Enbridge Kalamazoo cleanup now set at $1.157 billion and growing

The cost of Enbridge’s cleanup from the spill at Marshall, Michigan in 2010 is now $1.157 billion the company said Friday as it released its second quarter results. That is an increase of $35 million from the estimates Enbridge released at the end of 2013 and the first quarter of 2014.

As of June, 2014, Enbridge faces possibly $30 million in fines and penalties from the United States government.

In its quarterly report Enbridge said

EEP   [Embridge Energy Partners] continues to perform necessary remediation, restoration and monitoring of the areas affected by the Line 6B crude oil release. All the initiatives EEP is undertaking in the monitoring and restoration phase are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.

On March 14, 2013, as previously reported, the United States Environmental Protection Agency ordered in Enbridge to undertake “additional containment and active recovery of submerged oil relating to the Line 6B crude oil release.”

new Enbridge logoEnbridge says it has “completed substantially all of the EPA order, “with the exception of required dredging in and around Morrow Lake and its delta.”

“Approximately $30 million of the increase in the total cost estimate during the three months ended June 30, 2014 is primarily related to the finalization of the MDEQ approved Schedule of Work and other costs related to the on-going river restoration activities near Ceresco,” Enbridge reported.

Enbridge also said it is working with the Michigan Department of Environmental Quality “to transition submerged oil reassessment, sheen management and sediment trap monitoring and maintenance activities from the EPA to the MDEQ, through a Kalamazoo River Residual Oil Monitoring and Maintenance Work Plan.”

Enbridge also said that costs may still go up, saying there continues to be the potential for “additional costs in connection with this crude oil release due to variations in any or all of the cost categories, including modified or revised requirements from regulatory agencies, in addition to fines and penalties and expenditures associated with litigation and settlement of claims.”

Enbridge said that “a majority of the costs incurred in connection with the crude oil release for Line 6B are covered by Enbridge’s comprehensive insurance policy…. which had an aggregate limit of  $650 million for pollution liability.” So far, Enbridge has recovered $547 million of the $650 million from its insurers. Enbridge is suing its insurers to recover the rest of the money.

That means that “Enbridge and its affiliates have exceeded the limits of their coverage under this insurance policy. Additionally, fines and penalties would not be covered under the existing insurance policy,” the company said.

Insurance renewed

Enbridge said it has “renewed its comprehensive property and liability insurance programs under which the Company is insured through April 30, 2015 with a liability aggregate limit of $700 million, including sudden and accidental pollution liability, with a deductible applicable to oil pollution events of $30 million per event, from the previous $10 million.”

It adds:

In the unlikely event multiple insurable incidents occur which exceed coverage limits within the same insurance period, the total insurance coverage will be allocated among Enbridge entities on an equitable basis based on an insurance allocation agreement among Enbridge and its subsidiaries.

All Enbridge figures are in US dollars

The Northern Gateway Joint Review Panel required Enbridge that “its Northern Gateway’s Financial Assurances Plan must provide a total coverage of $950 million for the costs of liabilities for, without limitation, cleanup, remediation, and other damages caused by the Project during the operations phase. The plan should include the following components and minimum coverage levels.” (That figure in Canadian dollars)

Enbridge’s Michigan cleanup costs now exceed JRP pipeline conditions for Gateway, SEC filing shows

NTSB staff examine ruptured pipe
US National Transportation Safety Board staff examine a ruptured pipe from the Enbridge oil spill in August, 2010. The photo was released by the NTSB May 21, 2012. (NTSB)

The costs for Enbridge to clean up the 2010 Marshall, Michigan oil spill now far exceeds the maximum estimate that the Joint Review Panel gave for a major spill on the Northern Gateway Pipeline and also exceeds the amount of money the JRP ordered Enbridge to set aside to deal with a spill. Enbridge’s cleanup costs have also now edged past the higher liability amount requested by the Haisla Nation.

According to the US firm Enbridge Energy Partners’ filing with the United States Securities and Exchange Commission, as of September 30, 2013, the cost of cleanup was $1.035 billion US, not including possible additional fines and penalties that might be imposed by US authorities in the future.

In its decision, the Joint Review Panel estimated the cost a major oil spill from the Northern Gateway project would be about $693 million.  As part of the 209 conditions, the JRP ordered Enbridge to set aside “financial assurances” totaling $950 million.

Note all costs in this article are for a pipeline breach. The Joint Review Panel had different estimates for a tanker spill and the liability rules for marine traffic are different from pipelines.

In its filing for the third quarter of 2013, with the SEC, Enbridge Energy Partners say that the cost up until September 2013 had “exceed[ed] the limits of our insurance coverage.” The same filing says that Enbridge is in a legal dispute with one its insurers.

In its SEC filing, Enbridge says:

Lakehead Line 6B Crude Oil Release
We continue to perform necessary remediation, restoration and monitoring of the areas affected by the Line 6B crude oil release. All the initiatives we are undertaking in the monitoring and restoration phase are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.
As of September 30, 2013, our total cost estimate for the Line 6B crude oil release is $1,035.0 million, which is an increase of $215.0 million as compared to December 31, 2012. This total estimate is before insurance recoveries and excluding additional fines and penalties which may be imposed by federal, state and local governmental agencies, other than the Pipeline and Hazardous Materials Safety Administration, or PHMSA, civil penalty of $3.7 million, we paid during the third quarter of 2012. On March 14, 2013, we received an order from the EPA, or the Environmental Protection Agency, which we refer to as the Order, that defined the scope which requires additional containment and active recovery of submerged oil relating to the Line 6B crude oil release. We submitted our initial proposed work plan required by the EPA on April 4, 2013, and we resubmitted the workplan on April 23, 2013. The EPA approved the Submerged Oil Recovery and Assessment workplan, or SORA, with modifications on May 8, 2013. We incorporated the modification and submitted an approved SORA on May 13, 2013. The Order states that the work must be completed by December 31, 2013.

The $175.0 million increase in the total cost estimate during the three month period ending March 31, 2013, was attributable to additional work required by the Order. The $40.0 million increase during the three month period ending June 30, 2013 was attributable to further refinement and definition of the additional dredging scope per the Order and associated environmental, permitting, waste removal and other related costs. The actual costs incurred may differ from the foregoing estimate as we complete the work plan with the EPA related to the Order and work with other regulatory agencies to assure that our work plan complies with their requirements. Any such incremental costs will not be recovered under our insurance policies as our costs for the incident at September 30, 2013 exceeded the limits of our insurance coverage.

According to the SEC filing, the breakdown of costs include $2.6 million paid to owners of homes adversely impacted by the spill.

