveys, pipeline locates prior to excavation activities, and identifying vehicle crossing issues as part of the third-party construction drawing review process.
Annual leak detection surveys record significant deficiencies, abnormalities or unsafe conditions such as apparent earth movement, damaged warning signs, or other evidence of external damage to the pipe but do not measure DOC over the pipeline.
The annual leak detection survey conducted in June 2021 did not identify low DOC at the incident site or changes in topography of the land (e.g., signs of erosion), and there were crops at the time of the survey which may have prevented observation of certain conditions on the ROW.
The landowner indicated to CER Inspection Officers (IOs) that the other company with pipelines crossing their land regularly communicates with them and sends One Call reminders, but they could not recall receiving similar communication from Manitoba Hydro. They could not recall the last time that Manitoba Hydro had visited, and when the company had last located the Minell Pipeline on their property, and there was no mention of DOC.
Manitoba Hydro distributes an annual letter and pamphlet titled ‘Pipeline Safety & Landowner Awareness’ to landowners along the Minell Pipeline ROW, which it confirmed is the only information issued by the company to landowners. The last communication prior to the incident was provided to the landowner at the incident location by mail on 22 January 2021. CER IOs noted that the pamphlet did not contain guidance on agricultural activities allowable under the CER Act, and instead quoted provincial regulations and definitions in the context of the Minell Pipeline.
For example, Manitoba Hydro’s ‘Pipeline Safety and Landowner Awareness’ pamphlet specified that crossing of the Minell Pipeline ROW is permitted where ploughing or tilling does not disturb more than 30 cm (12 inches) and is not permitted where the soil is rutting more than 15 cm from equipment, or the activity will result in the removal of cover over the Minell Pipeline.
This is not consistent with the DPR-O Guidance Notes, which states that the types of agricultural ground disturbance activities that are not prohibited and do not require authorization are cultivation to a depth of less than 45 cm, and an activity to a depth of less than 30 cm provided that it does not result in the reduction of earth cover over the Minell Pipeline to a depth that is less than the cover provided when the Minell Pipeline was constructed. The Guidance Notes are based on the definition for ground disturbance under the CER Act.
Agricultural activities under the DPR are allowed up to a depth of 45 cm, without requiring authorization from the pipeline company, unless a section 7 DPR-O notice has been provided to the landowner or other specified persons. Such a notice must identify specific locations and make clear that, even if the conditions of subsection 13(1)(a) of the DPR-A are met, operation of vehicles or mobile equipment across the pipeline at those locations may be unsafe and require permission from the pipeline company. No such notice was provided to the landowner in this case, and the DOC for the Minell pipeline, on 5 October 2021, was not sufficient to safely allow authorized agricultural and/or other types of activities.
During the CER’s compliance verification activities (CVAs), Manitoba Hydro did not, at any time, provide any evidence that its integrity activities were used to collect information on the types and frequency of agricultural work being performed in the vicinity of the Minell Pipeline, which could be used to estimate variations in DOC over time. Other than for reasons related to funding, Manitoba Hydro was unable to explain the 15-year interval it set between DOC surveys for the Minell Pipeline that would account for hazards posed by agricultural activities that can result in changes to DOC over time.
In addition, during follow-up CVAs, CER IOs noted several gaps in Manitoba Hydro’s Damage Prevention Program (DPP) and determined that the company failed to demonstrate that it had applied management system requirements to its DPP as required by section 6.5 of the Canadian Energy Regulatory Onshore Pipeline Regulations. However, this issue is being addressed separately and is not considered within the scope of this Notice of Violation.
Conclusion:
Despite the fact that the Minell Pipeline runs through primarily agricultural land, Manitoba Hydro did not have recent information on the DOC along the entire ROW. As a result, Minell Pipeline Ltd., via their operator and owner Manitoba Hydro, could not, and did not, identify and notify the landowner (and by extension, the equipment operator) of inadequate DOC at the incident location, or similarly to landowners at other locations with inadequate DOC.
Minell Pipeline Ltd. is responsible to fulfill the above obligation at all times while they have a CER-regulated pipeline in operation, regardless of whether the particular activity that led to the pipeline strike in this case was an authorized agricultural activity or not.
Minell Pipeline Ltd. failed to identify and advise landowners of specific locations where the operation of vehicles or mobile equipment across the pipeline for agricultural purposes could impair the safety and security of the Minell Pipeline until it was ordered to do so under IOO MEL-001-2021.
Based on the above, I have reasonable grounds to believe that Minell Pipeline Ltd. was in violation of section 7 of the DPR-O and hereby issue this Notice of Violation. For greater clarity, this Notice of Violation is not being issued for the 5 October 2021 incident directly, rather, it is being issued for a violation that became apparent via the investigation and compliance verification activities performed by the CER stemming from the 5 October 2021 line strike, and the violation existed independent of any such incident. Further, in issuing this Notice of Violation, I am not required to make any findings as to whether the 5 October 2021 incident was caused by unauthorized activity.
