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

TK

05/07/2017 22:25

(Adds comment from TransCanada) 
    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 from operators and move it more to 
manufacturers, 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 parts 
they were using were 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, making it imperative for them 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 this week 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. 
    TransCanada, which was among companies represented at an NEB 
workshop last week on quality assurance for pipeline parts, said 
it will use conclusions from the event to bolster its quality 
management program. 
    Enbridge, TK Corp and Valvitalia did not respond to requests 
for comment. 
    The Canadian Energy Pipelines Association, which includes 
TransCanada and Enbridge, said 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. It could 
take up to 2023 for changes to be adopted formally by the 
external standards association, but the regulator will take 
action if quality assurance issues demand immediate attention, 
Colquhoun said. 
 
 (Editing by Jonathan Oatis and Dan Grebler) 
 ((Ethan.Lou@thomsonreuters.com; +1-403-531-1634; Reuters 
Messaging: ethan.lou.thomsonreuters.com@reuters.net)) 
 
Keywords: CANADA PIPELINE/PARTS