Despite the efforts we have made to ensure the reasonableness of our estimates, changes to the recorded amounts associated with this release are possible as more reliable information becomes available. We continue to have the potential of incurring additional costs in connection with this crude oil release due to variations in any or all of the categories described above, including modified or revised requirements from regulatory agencies in addition to fines and penalties as well as expenditures associated with litigation and settlement of claims.
The material components underlying our total estimated loss for the cleanup, remediation and restoration associated with the Line 6B crude oil release include the following:
(in millions)

Response Personnel & Equipment  $454

Environmental Consultants  $193

Professional, regulatory and other $388

Total $ 1,035

For the nine month periods ended September 30, 2013 and 2012, we made payments of $62.3 million and $120.9 million, respectively, for costs associated with the Line 6B crude oil release. For the nine month period ended September 30, 2013, we recognized a $2.6 million impairment for homes purchased due to the Line 6B crude oil release which is included in the “Environmental costs, net of recoveries” on our consolidated statements of income. As of September 30, 2013 and December 31, 2012, we had a remaining estimated liability of $265.9 million and $115.8 million, respectively.

As for insurance, Enbridge Energy Partners say:

The claims for the crude oil release for Line 6B are covered by the insurance policy that expired on April 30, 2011, which had an aggregate limit of $650.0 million for pollution liability. Based on our remediation spending through September 30, 2013, we have exceeded the limits of coverage under this insurance policy. During the third quarter 2013, we received $42.0 million of insurance recoveries for a claim we filed in connection with the Line 6B crude oil release and recognized as a reduction to environmental cost in the second quarter of 2013. We recognized $170.0 million of insurance recoveries as reductions to “Environmental costs, net of recoveries” in our consolidated statements of income for the three and nine month periods ended September 30, 2012 for the Line 6B crude oil release. As of September 30, 2013, we have recorded total insurance recoveries of $547.0 million for the Line 6B crude oil release, out of the $650.0 million aggregate limit. We expect to record receivables for additional amounts we claim for recovery pursuant to our insurance policies during the period that we deem realization of the claim for recovery to be probable.

In March 2013, we and Enbridge filed a lawsuit against the insurers of our remaining $145.0 million coverage, as one particular insurer is disputing our recovery eligibility for costs related to our claim on the Line 6B crude oil release and the other remaining insurers assert that their payment is predicated on the outcome of our recovery with that insurer. We received a partial recovery payment of $42.0 million from the other remaining insurers and have since amended our lawsuit, such that it now includes only one insurer. While we believe that our claims for the remaining $103.0 million are covered under the policy, there can be no assurance that we will prevail in this lawsuit.

 

The Joint Review, Enbridge and Michigan

The Joint Review Panel based its finding on the Marshall, Michigan spill on the figure of $767 million from the summer of 2012 –again showing the limitations of the JRP’s evidentiary deadlines since the costs are now much higher.

The JRP quoted Enbridge as saying:

Northern Gateway considered the high costs of the Marshall, Michigan spill, which were at least $252,000 per cubic metre ($40,000 per barrel), to be an outlier or a rare event because the spill occurred in a densely populated area, because the pipeline’s response time was abnormally long, and because there was the prospect of potentially lengthy legal proceedings.

Enbridge assured the JRP that the corporate culture and management changes and equipment upgrades since the Marshall, Michigan spill lowered that chances of a similar event.

The company based its models for the JRP on much smaller spills, including one spill at Lake Wabamun, Alberta from a train not a pipeline (Vol. 2 p 357)

Enbridge’s risk assessment did not “generate an estimate of economic losses caused
by a spill.”

The JRP says Northern Gateway relied on its analysis of literature, and spill events experienced by Enbridge and other liquid hydrocarbon carriers in Alberta and British Columbia. After assessing all of this information, Northern Gateway regarded the high costs of a cleanup as “conservative”–meaning the company expects costs to be lower than its estimates in evidence before the JRP.

In Northern Gateway’s view the most costly pipeline spill incident would be a full-bore oil pipeline rupture, with an estimated cost of $200 million, and an extremely low probability of occurrence.

Haisla evidence

In their evidence, the Haisla (and other First Nations and intervenors) were doubtful about Northern Gateway’s assurances. The Haisla asked that Enbridge have a minimum of $1 billion in liability, an amount Enbridge has now exceeded in Michigan.

Haisla Nation estimated the cost of damage to ecosystem services because of a terrestrial oil spill from Northern Gateway’s pipeline would be in the range of $12,000 to $610 million for a 30-year period.

The Haisla’s cost estimates were based on values for environmental goods and services and probabilities of spills that were independent of Northern Gateway’s parameters for estimating oil spill costs. In contrast to Northern Gateway’s estimated spill frequency and costs, the Haisla predicted that spills would occur more often and placed a higher value on damages to environmental goods and services.

Haisla Nation argued that Northern Gateway overestimated its ability to detect and respond to a spill. In the Haisla’s view this resulted in the cost of a spill and the requisite financial assurances being understated. Haisla cited several factors, including: remote location, limited access, challenging terrain, seasonal conditions, and river flow conditions that would cause the cost of cleaning up a spill in the Kitimat River valley to be significantly greater than the costs associated with Enbridge’s Marshall, Michigan spill.

For these reasons, Haisla proposed that Northern Gateway should be required to obtain a minimum of $1 billion of liability coverage through insurance and financial assurances. Haisla said that Northern Gateway should file annually the report from an independent third party assessing the financial assurances plan. (Vol 2 p359)

In response Northern Gateway said:

Northern Gateway said that Haisla’s findings were based on a number of fundamental methodological flaws and a lack of probability analysis to support the high frequency of occurrence of oil spill events. Northern Gateway argued that Haisla’s estimates of ecosystem service values were inflated because they were based on values from unrelated studies. In Northern Gateway’s view, Haisla relied on high passive use values that were not justified.

JRP ruling

As it has in most of its decision, the JRP accepted Northern Gateway’s evidence, including its explanation of the Marshall, Michigan spill and then went on to base its spill cost estimates not on a pipeline breach but on the 2005 railway spill at Lake Wabumum, near White Sands, Alberta.

The Panel accepts that the cleanup costs for the Marshall, Michigan spill were orders of magnitude higher because of the extended response time. In this application, the Panel accepts Northern Gateway’s commitment to complete the shutdown in no more than 13 minutes after detection. For this reason the Panel did not use the Marshall spill costs in its calculations. The spill volume and the resulting costs are directly dependent on the Northern Gateway’s control room staff and the pipeline control system fully closing the adjacent block valves no longer than 13 minutes from the detection of an alarm event, as well as the amount of oil which would drain out of the pipeline after valve closure due to elevation differences.

