Annual Report for Fiscal Year Ended March 31, 2012
Table of Contents
The Northern Pipeline Agency (NPA) was created by the Northern Pipeline Act (the Act) in 1978 to carry out federal responsibilities in respect of the planning and construction by Foothills Pipe Lines Ltd. (Foothills) of the Canadian portion of the Alaska Natural Gas Transportation System (ANGTS).
The project, also referred to as the Alaska Highway Gas Pipeline project (AHGP), is the subject of the 1977 Agreement between Canada and the United States of America on Principles Applicable to a Northern Natural Gas Pipeline.
Phase I of the project (the Prebuild) was constructed in 1981-82 for the initial purpose of transporting gas sourced from Western Canada to the United States (U.S.). The current flow capacity of the Prebuild is approximately 3.3 billion cubic feet per day (Bcf/d).
Figures 1 and 2 show the proposed route of the ANGTS in Canada and the U.S., as well as details of the existing Prebuild in Canada.
Phase II of the project would link the Prebuild with U.S. reserves at Prudhoe Bay in Alaska. Unfavourable economic conditions from 1982 to the beginning of this decade led to indefinite delays in the completion of the ANGTS and a prolonged period of low activity for the Agency. In 2008, TransCanada Pipelines Ltd. (TransCanada), which now owns Foothills, was selected by the State of Alaska under the Alaska Gasline Inducement Act to receive up to $500 million in State assistance to pursue an Alaska gas pipeline. This large-scale project of 2,762 km, would transport 4.5 to 5.9 Bcf/d of natural gas in a buried 48-inch, high-pressure pipeline from Prudhoe Bay, Alaska, to markets in Canada and the lower 48 states. Project costs have been estimated at $32-41 billion (2009 USD) by TransCanada.
On March 30, 2012, ExxonMobil, ConocoPhillips, BP and TransCanada announced that they are working together on a work plan to assess liquefied natural gas exports from south-central Alaska as an alternative to a natural gas pipeline through Canada. For its part, the Agency remains ready, engaged and prepared to lead the review of the AHGP, if and when the project moves forward. The Agency will continue to work together with the Alaska Pipeline Project, other federal agencies, provincial and territorial governments, Aboriginal organizations, and the public to meet the objectives of the Act and the Agreement.
The Alaska Natural Gas Transportation System
The Foothills Prebuild
For further background information on the ANGTS and the NPA’s roles and responsibilities, reference may be made to the NPA’s Departmental Performance Report for the period ending March 31, 2012.
The NPA can be contacted at:
615 Booth Street, Room 412
Ottawa, Ontario K1A 0E9
Key 2011-2012 Activities
In 2011-2012, the NPA continued to deliver on the responsibilities of the Government of Canada that are embodied in the 1977 Canada-U.S. Agreement and the Northern Pipeline Act by working with federal departments, provincial and territorial governments, First Nations, the U.S. Federal Energy Regulatory Commission (FERC), the U.S. Office of the Federal Coordinator (OFC), and TransCanada.
The NPA has worked to develop a potential approach for a comprehensive regulatory review of environmental and socio-economic information under the Act, in coordination with other federal departments and agencies. The NPA has also been corresponding with Aboriginal communities on a variety of matters related to the project and its benefits and regulation. This has involved participating in workshops in Yukon, in fall 2011, facilitated by the Alaska Highway Aboriginal Pipeline Coalition (AHAPC).
The NPA has entered into inter-agency agreements with the Department of Justice, the National Energy Board, Natural Resources Canada, the Department of Fisheries and Oceans and Health Canada to meet its resource requirements as appropriate and continues to conduct forward corporate planning to assess future resource requirements.
Under the Northern Pipeline Act, the NPA can be called upon to undertake a number of activities:
- Implementing the obligations under the Canada-U.S. Agreement signed in 1977;
- Facilitate the efficient and expeditious planning and construction of the pipeline taking into account local and regional interests, the interests of the residents, particularly the native people, 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 effects 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.
The Minister for Natural Resources, the Honourable Joe Oliver, is responsible for the management and direction of the NPA.
The Act provides for the NPA Deputy Head, called the Commissioner, to be appointed by Governor in Council. Currently, this position is held by the Deputy Minister of Natural Resources Canada, Serge P. Dupont.
Daily operations of the NPA are managed by an Assistant Commissioner, who is supported by twelve full time employees, engaged as required. The Act provides for independent regulatory decision-making by a Designated Officer who must be a member of the National Energy Board.
Through a Service Agreement, Natural Resources Canada provides administrative, financial, communications, IT and technical assistance to the NPA.
Sections 13 and 14 of the Act provide for an annual audit of the accounts and financial transactions of the NPA by the Auditor General of Canada, and for a report thereon to be made to the Minister and laid before Parliament. In compliance with these requirements, the report of the Auditor General of Canada for the year ended March 31, 2012, is reproduced as an appendix to this report.
The NPA had requested and received a reference level of $3,075,068 for 2011-2012. Final expenditures for the year totalled $2,142,593. All of the Agency’s operating expenses are cost recovered from TransCanada.
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