NEB: new rules on pipeline parts?

The National Energy Board (NEB) commissioned the report in order to improve the equality of pipeline parts being provided to operators.

In recent years, both TransCanada Corp. and Enbridge Inc. have discovered that some parts they were using were substandard.

"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.

The report also stated that policies should be developed "to ensure pipeline-operator quality strategies are transferred to all parties in the supply chain.”

The report's recommendations are not binding, but NEB Chief Engineer Iain Colquhoun told press this week that 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 proposed higher standards would apply to all manufacturers who provide parts to Canadian pipeline operators, including South Korea's TK Corp and Italy's Valvitalia Sp which had provided some substandard parts to TransCanada and Enbridge, according to the NEB.

The Canadian Energy Pipelines Association (CEPA), 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.

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.