The Panel decided on a total unit cost of $138,376 per cubic metre ($22,000 per barrel). This is midway between the unit cost of $88,058 per cubic metre ($14,000) per barrel proposed by Northern Gateway and the unit cost of $188,694 per cubic metre ($30,000 per barrel) for the Lake Wabamun spill. It is about one-half of the Marshall spill’s unit cost. Giving weight to the Lake Wabamun costs recognizes actual costs experienced in a Canadian spill and the greater costs of spills in high consequence areas. In these areas, individuals, populations, property, and the environment would have a high sensitivity to hydrocarbon spills. The deleterious effects of the spill would increase with the spill volume, the extent of the spill, and the difficulty in accessing the spill area for cleanup and remediation.

Using these spill volume and unit cost values in the calculation below, the Panel estimated the total cost of a large spill could be $700 million. Total cost of a spill = 31,500 barrels x $22,000 per barrel = $693 million, or $700 million when rounded up.

(p362)

The Panel based the financial assurances requirements for Northern Gateway on a spill with a total estimated cost of $700 million and directs Northern Gateway to develop a financial assurances plan with a total coverage of $950 million that would include the following components:
i. Ready cash of $100 million to cover the initial costs of a spill;
ii. Core coverage of $600 million that is made up of stand-alone, third party liability insurance and other appropriate financial assurance instruments, and
iii. Financial backstopping via parental, other third party guarantees, or no fault insurance of at least $250 million to cover costs that exceed the payout of components i. and ii.
The financial backstopping would be available to fill the gap if the spill volumes or unit costs were under-estimated or if the payout from the core coverage would be less than 100 per cent.

The Panel noted that:

The evidence indicates that there is some probability that a large oil spill may occur at some time over the life of the project. In these circumstances the Panel must take a careful and precautionary approach because of the high consequences of a large spill. The Panel has decided that Northern Gateway must arrange and maintain sufficient financial assurances to cover potential risks and liabilities related to large oil spills during the operating life of the project.

Northern Gateway committed to investing $500 million in additional facilities and mitigation measures such as thicker wall pipe, more block valves, more in-line inspections, and complementary leak detection systems. This initiative should enhance the safety and reliability of the system and help reduce and mitigate the effects of a spill, but it would not eliminate the risk or costs of spills. This initiative is not a direct substitute for third party liability insurance and does not eliminate the need for liability insurance or any other form of financial assurance to cover the cost of a spill. (p 361)

So the JRP decision comes down to this, if you accept Northern Gateway’s position that pipeline spills are rare and mostly small, then the company has the financial resources to cover the damage. If, however, Northern Gateway is wrong and the costs of a pipeline cleanup exceed the $950 million required by the Joint Review Panel, as has happened in Michigan, then those JRP conditions are already obsolete.

(Northwest Coast Energy News encourages all readers to read the complete JRP report  and SEC filing since space and readability does not permit fully quoting from the report)

EPA Orders Enbridge to Perform Additional Dredging to Remove Oil from Kalamazoo River

The United States Environmental Protection Agency has ordered Enbridge to dredge the Kalamazoo River to remove addition bitumen.

The EPA issued this news release

CHICAGO (March 14, 2013) – The U.S. Environmental Protection Agency today issued an administrative order that requires Enbridge to do additional dredging in Michigan’s Kalamazoo River to clean up oil from the company’s July 2010 pipeline spill. EPA’s order requires dredging in sections of the river above Ceresco Dam, upstream of Battle Creek, and in the Morrow Lake Delta.

EPA has repeatedly documented the presence of recoverable submerged oil in the sections of the river identified in the order and has determined that submerged oil in these areas can be recovered by dredging. The dredging activity required by EPA’s order will prevent submerged oil from migrating to downstream areas where it will be more difficult or impossible to recover.

Enbridge has five days to respond to the order and 15 days to provide EPA with a work plan. Dredging is anticipated to begin this spring and is not expected to result in closures of the river. EPA’s order also requires Enbridge to maintain sediment traps throughout the river to capture oil outside the dredge areas.

On July 26, 2010, Enbridge reported that a 30-inch oil pipeline ruptured near Marshall, Michigan. Heavy rains caused the spilled oil to travel 35 miles downstream before it was contained.

 

New US pipeline safety report finds more problems with Enbridge, problems also found in other big pipeline companies

Leak detection report coverA new draft report for the U.S. Congress from the United States Pipeline and Hazardous Materials Safety Administration takes new aim at Enbridge for failures in its pipeline leak detection and response system.

Not that the PHMSA is singling out Enbridge, the report is highly critical of leak detection systems on all petroleum and natural gas pipeline companies, saying as far as the United States is concerned, the current pipeline standards are inadequate.

The release of the “Leak Detection Report” written by Kiefner & Associates, Inc (KAI) a consulting firm based in Worthington, Ohio, comes at a critical time, just as Enbridge was defending how it detects pipeline leaks before the Joint Review Panel questioning hearings in Prince George, where today Enbridge executives were under cross-examination by lawyers for the province of British Columbia on how the leak detection system works.

In testimony on Wednesday, October 12, Enbridge engineers told the Joint Review Panel that the company’s pipelines are world-class and have a many prevention and detection systems.

Northern Gateway president John Carruthers testifed there is no way to eliminate all the risks but the company was looking for the best way of balancing benefits against the risk.

However, the KAI report points out that so far, all pipeline company cost-benefit analysis is limited by a short term, one to five year point of view, rather than looking at the entire lifecycle of a pipeline.

Two Enbridge spills, one the well-known case in Marshall Michigan which saw bitumen go into the Kalamazoo River and a second in North Dakota, both in 2010, are at the top of the list in the study for PHMSA by the consulting firm.

On the Marshall, Michigan spill the KAI report goes over and adds to many of the criticisms of Enbridge in the National Transportation Safety Report in July which termed the company’s response like the “Keystone Kops.”

The second spill, in Neche, North Dakota, which, unlike the Marshall spill, has had little attention from the media, is perhaps equally damning, because while Enbridge’s detection systems worked in that case–the KAI report calls it a “text book shutdown”– there was still a spill of 158,928 gallons (601,607 litres) of crude oil, the sixth largest hazardous liquid release reported in the United States [between 2010 and 2012] because Enbridge “did not plan adequately for containment.”

(The KAI report also examines problems with natural gas pipelines, including one by TransCanada Northern Border line at Campbell, Wyoming in February 2011. Northwest Coast Energy News will report on the natural gas aspects of the report in a future posting.)