While Minell Pipeline Ltd. was in violation of section 7 of the DPR-O for a period of time exceeding one day, I am exercising my discretion to issue this Notice of Violation for only one day, as in my view it results in a penalty that is proportionate and sufficient to advance the purpose of the CER Act's administrative monetary penalty scheme which is to promote compliance and not to punish.
Section Three – Penalty Calculation
A) Baseline Penalty (Gravity Level = 0)
Refer to AMP Regulations, Subsection 4(1)
| Category | Individual | Any Other Person |
|---|---|---|
| Type A | $1,365 | $5,025 |
| Type B | $10,000 | X $40,000 |
B) Applicable Gravity Value
Refer to AMP Regulations, Subsection 4(2)
| Gravity Level | |||||||
|---|---|---|---|---|---|---|---|
| Mitigating | Aggravating | ||||||
| -2 | -1 | 0 | +1 | +2 | +3 | ||
Other violations in previous seven (7) years |
-- | -- | X | -- | |||
| Not applicable. | |||||||
| X | Any competitive or economic benefit from violation | -- | -- | X | -- | ||
| There is insufficient evidence that any of Minell Pipeline Ltd.’s actions relating to this violation had a purpose or intention of economic or competitive benefit, despite any incidental cost savings that may have occurred. | |||||||
| X | Reasonable efforts to mitigate/reverse violation’s effect/reverse violation’s effect | X | -- | ||||
In response to the violation, Manitoba Hydro undertook corrective actions including the remediation of nine additional sites identified by the DOC survey, which was scheduled to be completed in a timely manner. Manitoba Hydro also completed an additional DOC survey beyond the survey ordered under IOO MEL-001-2021, updated its annual communications process to include face-to-face meetings with landowners, and was fully cooperative in addressing corrective actions identified through post-incident CVAs. Following the incident, Manitoba Hydro trucked in a portable compressed natural gas trailer to Dauphin as contingency to avoid disruption in service, and no residential customers lost gas service during the outage. |
|||||||
| X | Negligence on part of person who committed violation | -- | -- | X | -- | ||
The last DOC survey was undertaken 12 years earlier, with the next one scheduled to occur in 2024, and the most recent DOC surveys had occurred in 2007 and 2009. In 2009, the DOC decreased 10.8 cm and 6 cm respectively from measurements taken in similar proximity during the previous 2007 DOC survey. This quantitative assessment from 12 years earlier demonstrated a loss of small amounts of cover over time. However, quantitative measures were not used to establish the frequency of DOC surveys going forward, instead a nominal frequency of 15 years was chosen, with a decision to increase to 10 years due to the availability of funding in 2018. The DOC over the Minell Pipeline in ten locations was not sufficient to allow mobile agricultural equipment to safely travel over the pipeline. The hazard inventory for the Minell Pipeline did not identify hazards and risks related to agricultural activities, nor were any mitigations identified. The Damage Prevention Program communication with landowners was one-way; an annual mailed letter but no apparent effort to collect information about the agricultural land use around the pipeline and/or any changes that may result over time. The company’s public awareness materials reference Manitoba Provincial regulations, such as limiting cultivation to 30 cm, in effect partially shifting the regulatory burden of identifying and locating areas where agricultural activity to a depth of 45 cm is unsafe to landowners, contrary to the CER’s regulatory framework. Viewed another way, Manitoba Hydro’s communications purported to reduce the depth to which activities were presumed authorized to 30 cm in a blanket fashion, which is contrary to the obligations imposed by section 7. Section 7 obliges pipeline companies to identify specific locations where such activity may be hazardous and notify landowners of such locations. While there were other pipeline integrity measures employed by Manitoba Hydro, the above deficiencies with the Damage Prevention Program, and their failure to gather and communicate relevant, up-to-date safety information to landowners over time, does not meet the standard expected of reasonable, prudent operators of CER regulated pipelines. In summary, based on the above, while there is no prescriptive standard that Manitoba Hydro did not meet, with respect to the expectations of a reasonable CER-regulated pipeline company in meeting the requirements of section 7 of the DPR-O, Minell Pipeline Ltd. (via Manitoba Hydro) failed to:
|
|||||||
| X | Reasonable assistance to the Board with respect to violation | X | -- | ||||
| Minell Pipeline Ltd. was cooperative and responsive in dealing with Inspection Officers during various compliance verification activities, and in responding to multiple information requests and interviews in a timely manner. In addition, Minell Pipeline Ltd. submitted corrective and preventative action plans to address the four NNCs issued under the compliance verification activities, and CER oversight will be ongoing to verify compliance with the DPRs. I am recognizing Minell Pipeline Ltd.’s assistance by applying a -1 to this factor, however, I believe the minimum gravity value of -2 for this factor is reserved for companies who take truly exceptional or extraordinary measures. | |||||||
