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Canadian pipeline operators to assume liability for oil spill damage under new rules

June 05, 2014
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Canada is toughening its rules concerning pipeline safety and response to spill damages, transferring the responsibility for oil spills to pipeline companies and making them liable for all costs associated with accidents.

The move was announced by Natural Resources Minister Greg Rickford last month, ahead of the development of new projects intended to carry crude from Alberta's oil sands to ports for export.

Under the new legislation, pipeline operators will be required to hold a minimum amount of cash to cover potential cleanup costs. They will be held liable for all spills and incidents on their infrastructure regardless of fault and will be responsible for the first C$1 billion in cleanup expenses.

The government will also give the National Energy Board (NEB), Canada's energy watchdog, expanded powers concerning compliance on safety, allowing it to intervene and manage spill response if a company is unable or unwilling to do so.

The approach, called "absolute liability" for pipelines regulated by NEB, will also see the government fund the initial cost of damage clean-up when an accident is too severe to be handled by the company itself. NEB will be responsible for reimbursing those funds from pipeline operators.

The changes come amid increasing opposition towards the development of two pipelines in Alberta. Enbridge Inc.'s Northern Gateway pipeline project is designed to transport 525 barrels of oil day to a port in British Columbia, while the extension of Kinder Morgan's Trans Mountain pipeline is expected to boost its capacity nearly three-fold, allowing it to carry 900,000 barrels a day to Vancouver.

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