The highly technical, 270-page draft report was released on September 28, as Enbridge was still under heavy criticism from the US National Transportation Safety Board report on the Marshall, Michigan spill and was facing penalties from the PHMSA for both the Marshall spill and a second in Ohio.

Looking at overall pipeline problem detection, KAI says the two standard industry pipeline Leak Detection Systems or LDS didn’t work very well. Between 2010 and 2012, the report found that Computational Pipeline Monitoring or CPMs caught just 20 per cent of leaks. Another system, Supervisory Control and Data Acquisition or SCADAs caught 28 per cent.
Even within those acronym systems, the KAI report says major problem is a lack of industry standards. Different companies use different detector and computer systems, control room procedures and pipeline management.

The report also concludes that the pipeline industry as a whole depends far too much on internal detectors, both for economic reasons and because that’s what the industry has always done. External detectors, the report says, have a better track record in alerting companies to spills.

A significant number of spills are also first reported by the public or first responders, rather than through the pipeline company system and as KAI says of Enbridge, “Operators should not rely on the public to tell them a pipeline has ruptured.”

The consultants also say there are far too many false alarms in spill detection systems.

Although the KAI report concentrates on the United States, its report on Enbridge does raise serious questions about how the company could detect a pipeline breach or spill in the rugged northern British Columbia wilderness where the Northern Gateway Pipeline would be built, if approved by the federal government.

The report comes after the United States Congress passed The Pipeline Safety, Regulatory Certainty, and Job Creation Act, which was signed into law by President Barack Obama on January 3, 2012. The law called on a new leak detection study to be submitted to Congress that examines the technical limitations of current leak detection systems, including the ability of the systems to detect ruptures and small leaks that are ongoing or intermittent. The act also calls on the US Department of Transportation to find out what can be done to foster development of better technologies and economically feasible ways of detecting pipeline leaks. The final report must be submitted to Congress by January 3, 2013.

(The draft report does note in some ways, Canadian standards for detecting pipeline leaks are better than those in the United States. For example, Canada requires some pipeline testing every year, the United States every five years. It also finds European pipeline monitoring regulations also surpass those in the United States).

The spills studied in the report all found weaknesses in one or more of those three areas: people, company procedures and the technology. It appears that the industry agrees, at least in principle, with executives telling the consultants:

The main identified technology gaps – including those identified by operators – include: reduction or management of false alarms; applicable technical standards and certifications; and value / performance indicators that can be applied across technologies and pipelines.

The report echoes many of the findings of the US National Transportation Safety Board in its examination of the Enbridge Marshall, Michigan spill but it applies to all pipeline companies, noting:

Integration using procedures is optimal when it is recognized that alarms from the technology are rarely black-and-white or on/off situations. Rather, at a minimum, there is a sequence: leak occurrence; followed by first detection; followed by validation or confirmation of a leak; followed by the initiation of a shutdown sequence. The length of time that this sequence should take depends on the reliability of the first detection and the severity of the consequences of the release. Procedures are critical to define this sequence carefully – with regard to the technology used, the personnel involved and the consequences – and carefully trained Personnel are needed who understand the overall system, including technologies and procedures.

We note that there is perhaps an over-emphasis of technology in LDS. A recurring theme is that of false alarms. The implication is that an LDS is expected to perform as an elementary industrial automation alarm, with an on/off state and six-sigma reliability. Any alarm that does not correspond to an actual leak is, with this thinking, an indicator of a failure of the LDS system.

Instead, multiple technical studies confirm that far more thought is required in dealing with leak alarms. Most technologies infer the potential presence of a leak via a secondary physical effect, for example an abnormal pressure or a material imbalance. These can often be due to multiple other causes apart from a leak.

The report takes a critical look at the culture of all pipeline companies which divides problems into leaks, ruptures and small seeps. Under both pipeline practice and the the way problems are reported to the PHMSA in the US a “rupture is a situation where the pipeline becomes inoperable.” While a rupture means that a greater volume of petroleum liquid or natural gas is released, and is a higher priority than a leak or seep, the use of language may mean that there is a lower priority given to those leaks and seeps than the crisis created by a rupture.

(Environmental groups in British Columbia have voiced concerns about the cumulative affect of small seeps from the Enbridge Northern Gateway that would be undetectable under heavy snow pack either by an internal system or by external observation)

Overall, the report finds serious flaws to the way pipeline companies are conducting leak detection systems at the moment, including:

  • Precisely the same technology, applied to two different pipelines, can have very different results.
  • Leak Detection Systems do not have performance measures that can be used universally across all pipelines. Compounding the problem are different computer systems where software, program configuration and parameter selection all contribute, in unpredictable ways, to overall performance.
  • Many performance measures present conflicting objectives. For example, leak detection systems that are highly sensitive to small amounts of lost hydrocarbons are also prone to generating more false alarms.
  • The performance of a leak detection system depends critically on the quality of the engineering design, care with installation, continuing maintenance and periodic testing.
  • Even though an internal technology may rely upon simple, basic principles, it is in fact, complex system that requires robust metering, robust SCADA and telecommunications, and a robust computer to perform the calculations. Each of these subsystems is individually complex.
  • Near the inlet and the outlet of the pipeline a leak leads to little or no change in pressure. Flow rates and pressures near any form of pumping or compression will generally be insensitive to a downstream leak
  • Differences in any one of these factors can have a dramatic impact on the ultimate value of a leak detection system.

The report goes on to  say:

There is no technical reason why several different leak detection methods can not be implemented at the same time. In fact, a basic engineering robustness principle calls for at least two methods that rely on entirely separate physical principles.

The report strongly recommends that pipeline companies take a closer look at external leak detection systems. Even though the US Environmental Protection Agency began recommending the use of external detection as far back as 1988, the companies have resisted due to the cost of retrofitting the legacy pipeline network. (Of course if the pipeline companies had started retrofitting with external detectors in 1988 they would be now 24 years into the process).

KAI says:

  • External leak detection is both very simple – relying upon routinely installed external sensors that rely upon at most seven physical principles – and also confusing, since there is a wide range of packaging, installation options, and operational choices to be considered.
  • External leak detection sensors depend critically on the engineering design of their deployment and their installation.
  • External sensors have the potential to deliver sensitivity and time to detection far ahead of any internal system.
  • Most technologies can be retrofitted to existing pipelines. In general, the resistance to adopting external technologies is, nevertheless, that fieldwork on a legacy pipeline is relatively expensive.
  • The report goes on to identify major bureaucratic roadblocks within pipeline companies. Like many other big corporations, walls exist that prevent the system from working well
  • A particular organizational difficulty with leak detection is identifying who “owns” the leak detection system on a pipeline. A technical manager or engineer in charge is typically appointed, but is rarely empowered with global budgetary, manpower or strategic responsibilities. Actual ownership of this business area falls variously to metering, instrumentation and control, or IT.