| After becoming aware of the violation, promptly reported the violation to the Regulator | X | -- | |||||
| Not applicable | |||||||
| X | Steps taken to prevent reoccurrence of violation | X | -- | ||||
The Minell Pipeline Ltd. Incident Investigation Report addressed basic causes relating to the landowner activity. The company did not identify root causes, such as land use or environmental factors that may contribute to loss of cover over the pipeline over time. DOC had not been surveyed since 2009, based on an assumption by Manitoba Hydro given the land use. The DOC survey undertaken as a result of the CER Inspection Officer Order (IOO) identified multiple locations with DOC less than 65 cm. In addition, the IOO ordered the company to communicate the results of the DOC surveys to affected landowners and land users, as well as provide a report indicating any corrective actions to be taken. The company’s corrective and preventative actions included a review of its processes for managing depth surveys, landowner notification, safety material provided to landowners, and annual ‘surveys’ of processes. In addition, Manitoba Hydro committed to conducting more frequent DOC surveys and revising its DOC survey procedures, updating its public awareness materials, enhancing annual communications with landowners/occupants of property along the ROW, and developing an annual ROW monitoring process to supplement existing processes for annual leak and land use surveys. Minell Pipeline Ltd.’s Damage Prevention Program (DPP) does not identify quantitative measures used as criteria for insufficient cover, it is only based on when someone suspects loss of cover may exist but not based on other factors. The company seems to solely rely on visual inspection and leak detection, and it is not clear in the DPP how insufficient cover is assessed. |
|||||||
| For Type B violations, whether the violation was primarily a reporting or record-keeping requirement failure | X | -- | -- | ||||
| Not applicable | |||||||
| X | Any aggravating factors in relation to risk of harm to people or environment | -- | -- | X | |||
The line strike was only one illustration of consequences that could result from risks arising from the violation, and my consideration of “risk of harm” is not limited to only this 1 consequence that occurred. This violation would stand even if the line strike specifically did not happen. The damage to the natural gas pipeline could have resulted in more severe consequences including a fatality, particularly if the gas ignited. Fortunately, at the time of the incident the pipeline was operating at a lower pressure given the warm weather conditions, however the probability of harm existed throughout the rest of the year and in numerous locations independent of the line strike. Further, while the environmental damage is difficult to estimate, approximately 84,000m3 of gas escaped, undoubtedly causing the release of more potent GHG emissions into the atmosphere. In addition, the pipeline shut down disrupted the supply of natural gas to the downstream distribution systems, extending to the town of Dauphin, and similar risk existed beyond this one incident, though Manitoba Hydro took steps to mitigate and ensure gas supply to Dauphin which I considered as a mitigation above. This is particularly important as this pipeline is the provider of gas to parts of the hospital in Dauphin. Large commercial clients were asked to cut back operations to conserve the gas remaining in the pipeline. No residential customers lost gas service during the outage. In this instance, there were no injuries or fatalities, and a reduced risk of damage to property given the location of the strike was in the middle of an agricultural field. Whether the risk materialized or not, this incident could have resulted in a high severity of harm to the person who struck the pipeline and the environment, and the potential for severe impacts to the neighboring communities (including the Dauphin hospital). Other areas along the Minell Pipeline also had low DOC and the potential of severe consequences in those locations existed for affected landowners as well. As a result, I am applying a +2 gravity value to this factor. |
|||||||
C) Total Gravity Value
(adjustments made for gravity values in B) based on mitigating or aggravating factors applied)
+1
D) Daily Penalty
(baseline penalty adjusted for the final gravity level)
$52,000
E) Number of Days of Violation
(If more than one day, justification must be provided)
Not applicable
Notes to explain decision to apply multiple daily penalties, or “Not Applicable”
Not applicable
1
Section Four – Total Penalty Amount
Note:
The total penalty amount shown is based on the period described in section one above. If compliance has not been achieved, a subsequent Notice of Violation may be issued.
Section Five – Due Date
(30 days from receipt of Notice of Violation)
Due Date
October 20, 2023
_____________________________________________________________
Keith Landra ()
Designated Officer pursuant to ss. 116(2) of the CER Act
Administrative Monetary Penalties
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 CER website:
- a) 30 days from the date this Notice of Violation was received; or
- b) 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:
- Canada Energy Regulator
Attention: Finance
210-517 10 Ave SW
Calgary AB T2R 0A8
Your completed Payment form should be enclosed with your payment.
- Date modified: