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Pipeline firms need $1-billion at hand for cleanups: Oliver

Minister of Natural Resources Joe Oliver announces new rules for pipelines Wednesday in Vancouver.

DARRYL DYCK/CP

Major pipeline companies will need to have a minimum of $1-billion on hand to tackle spill cleanups in Canada, under plans announced by the federal Conservative government.

The government will also move to enshrine in law the currently implicit polluter-pays principle. Both measures were unveiled Wednesday by Natural Resources Minister Joe Oliver during a visit to Vancouver.

Current operators of major pipelines in Canada will be able to meet the financial test, department officials said.

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The $1-billion threshold could consist of cash on hand, bonds, lines of credit, liability insurance and other financial assets, including third-party guarantees.

New projects would need to fulfill the $1-billion requirement soon, while operators of existing pipelines will have a 12-month transition period in which to comply.

Lower minimum financial resources will be required for smaller pipeline operators, with those details to be determined by the National Energy Board.

Mr. Oliver's appearance in Vancouver comes as the spotlight is placed on a series of spills in the pipeline industry, even as companies seek to expand export capacity from Canada into the United States.

New fines to be levied by the NEB will take effect next Wednesday, ranging from $25,000 to $100,000 a day, depending on the pipeline safety infraction. Those fines were announced last year.

Mr. Oliver said there is no room for complacency around the safety of energy projects. "We will ensure that all companies operating pipelines have the capacity to respond to any incident and to remedy damages," he said. "Our government is committed to a world-leading pipeline safety regime."

Pipeline firms will be required to "appoint an accountable senior officer" to monitor and ensure compliance with safety regulations, and companies have already taken steps to make such appointments, government officials said.

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Calgary-based Enbridge Inc. is seeking to have its proposed Northern Gateway pipeline take oil from Alberta to the West Coast. Company spokesman Ivan Giesbrecht said in a statement, "What we can say now is that Northern Gateway is fully aligned with the overall objective of strengthening pipeline safety in B.C. and across Canada." Enbridge spokesman "Northern Gateway has been consulting and engaging with our partners and stakeholders along the right-of-way for many years and made significant changes to our project as a result."

Last week, Enbridge rejected the NEB's demand to have $950-million in cash and insurance set aside for the costs of potential Northern Gateway cleanup, remediation and other spill-related damages.

Separately, Enbridge said Wednesday it has reopened its Waupisoo pipeline after shutting it down following an oil leak in northern Alberta last Saturday, but two other routes remained offline as a precautionary measure. Enbridge said it has liability insurance and will be reimbursed for costs under coverage, subject to a $10-million deductible.

Although the B.C. Liberals have rejected the Northern Gateway pipeline project on environmental grounds, they are seen as more willing to negotiate on key energy projects than the B.C. New Democrats, who failed to topple them in the May 14 provincial general election.

B.C. Environment Minister Mary Polak said it is too early to say if Wednesday's announcement will go far enough to meet the province's conditions for pipeline approval.

"It certainly shows the federal government understands we are serious about it," she said in an interview in Victoria. "We haven't fully evaluated what their announcement contains in terms of whether or not they get to the bar of meeting it."

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Mr. Oliver was in British Columbia for his first visit since the B.C. Liberals were re-elected in May.

Asked about TransCanada Corp.'s Keystone XL pipeline proposal from Alberta to the U.S. Gulf Coast, Mr. Oliver replied: "The strategic issue of market diversification is a critical one for the country and Keystone XL by itself cannot possibly solve that whole problem. It's a very important project. It will create jobs in this country. It will help alleviate the huge price discount."

With a file from Justine Hunter in Victoria.

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About the Authors

Brent Jang is a business reporter in The Globe and Mail’s Vancouver bureau. He joined the Globe in 1995. His former positions include transportation reporter in Toronto, energy correspondent in Calgary and Western columnist for Report on Business. He holds a Bachelor of Commerce degree from the University of Alberta, where he served as Editor-in-Chief of The Gateway student newspaper. Mr. More

B.C. reporter

Ian Bailey is a Vancouver-based reporter for The Globe and Mail.  He covers politics and general news. Prior to arriving at The Globe and Mail, he reported from Toronto and St. John’s for The Canadian Press.  He has also covered British Columbia for CP, The National Post and The Province. More

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