The report calls for better internal standards at pipeline companies since with leak detection “one size does not necessarily fit all”.

It also notes that “flow metering is usually a central part of most internal leak detection systems,” but adds “flow meter calibration is by far the most laborious part of an internal system’s maintenance.

Also, the central computer and software technology usually has maintenance requirements far greater than most industrial automation and need special attention.”

While a company may do a cost benefit analysis of its leak detection system and risk reduction system it will generally emphasize the costs of the performance and engineering design of the leak detection system, the companies usually place less emphasis on the benefits of a robust system, especially the long term benefits.

At present the pipeline companies look at the benefit of leak detection as a reduction in risk exposure, or asset liability, “a hard, economic definition… understood by investors.” But the report adds that leak detection systems have a very long lifetime and over that life cycle, the cost-benefit approaches the reduction in asset liability caused by the system, when divided by annual operational costs. However, since pipeline companies budget on a one to five year system the long term benefit of robust, and possibly expensive spill detection is not immediately apparent.

Enbridge

The consultants studied 11 US oil spills, the top two with the greatest volume were from Enbridge pipelines. The others were from TE Products Pipeline, Dixie Pipeline, Sunoco, ExxonMobil, Shell, Amoco, Enterprise Products, Chevron and Magellan Pipeline. Not all US spills were used in the KAI report, the 11 were chosen for availability of data and documentation.

The largest spill in the KAI study was the pipeline rupture in Michigan at 843,444 gallon (3,158,714 litres) which has been the subject of continuing media, investigative and regulatory scrutiny. The second spill in North Dakota, has up to now received very little attention from the media. That will likely change once the US Congress gets the final report. Even though the Neche, North Dakota spill, has been described as “text book case” of a pipeline shutdown, there was still a large volume of oil released.

Marshall, Michigan spill

On the Marshall, Michigan spill that sent bitumen into the Kalamazoo River the report first goes over the facts of the 843,444 gallon spill and the subsequent release of a highly critical report from the US National Transportation Safety Board. It then looks at the failures of Enbridge’s detection system from the point of view mandated for the report to Congress:

The pipeline was shutting down when the ruptured occurred. Documentation indicates that a SCADA alarm did sound coincident with the most likely time of the rupture. It was dismissed. The line was shut down for around 10 hrs and crude oil would have drained from the line during this time.

On pipeline start up, alarms in the control room for the ruptured pipeline sounded. They were dismissed. This was repeated two more times. The pipeline was shut down when the control room was notified of the discharge of the crude oil by a member of the public. The time to shut down the pipeline is not relevant here because of the 17 hours that elapsed after the rupture occurred.

The review identified issues at Enbridge relevant to this Leak Detection Study:

1. Instrumentation on a pipeline that informs a controller what is happening to the pipeline must be definitive in all situations.
2. However, the instrumentation did provide warnings which went unheeded by controllers.
3. Instrumentation could be used to prevent a pump start up.
4. Operators should not rely on the public to tell them when a pipeline has ruptured.
5. Pipeline controllers need to be fully conversant with instrumentation response to different operations performed on the pipeline.
6. If alarms can be cancelled there is something wrong with the instrumentation feedback loop to the controller. This is akin to the low fuel warning on a car being turned off and ignored. The pipeline controller is part of an LDS and failure by a controller means the LDS has failed even if the instrumentation is providing correct alarms.
7. If the first SCADA alarm had been investigated, up to 10 hours of pipeline drainage to the environment might have been avoided. If the second alarm had been investigated, up to 7 hours of pumping oil at almost full capacity into the environment might have been avoided.
8. CPM systems are often either ignored or run at much higher tolerances during pipeline start ups and shutdowns, so it is probable that the CPM was inoperative or unreliable. SCADA alarms, on the other hand, should apply under most operating conditions.

Neche, North Dakota spill

At approximately 11:37 pm. local time, on January 8, 2010, a rupture occurred on Enbridge’s Line 2, resulting in the release of approximately 3000 barrels or 158,928 gallons of crude oil approximately 1.5 miles northeast of the town of Neche, North Dakota, creating the sixth largest spill in the US during the study period.

As the report notes, in this case, Enbridge’s detection system worked:

At 11:38 pm., a low-suction alarm initiated an emergency station cascade shutdown. At 11:40 pm., the Gretna station valve began closing. At 11:44 pm., the Gretna station was isolated. At 11:49 pm., Line 2 was fully isolated from the Gretna to Donaldson pump stations.

Documentation indicates a rapid shut down on a low suction alarm by the pipeline controller. From rupture to shut down is recorded as taking 4 minutes. The length of pipeline isolated by upstream and downstream remotely controlled valves was 220,862 feet. The inventory for this length of line of 26-inch diameter is 799,497 gallons. The release amount was around 20 per cent of the isolated inventory when the pipeline was shut down.

The orientation of the 50-inch long rupture in the pipe seam is not known. The terrain and elevation of the pipeline is not known. The operator took around 2 hours and 40 minutes to arrive on site. It is surmised that the rupture orientation and local terrain along with the very quick reactions by the pipeline controller may have contributed to the loss of around 20 per cent of the isolated inventory.

The controller was alerted by the SCADA. Although a CPM system was functional the time of the incident it did not play a part in detecting the release event. It did provide confirmation.

But the KAI review identified a number of issues, including the fact in item (7) Enbridge did not plan for for containment and that containment systems were “under-designed.”

1. This release is documented as a text book shut down of a pipeline based on a SCADA alarm.
2. The LDS did not play a part in alerting the pipeline controller according to
documentation. However, leak detection using Flow/Pressure Monitoring via SCADA
worked well.
3. Although a textbook shut down in 4 minutes is recorded, a large release volume still occurred.
4. The release volume of 158,928 gallons of crude oil is the sixth largest hazardous liquid release reported between January 1, 2010 and July 7, 2012.
5. The length of pipeline between upstream and downstream isolation valves is long at 41.8 miles.
6. If not already performed, the operator should review potential release volumes based on ruptures taking place at different locations on the isolated section.
7. The success of a leak detection system includes planning for the entire process: detection through shutdown through containment. In this case, the operator did not plan adequately for containment so that although the SCADA leak detection technology, the controller and the procedures worked well, the containment systems (isolation valves) were under-designed and placed to allow a very large spill.”

