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

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

Overview 1.Background and Context for Todays Meeting Role of the OEB TransCanadas proposed Energy East Pipeline Project What the OEB was asked to Consider (Impacts and Principles) National Energy Board and OEB Processes 2.OEBs Approach: A Two-Part Process Part One and Key Observations 3.OEBs Technical Advisors and Preliminary Assessments 4.Next Steps 2

Ontario Energy Board 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, Ontarios Minister of Energy asked the OEB to examine and report on TransCanadas proposed Energy East Pipeline from an Ontario perspective. 3

TransCanadas 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 & Qubec) 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 4

TransCanadas Proposed Route in Ontario 5

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. 6

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 7

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. 8

NEB and OEB Processes 9 NEB Review ProcessOEB 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 Mtis communities that may rest with the federal government or others.

OEBs Approach: A Two-Part Process Part One Impacts Important to Ontarians and Aboriginal Communities Public, First Nations & Mtis, Stakeholders input sought on impacts. Technical Advisors generate background report to help OEB understand the impacts. Part Two OEBs Understanding of Impacts Technical Advisors share preliminary assessment of TransCanadas application in light of Part One feedback and Ministers six principles. Further feedback sought from Public, First Nations & Mtis, and Stakeholders. 10

Academic Community Agriculture Business Community Associations Construction Electricity Distributors Environment First Nations & Mtis Communities Large-Volume Gas Users Landowners Mining Municipal Government Oil/Gas Industry Organized Labour Public Health Religious Institutions Residential Gas Consumers Social Justice Tourism 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 & Mtis Community Discussions Part One 11

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. 12

Key Observations from Part One First Nation and Mtis 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. 13

The OEBs Technical Advisors The OEB has retained a number of Technical Advisors to assess TransCanadas 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 14

Work of OEBs 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 OEBs 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 Ministers 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. 15

Preliminary Assessment Economic Impacts Economic benefits are expected from the Energy East project but TransCanadas estimates are likely inflated. Results from TransCanadas 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-to- wheels).

Preliminary Assessment Pipeline Safety Impacts 18

Overview 1.Background Who We Are What the OEB Asked us to Do Approach to the Assessment 2.Pipeline Integrity 3.Emergency Management 19

Who We Are DNV GL is a leading technical advisor to the global oil and gas industry, the worlds 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. 20

What the OEB Asked Us to Do 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. 21

Approach to Assessment Consider risk: Probability of failure (Pipeline Integrity). Consequences (Emergency Management). Consider principles in Ministers 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. 22

Pipeline Integrity 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. 23

Mechanical Properties of the Pipe 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. 24

Pipe manufacturing process 100% of the existing pipeline was manufactured using the double submerged arc welding (DSAW) process. 25

Coating System ~ 95% of the existing pipeline is coated with Fusion Bond Epoxy (FBE). ~ 5% is coated with double wrap polyethylene coating. 26

1207 27

Tape-Coated Sections 28 MLV 58-59 MLV 60-61 MLV 74-75 MLV 76A-77

In-line Inspection Modern in-line inspection tools can reliably detect and size corrosion. Environmentally assisted cracking (SCC) are more difficult to accurately detect and size. 29

Pipeline Integrity 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. 30

Emergency Management 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. 31

Valve type and placement 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. 32

Leak Detection System 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. 33

Emergency Response 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. 34

Emergency Management 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. 35

Emergency Management 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. 36

Preliminary Assessment Natural Environment Impacts 37

Overview The OEB asked DNV GL to review TransCanadas 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. 38

Approach to Preliminary Assessment The Application was reviewed in regards to: the six principles stated in the Ministers letter; the Part One Public Consultation Report by Swerhun Inc.; the Part One First Nations and Mtis Report by Counsel Public Affairs; the Background Environmental Considerations Report prepared by TERA; the NEB Filing Manual; and professional judgement. 39

General Observations The Application is incomplete. Additional information is expected in the New Year. It is premature to assess: 1.the Applications 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. 40

General Observations 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. 41

Impacts on Water 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. 42

Impacts on Water 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. 43

Impacts on Rideau River and Canal 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. 44

Impacts on Rideau River and Canal 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. 45

Impacts on Fish and Wildlife 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. 46

Impacts on Parks and Natural Areas 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. 47

Impacts on Parks and Natural Areas For consideration: Provide detailed park protection plans. Provide detailed wetland studies addressing avoidance, function, mitigation, monitoring and compensation for wetland loss. 48

Impacts on Agricultural Resources 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. 49

Impacts on Agricultural Resources For consideration: Develop a project specific Emergency Response Plan. Map and repair any drain tiles crossed. 50

Other Considerations 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. 51

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. 52

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

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