Commissioner's Message

It is my pleasure to present the 2009-10 Departmental Performance Report for the Northern Pipeline Agency (NPA).

The Northern Pipeline Agency was established in 1978 to facilitate the planning and construction of the Canadian portion of Foothills Pipe Line’s Alaska Highway natural gas pipeline project, and to maximize social and economic benefits while minimizing adverse social and environmental effects.

Although the prebuild portion of the project was constructed in southern B.C., Alberta, and Saskatchewan in the 1980s for the export of Canadian natural gas, the northern portion of the project was never completed, for economic reasons.  The Foothills project is now owned by TransCanada PipeLines Limited (TransCanada).

In late 2008, TransCanada was selected by the State of Alaska under the Alaska Gasline Inducement Act (AGIA) to receive up to $500 million in State assistance to pursue an Alaska Highway natural gas pipeline, called the Alaska Pipeline Project.  The large-scale project would transport 4-5 billion cubic feet per day of natural gas in a 48-inch, high-pressure pipeline from Prudhoe Bay, Alaska, to markets in Canada and the lower 48 states. TransCanada has estimated project costs to be $32 to $41 billion, of which roughly $15 billion would be for pipeline construction in Canada.  TransCanada has indicated that it is proceeding with planning and development to complete the Foothills pipeline system in Canada.

In early 2010, TransCanada received approval from the United States Federal Energy Regulatory Commission (FERC) to conduct an “open season” in the United States in May–July 2010, to determine the level of commercial interest in the project.  A similar commercial process was undertaken in Canada in the same timeframe.  TransCanada has indicated receiving a positive response to its open season, although full details are not expected until the end of 2010 or early 2011, given the ongoing commercial negotiations with potential shippers.

During  2009-10 the Agency continued to prepare to deliver on the responsibilities of the Government of Canada that are embodied in the Northern Pipeline Act and associated agreements by working with TransCanada and with federal agencies, provincial and territorial governments and with First Nations.  The Agency saw an increase in its human resources in 2009–2010 to four full-time equivalent positions as activity under the Act increased.

Section I – Departmental Overview

Raison d’être

Responsibilities

Under Section 4 of the Northern Pipeline Act, the Northern Pipeline Agency can be called to undertake a number of activities:

• facilitate the efficient and expeditious planning and construction of the pipeline taking into account local and regional interests, the interests of the residents, particularly Native peoples, and recognizing the responsibilities of the Government of Canada and other governments, as appropriate, to ensure that any native claim related to the land on which the pipeline is to be situated is dealt with in a just and equitable manner;
  
  
• facilitate, in relation to the pipeline, consultation and coordination with the governments of the provinces, the Yukon Territory and the Northwest Territories;
  
  
• maximize the social and economic benefits from the construction and operation of the pipeline while at the same time minimizing any adverse effect on the social and environmental conditions of the areas most directly affected by the pipeline; and,
  
  
• advance national economic and energy interests and maximize related industrial benefits.

Strategic Outcome and Program Activity Architecture (PAA)

The Northern Pipeline Agency has a single strategic outcome and a single program activity.  Both are aligned with the Government of Canada’s Strong Economic Growth outcome as per the Whole-of-Government Framework.

Summary of Performance

* The NPA recovers its 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.

**In 2009-10, the Agency had a total spending authority of $660,059. The spending authority was increased in anticipation of an increase in Agency workload to support a high level of planning activity for the pipeline.

Contribution of Priorities to Strategic Outcome

Risk Analysis

TransCanada, in partnership with Exxon Mobil, is completing its 2010 open season process and is undertaking studies and planning for its Alaska Gas Pipeline project.  TransCanada has communicated its project time-line to the Agency and has asked the Agency to undertake various preparatory activities.  This includes the Agency providing certainty on the process that will be used to review all of the technical, financial, environmental, socio-economic and other information that TransCanada will be required to file to proceed with the Foothills project.  In the future, the Agency will be consulting with Aboriginal people on the project review, as well as on a number of other matters.  

The challenge for the Agency is to plan for an efficient and effective review of updated environmental, socio-economic and technical information taking into account changes since the Northern Pipeline Act came into force and the pipeline was certificated in the late 1970s. Some of the changes in Yukon include new environmental legislation, devolution of some federal responsibilities, and settlement of most of the First Nations land claims along the pipeline route.

The Agency also faces the ongoing challenge of keeping up with the pace of the project, i.e., to have sufficient human and financial resources to complete its analysis and Aboriginal consultations, to make the necessary preparations, and ultimately to complete a technical, environmental and socio-economic review of reports and plans that will be submitted by Foothills.

Failure to make timely preparations could jeopardize the Government of Canada’s performance of its responsibilities under the 1977 Canada-US Agreement and the Northern Pipeline Act, and pursuant to TransCanada’s rights related to its existing certificates of Public Convenience and Necessity, and its existing pipeline easement in the Yukon.

Expenditure Profile

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*The NPA also received $369k in additional appropriations for fiscal year 2009-10, through the supplementary estimates process.

Spending in 2009-10 was significantly higher than in the two previous years.