 

 

 KAI Draft report on Leak Detection Systems at the Pipeline and Hazardous Materials Safety Administration website

 

Enbridge faces $68,000 fine for not inspecting pipeline branch in Ohio

Enbridge is facing a new penalty from the US Pipeline and Hazardous Materials Administration for not inspecting a pipeline branch in Ohio and Michigan. The decision by the PHMSA comes just after a couple of days after the agency acknowledged that Enbridge had paid the civil penalty for the Marshall, Michigan oil spill with a wire transfer to the US Treasury of $3,699,200 on August 12. It was the Marshall pipeline breach and spill that led to bitumen entering the Kalamazoo River.

The new proposed penalty is much lower, just $68,000. It relates to the PHMSA inspection of Enbridge’s Toledo pipeline between July 12 and July 15, 2010.

The PHMSA says it found three alleged violations of federal pipeline safety regulations.

As well as the proposed civil penalty of $68,000, Enbridge Toledo is required to submit past records for inspections of subsequent overpressure safety devices and out-of-service tanks
The agency lists the violations as:

1. Failure to adequately inspect the right-of-way at a mainline valve location in Toledo as required by 49 CFR §195.412.
No proposed penalty — Warning Item.
1. Exceeding the maximum interval for inspection of 12 overpressure safety devices as required by 49 CFR §195.428.
Proposed penalty is $39,000 + PCO.
1. Exceeding the maximum interval for API 653 internal inspections of two breakout tanks located at Stockbridge, MI as required by 49 CFR §195.432.
Proposed penalty is $29,600 + PCO.

Enbridge can, if it wishes, challenge the NOPV (Notice of Possible Violation) in court.  In the case of the original Marshall, Michigan, spill NOPV, Enbridge did not challenge the findings of the PHMSA and paid the penalty.

The new document sent to Enbridge by David Barrett, PHMSA Director, Central Region says that the company failed to perform internal inspections or establish a corrosion rate for the bottom plates of its tanks within the 10 year period as required by US regulations. It also says Enbridge failed to demonstrate that they had established a basis for the corrosion rate for the tank bottoms and exceeded the 10 year maximum internal inspection interval for unknown corrosion rates.

Additionally, Enbridge did not have similar service experience, or procedures to apply similar service experience available to make this inspection interval determination.

The PHMSA also says that Enbridge Enbridge failed to inspect its overpressure safety devices at intervals not exceeding 15 months, but at least once each calendar year. The inspection intervals exceeded the maximum 15 month interval by 14-24 days for the overpressure safety devices listed int the order.

The compliance order calls for Enbridge to submit documentation of all inspections performed on
each of the tanks and overpressure devices listed in the PHMSA order from 2010 to present. Enbridge has to internally inspect each of the tanks and to submit to the PHMSA documentation on the “safety improvement costs” needed to comply with the order.

As for the Marshall, Michigan spill, while Enbridge promptly paid the civil penalty, the PHMSA order notes

This Order does not resolve any existing or potential civil or criminal liability that Enbridge may have for any other violations of the federal Pipeline Safety Laws, or any regulations or orders issued thereunder, not specifically enumerated herein. Further, this Order does not resolve any existing or potential civil or criminal liability that Enbridge may have for violations ofany other federal laws arising from or otherwise related to the events or conduct giving rise to this Order or
to the consequences or damages resulting from the Failure.

Link: PHMSA Inspection of Enbridge (Toledo) Pipeline Results in NOPV and Civil Penalty

PHMSA Final Order Marshall Michigan spill PDF

NEB conducting safety audit of Enbridge

The National Energy Board is following up a highly critical report by the US National Transportation Safety Board on the Marshall, Michigan spill by conducting an overall safety audit of Enbridge pipeline management and practices.  The NEB says the review began even before the NTSB report was released:

even prior to the release of the final report, we have been reviewing Enbridge’s management practices. In the next weeks and months, we will be conducting safety audits to review and confirm that improvements, particularly to their control room practices in Edmonton, are satisfactory.

In a letter to the public from NEB chair, Gaétan Caron, posted on the NEB website, the agency says: “Pipeline safety is and always has been of paramount concern to the National Energy Board and we recognize it is of growing concern to Canadians.”

The letter goes on to say:

Given recent events, it is important that Canadians understand how we hold companies accountable for public safety and protection of the environment and take swift and appropriate action when they do not.

The Board takes a proactive approach to preventing spills and releases, with the ultimate goal of seeing none at all. We require pipeline companies to anticipate, prevent, manage and mitigate potentially dangerous conditions associated with their pipelines.

To do this, we conduct compliance verification activities which include things such as inspections, compliance meetings, emergency exercises, audits and investigations on a regular basis with all companies we regulate. In the specific case of Enbridge, in recent years the NEB has conducted approximately 25 compliance verification activities per year, focusing on every aspect of their management system. In addition, the NEB imposed two precautionary pressure restrictions on Enbridge pipelines, one in 2010 and another in 2011, which remain in effect.

When the NEB identifies deficiencies in a company’s systems, projects or programs, we require the company to immediately implement changes to correct those deficiencies or to develop a corrective action plan for NEB approval. It is important to note that we aim to prevent incidents from occurring in the first place and we will take all available actions at our disposal to protect the environment and the public. The NEB may revoke authorizations, impose safety orders that restrict operations, issue stop-work orders and monetary penalties as well as pursue criminal prosecution.

The NEB has also reviewed the synopsis of the National Transportation Safety Board’s report on Enbridge’s Line 6B rupture in Michigan in 2010 to see what we can learn in the interests of public safety and environmental protection. A thorough review of the final report will be conducted in order to identify all lessons that may be applied to pipelines and companies under the Board’s jurisdiction, however even prior to the release of the final report, we have been reviewing Enbridge’s management practices. In the next weeks and months, we will be conducting safety audits to review and confirm that improvements, particularly to their control room practices in Edmonton, are satisfactory.

The NEB goes on to stay that Jobs, Growth and Long-term Prosperity Act (formerly Bill C-38) is giving the agency more bight:

 the Government of Canada will be adding another tool to our compliance and enforcement toolkit: administrative monetary penalties (AMPs). The new AMP sections in the NEB Act set out the maximum daily penalties for both individuals and companies. For individuals the maximum daily penalty is $25,000 for each violation and for companies the maximum daily penalty is $100,000 per violation.

The Act stipulates that each day a violation continues is considered to be a separate violation. This means that separate penalties could be issued per infraction, per day with no maximum total financial penalty.

Some of the details of the AMPs design are described in the government amendments to the NEB Act, but other details, such as what activities will be considered violations, will be written in a new regulation. We have committed to have these new regulations ready to use by July 6, 2013.

The NEB says it will continue to make public any enforcement measures it takes.

