Nov 8, 2016
In an article in the Financial Post, Julius Melnitzer addresses the impact that new federal regulations will have on companies in the oil and gas sector. The provisions are intended to ensure that pipelines have enough funds readily available to deal with the consequences of oil and gas spills. Melnitzer gains insight for the article from Terri-Lee Oleniuk, a partner in Osler’s Calgary office who practises in the firm’s Regulatory, Environmental, Aboriginal and Land Group.
“The Pipeline Safety Act is government’s answer to public criticism of operators’ response to large spills at a time when there are several large pipelines going through the regulatory process,” Terri-Lee explains, referring to Enbridge’s Northern Gateway, Kinder Morgan’s TransMountain Expansion and TransCanada’s Energy East.
The latest round of regulations sets absolute liability limits based on the pipelines’ capacity and also require companies to have 5% of that absolute liability limit “readily accessible” through a line or letter of credit, a pooled fund or cash. According to Terri-Lee, this regulation will not have much of an effect on major projects that are underway.
“For the large companies, the ‘readily accessible’ requirement is not really an additional burden, because they already had a $1 billion limit financial requirement in place,” she says. “In fact, the general consensus is that the regulations are reasonable and won’t have much impact on operators except for those who are cash-strapped or having difficulty accessing cheap credit.”
Learn more about the liability limits established through these new regulations in Julius Melnitzer’s article “New pipeline regulations won’t deter projects, lawyers say” in the November 7, 2016 issue of the Financial Post.