Canada's new pipeline parts rules to lessen burden on operators

TK

05/07/2017 17:48

By Ethan Lou 
    CALGARY, Alberta, July 5 (Reuters) - Canada's energy 
regulator should shift the burden for ensuring quality of 
oil-and-gas pipeline parts more to manufacturers and away from 
operators, according to an official report viewed by Reuters. 
    The National Energy Board (NEB) commissioned the report to 
improve the equality of pipeline parts after TransCanada Corp 
 TRP.TO  and Enbridge Inc  ENB.TO  discovered that some they 
were using had been substandard.  urn:newsml:reuters.com:*:nL1N1IE2AO 
    Currently, operators often have to provide additional 
specifications for parts because standards are too low, placing 
them at a disadvantage, according to the report, which was 
provided to Reuters ahead of its public release. 
    "This creates an uneven playing field where pipeline 
operators with comprehensive specifications are placed in an 
uncompetitive position due to higher procurement costs," the 
report read. 
    Canada, home to the world's third-largest oil reserves, 
relies heavily on pipelines to move its product, making it 
imperative for pipelines to be secure. 
    Policies should be developed "to ensure pipeline-operator 
quality strategies are transferred to all parties in the supply 
chain," according to the paper. 
    While the report's recommendations are not binding, NEB 
chief engineer Iain Colquhoun told Reuters on Tuesday the 
regulator's push for higher standards for manufacturers will 
ensure pipeline operators do not need to outline comprehensive 
additional specifications.  
    "We'll absolutely level the playing field," he said.  
    The higher standards would apply to all manufacturers who 
provide parts to Canadian pipeline operators, including South 
Korea's TK Corp  023160.KQ  and Italy's Valvitalia Sp 
 IPO-VALIT.MI , which had provided some substandard parts to 
TransCanada and Enbridge, according to the NEB. 
    Enbridge, TK Corp and Valvitalia did not respond to requests 
for comment. TransCanada was not immediately able to comment. 
    The Canadian Energy Pipelines Association (CEPA), which 
includes TransCanada and Enbridge, said on Tuesday it is 
possible that manufacturers could still pass on some costs of 
the higher standards. But operators will not be heavily affected 
as they can make the money back through the lifecycle of their 
pipelines, CEPA said. 
    Colquhoun said possible new measures for quality assurance 
include more standardization of manufacturing methods and 
training for certain employees of pipeline operators.  
    The report recommended changes that also include more 
disclosures and tracking of materials from manufacturers. 
    The NEB will decide on detailed measures this year, and 
while it could take up to 2023 for changes to formally be 
adopted by the external standards association, the regulator 
will take action if quality assurance issues demand immediate 
attention, Colquhoun said. 
 
 (Editing by Denny Thomas and Jonathan Oatis) 
 ((Ethan.Lou@thomsonreuters.com; +1-403-531-1634; Reuters 
Messaging: ethan.lou.thomsonreuters.com@reuters.net)) 
 
Keywords: CANADA PIPELINES/PARTS