As a part of our Action Plan on Safety and Environmental Protection, we began posting all documents related to Board-initiated safety and environmental compliance actions to our website in fall of 2011.

The Board is committed to continually improving the way we do business and we welcome any opportunity that allows us to do so in the interests of pipeline safety and environmental protection.

Enbridge has not yet responded to the NEB release.

Haisla ask Gateway JRP to force Enbridge to release more Kalamazoo spill information

The Haisla Nation have asked the Northern Gateway Joint Review panel to force Enbridge to reveal more information about the pipeline rupture and oil spill near Kalamazoo, Michigan, in July 2010. The Haisla are also asking for more and better information about the $500 million project upgrades that Enbridge announced last month.

In a notice of motion filed July 30, with the JRP, lawyers representing the Haisla Nation note that they had previously asked Enbridge “a number of questions relating to Enbridge’s spill of 3,785,000 litres of diluted bitumen into the Kalamazoo River at Marshall, Michigan (the ‘Kalamazoo Spill’).”

The notice then notes that “Northern Gateway refused to reply as the matter was under investigation by the United States National Transportation Safety Board… The NTSB’s Accident Report was adopted on July 10, 2012 and has now been released to the public. The basis for Northern Gateway’s refusal to answer the Haisla Nation’s information requests is, therefore, no longer present.”

The Haisla are asking the JRP

that Northern Gateway is required to file evidence relating to the Kalamazoo Spill
which identifies the cause of the pipeline rupture and the extent to which
Enbridge’s pipeline maintenance, monitoring and response approach caused and
contributed to the volume of the spill by a date to be fixed by the Panel;

As for the upgrades, the Haisla notice of motion notes

Northern Gateway has identified additional design features, which it states will “enhance the safety and reliability of the pipelines over and above standard industry practice”. The design features identified in the Reply Evidence include increased wall thickness of the pipeline, additional increases in pipe thickness for crossings at major tributaries to the Fraser, Skeena and Kitimat River, the placement of remotely operated isolation valves on each side of major tributaries of the Fraser,Skeena and Kitimat Rivers, and dual remote monitoring systems ….
Northern Gateway has not provided any details relating to these proposed design
features. Their relevance and suitability to enhancing safety and reliability of the
pipelines cannot, therefore, be assessed.

The motion asks

that Northern Gateway is required to provide details of its proposed additional
design features for thicker pipes for the pipeline generally and at identified
watercourse crossings, for additional valve placements, and for additional remote
monitoring, as well as all studies and reports that support how these additional
design features enhance pipeline safety, by a date to be fixed by the Panel.

The Haisla motion also asks for more details on various environmental and other questions.

The Joint Review Panel has not yet ruled on the Haisla motion.

Haisla Nation Notice of Motion  (pdf)

New US report slams Enbridge for spill record, as scientific investigation opens into diluted bitumen

A new US report is slamming Enbridge for its record on oil spills, just as the BC government set out strict new conditions for building pipelines and tanker traffic in the province.

The United States National Wildlife Association issued a report today called Importing Disaster, The Anatomy of Once and Future Oil Spills. (pdf of report at the bottom of this page)

At the same time,  the US Academy of Sciences has opened a new investigation into diluted bitumen.

 

 

 

A letter critical of Enbridge, previously overlooked by the US media is getting new traction, as the anniversary of the Marshall, Michigan, Kalamazoo River spill approaches on July 25.

Enbridge, so far, has not responded to the National Wildlife Federation report.

The environmental group opens the report by saying:

As the biggest transporter of Canadian tarsands oil into the U.S., Enbridge has aresponsibility to the American public to manage their operations in a manner that protects our comm unities and natural resources. But tarsands oil is a very different beast than conventional crude oil, and it is difficult to transport the former safely through pipelines that were designed for the latter. That’s because tarsands oil is more corrosive(due to its chemical mixture)and abrasive(due to high-gritminerals), weakening the pipes to the point  that they are more susceptible t oleaks and ruptures. Remarkably, there are no standards in place to ensure that new pipelines are built, maintained and operated with this fact in mind.

The National Wildlife Association goes on to say:

 fossil fuel companies have a ‘stranglehold’ on our political establishment, preventing even modest initiatives that could make our energy safer and cleaner. That lobby strategy keeps in place a system that’s led to 804 spills by Enbridge alone in the last decade, and a total of 6,781,950 gallons of oil spilled in the U.S. and Canada.

“Rather than focus on safety and cleanup, Enbridge is recklessly moving ahead with plans to expand their pipeline network in the Great Lakes region and the Northeast, and to double down on high carbon fuel that is proving nearly impossible to clean from Michigan’s waters,” said Beth Wallace, NWF’s Great Lakes outreach advisor.

NWF’s report recommends comprehensive reforms to break the cycle of spills and pollution that continue to threaten communities and speed global warming.  Among them, the report calls for stronger safety standards that account for increased dangers associated with heavy tar sands oil, increasing investment in clean energy and efficiency, and campaign and lobbying reforms that would put impacted citizens on a level playing field with Big Oil in the halls of Congress.

The NWF report then says:

 The Kalamazoo spill may have been a poster child for corporate negligence but it is far from the company’s only black mark. According to Enbridge’s own reports, between 1999 and 2010, they have been responsible for at least 800 spills that have released close to seven million gallons of heavy crude oil into the environment — or approximately half the amount of oil that spilled from the Exxon Valdez in 1989.

Canada has seen its own share of Enbridge heartache, including a 61,000 gallon spill earlier this summer near Elk Point, Alberta.

The National Wildlife Federation report is calling for  stronger pipeline safety standards that account for the dangers of transporting bitumen sands oil from Canada amd wants more rigorous reviews of all pipeline projects. The report calls bitumen sands oil “the planet’s dirtiest oil.”

US media covering the National Wildlife release and looking to the anniversary of the Kalamazoo disaster, are now quoting an overlooked letter from the US advocacy group Public Citizen issued on June 25.  

Concerned about Keystone XL pipeline, the advocacy group sent a letter to the Texas House of Representatives, recommending that the state should not wait for US federal rules to prevent tar sands pipeline spills. Public Citizen called the industry’s track record “troubled” and asked the committee to take up legislation that would give Texas broader authority over pipelines.

The committee will examine state regulations governing oil and gas well construction and integrity, as well as pipeline safety and construction, to determine what changes should be made to ensure that the regulations adequately protect the public. Public Citizen will testify in support of stronger rules for the Seaway pipeline (an existing line repurposed to carry tar sands instead of crude oil), the Keystone pipeline (whose southern leg is not yet built) and proposed future tar sands pipelines.

