ARCHIVED - Northern Pipeline Agency Canada

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Section I - Overview

Commissioner’s Message

It is my pleasure to present the 2009-10 Report on Plans and Priorities for the Northern Pipeline Agency (NPA).             

The NPA was established with the proclamation of the Northern Pipeline Act (the Act) in 1978 to facilitate the planning and construction by Foothills Pipe Lines Ltd. (Foothills) of the Canadian portion of the Alaska Highway Gas Pipeline Project and to maximize social and economic benefits from its construction and operation, and minimize any adverse effects.  The pipeline, also referred to as the Alaska Natural Gas Transportation System, was certificated in 1978 and is intended to transport Alaskan natural gas to southern markets in Canada and the United States.

The southern portion of the pipeline (the prebuild) was constructed in the early 1980's and presently transports Canadian gas sourced from south of the 60th parallel. Unfavourable economic conditions led to indefinite delays in the completion of the northern portion of the pipeline, and consequently, the NPA's activities have been limited to overseeing the expansion of the southern portion of the pipeline.

Interest in building an Alaska Highway pipeline has now been rekindled.  Foothills, a wholly-owned subsidiary of TransCanada Pipelines Limited, is actively advancing its Alaska Highway pipeline project.  Recognizing the role of the NPA in facilitating the efficient and expeditious planning and construction of the pipeline, NPA activity will increase as an Alaska Highway pipeline project builds momentum.

The NPA remains committed to fulfilling the responsibilities of the Government of Canada that are embodied in the Act by continuing to work with TransCanada Pipelines Limited and also with federal agencies, provincial and territorial governments, First Nations and the public.

Cassie J. Doyle
Commissioner

Summary Information

 The NPA was created by the Act in 1978 to:

• facilitate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project, for which National Energy Board (NEB) certificates were granted to Foothills taking into account local and regional interests;
• facilitate, in relation to the pipeline, consultation and coordination with the governments of the provinces and the territories;
• maximize social and economic benefits and the opportunities for employment by Canadians while minimizing any adverse social and environmental effects; and,
• advance national economic and energy interests and maximize related industrial benefits through Canadian participation in all aspects of the pipeline.

Prior to commencing construction of any particular section of the pipeline, Foothills is required to obtain a series of specific approvals from the NPA pursuant to the Act and the terms and conditions specified under the Act. These approvals relate to socio-economic and environmental factors, routing issues, technical design, and other matters such as demonstration of financing. For certain authorizations, approval from the NEB is necessary.

The project authorized under the Act envisaged the construction of a natural gas pipeline to carry gas from Alaska, through the Yukon, British Columbia and Alberta to markets in Canada and the United States. A portion of the pipeline was built in Alberta by 1982, with further expansions, under the NPA, as recently as 1998. However, the weak market conditions for natural gas, prevailing from the mid-1980s and in the 1990s resulted in an indefinite delay in construction of the northern portion of the line from Alaska to Alberta. 

For the better part of this decade natural gas prices have been rising, at the same time as supplies from traditional North American supply basins in the United States and western Canada have declined, leading to a corresponding increase in interest in reviving the Alaska Highway natural gas pipeline. As TransCanada Pipelines Limited’s project builds momentum, this will place additional demands on the NPA.

The NPA's jurisdiction extends only to the Foothills project, as authorized under the Act. In anticipation of receiving detailed project plans from Foothills, the NPA has begun reviewing key issues, including environmental concerns and First Nations interests. 

As a small agency, the NPA obtains its administrative services from NRCan and is benefiting from the shared services initiative launched by that department in late 2004. 

For the right of easement, Foothills pays the NPA an annual amount of $30,400; of this amount $10,000 is collected on behalf of and forwarded directly to the Yukon Government. The balance of $20,400 is remitted to the Government of Canada.

Financial resources for 2009-2010 are based on an assumption that the NPA will continue planning for a Foothills project. However, recognizing TransCanada Pipelines Limited’s commitment to advancing their project, the NPA is anticipating significantly increased activity during 2009-2010 (not reflected in the tables below).  Resource levels may need to be revised upwards depending on the actual level of project activity and demands from TransCanada Pipelines Limited.

NPA's Financial Resources ($ thousands)

2009-10	2010-11	2011-12
265.0	265.0	265.0

NPA's Human Resources

2009­10	2010-11	2011-12
2 FTEs	2 FTEs	2 FTEs

The 2 FTE’s are the Assistant Commissioner/Comptroller and the Commissioner. The costs of the NPA are fully cost recovered from Foothills.

NPA Priority

To achieve results for Canadians over the period of this three-year financial plan, the NPA has one strategic priority in respect of its strategic outcome:

NPA's Priority

Priority	Type	Planned Spending* ($ thousands)
		2007-2008	2008-2009	2009-2010
To effectively administer the Act in respect of any prebuild expansions and to conduct work related to the reactivation of the northern portion of the pipeline when required.	ongoing	265.0	265.0	265.0

*Expenditures and human resource requirements for the planning period are summarized in the table.  It should be noted that the NPA's costs are not borne by the taxpayer. The NPA recovers 100% of its operating costs from Foothills through existing authorities pursuant to section 29 of the Act and determined in accordance with section 24.1 of the National Energy Board Act and the National Energy Board Cost Recovery Regulations.

NPA - Plans and Priority

The challenge for the NPA is to be in a state of readiness in the event Phase II of the pipeline project is reactivated.  Since the Act came into force, the external environment relevant to environmental and public considerations, prior to the commencement of construction, has changed significantly. Some of the changes in Yukon include new environmental legislation, devolution of some federal responsibilities, and settlement of most First Nations land claims along the pipeline route.

The NPA will need to develop regulatory processes which fully meet modern environmental standards and respect the rights of First Nations. Simultaneously these processes must respect the rights granted to Foothills under the Act and recognize the continuing validity of the existing certificates.  To carry out these responsibilities, the NPA is working closely with relevant federal departments, principally the Canadian Environmental Assessment Agency, Indian and Northern Affairs Canada, the NEB, Foreign Affairs Canada, and Natural Resources Canada (NRCan).

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