“These companies keep calling it petroleum, but it’s not – these are pipelines of poison,” said Tom “Smitty” Smith, director of Public Citizen’s Texas office.

The media reports on the NWF release are pointing to a new investigation by the US National Academy of Sciences on the safety of diluted bitmenl safety in the United States, that will be part of a report to the US Congress

 An ad hoc committee will analyze whether transportation of diluted bitumen (dilbit) by transmission pipeline has an increased risk of release compared with pipeline transportation of other liquid petroleum products.  Should the committee determine that increased risk exists, it will complete a comprehensive review of federal hazardous liquid pipeline facility regulations to determine whether they are sufficient to mitigate the increased risk.

On June 25, the committee added three industry experts to the panel as there is growing scrutiny over dilbit in the US, which could become an issue in the presidential race.

NWF Enbridge Oil Spill (PDF)

Enbridge responds to NTSB criticism in e-mail to northwest BC “community leaders”

Enbridge Northern Gateway has issued a detailed reply to the criticism of its operations contained in a preliminary report from the US National Transportation Safety Board to the 2010 oil spill at Marshall, Michigan, which called the company’s response like the silent movie era “Keystone cops.”

The note from Michele Parrett,  Senior Manager, Community and Municipal Relations for Northern Gateway was sent to members of the District of Kitimat Council and presumably other politicians and community leaders along the proposed pipeline route.

The document was among those routinely released to the public at the regular council meeting on Monday, July 16, 2012 and is a much more detailed defence of Enbridge’s position than the news release issued after the NTSB report.

In the e-mail, Enbridge says it has updated its safety and response procedures and its corporate culture since the Michigan incident.

Despite widespread criticism of Enbridge from all sides of the political spectrum, that NTSB report does not seem to have had any impact on federal Environment Minister Peter Kent, who told The Canadian Press had had not yet read the NTSB report. Kent also said that unread report will not change the Conservative government’s mind about the Northern Gateway pipeline project, adding “Pipelines are still, by far, the safest way to transport petrochemicals in any form.”

 


 Overview of NTSB Report  into Line 6B  incident at Marshall, Michigan

July 12, 2012

Dear Community Leader,

I’m writing you today to provide information regarding the United States’ National Transportation Safety Board’s (NTSB) release of its conclusions and recommendations yesterday, with regard to the Enbridge pipeline leak in Marshall, Michigan in July 2010.

Enbridge has not been waiting for the NTSB’s report before furthering to improve our safety standards. Since the incident we have undertaken our own internal investigation and incorporated the findings of that investigation into new practices and processes to improve our safety and reliability.

Enbridge and Enbridge Energy Partners has been working with the NTSB and other regulators throughout the course of the investigation so that we can take the necessary steps to prevent such an accident from occurring again. We are now reviewing the NTSB reports in detail to determine whether any further changes are required.

Enbridge has already implemented, in 2010 and 2011, appropriate operational and procedural changes based on its own detailed internal investigation. Enbridge’s overarching objective and business priority is to ensure the safety and reliability of our delivery systems for the people who live and work near our pipeline systems across North America, our employees and our customers.

In direct response to the Marshall accident, or as part of our ongoing improvement initiatives and activities, Enbridge has taken the following steps:

Pipeline and Facility Integrity

· Further heightened the importance of our pipeline and facility integrity program.

· Re-organized the functional areas that are responsible for pipeline and facility integrity.

· Substantially increased capital and operating budgets associated with maintenance and integrity programs.

· Undertook hundreds of internal inspections and thousands of investigative digs.

· Placed a renewed emphasis on the safety of our overall system.

Leak Detection

· Established the Pipeline Control Systems and Leak Detection department, doubling the number of employees and contractors dedicated to leak detection and pipeline control.

· Enhanced procedures for leak detection analysis.

· Updated control room management procedures.

· Implemented a Leak Detection Instrumentation Improvement Program to add and upgrade instrumentation across our system.

Pipeline Control and Control Centre Operations (CCO)

· Developed a Control Room Management (CRM) plan based on the U.S. Code of Federal Regulations and implemented a number of the sections, October 1, 2011, remaining sections implemented by August 1, 2012.

· Revised and enhanced all procedures pertaining to decision making, handling pipeline start-ups and shutdowns, leak detection system alarms, communication protocols, and suspected column separations.

· Changed organizational structures to better align, focus and manage employees’ span of control and workloads.

· Augmented CCO (Control Centre Operations) staff, adding training, engineering and operator positions.

· We also completed the design and construction of a new, world-class CCO in Edmonton, Alberta which was underway at the time of the accident.

Public Awareness

· Reviewed and strengthened Public Awareness Programs in the U.S. and Canada.

· Developing an industry-leading online and in-person training tool to provide Enbridge-specific information to emergency responders.

· In the U.S, we:

o Formalized the U.S. Public Awareness Committee.

o Improved the Program Effectiveness Evaluation process.

o Provided annual employee training for field employees across the company’s U.S. operations.

o Created a Public Awareness Hotline.

· In Canada, we:

o Formalized the Canadian Public Awareness Committee.

o Are creating a Canadian Public Awareness Database.

o Improved the landowner/tenant database.

o Developed a landowner newsletter.

o Established Community Relations positions in each region.

Emergency Response

· $50 million spent between 2012 and 2013 (projected) to improve our equipment, training and capabilities.

· Develop better tools for waterborne spills.

· In 2011, a cross-business unit response team was created for large-scale events requiring more resources that a single region could provide.

· In 2011, created a dedicated Emergency Response group in Operation Services for increased regional support.

· Conducting an Emergency Response preparedness assessment to enhance abilities to more rapidly respond and contain a significant release.

Safety Culture

· Reinforced a high level of safety and operational integrity across Enbridge in integrity management, third-party damage avoidance and detection, leak detection, incident response capacity, worker and contractor occupational safety, public safety and environmental protection.

· Implemented “Lifesaving Rules” and training for all Enbridge employees and contractors. The Lifesaving Rules are applicable to all employees and contractors, and are communicated, clarified and reinforced across all business units at Enbridge.

· Introduced new Safety Culture training sessions for all employees.

Over the past two years we have made significant improvements in the above areas. The NTSB’s findings will provide us with regulatory guidance and important information to help improve our performance and achieve our goal of zero spills.

We remain committed to a respectful, open and transparent review and discussion of the Northern Gateway Project. Should you have any questions, please do not hesitate to contact me or a member of the Northern Gateway team at the information provided below.

Sincerely,

Michele Perret

Senior Manager, Community and Municipal Relations

Enbridge Northern Gateway Pipelines