Rep: OEB Doc: 128r6 Rev: 0 ONTARIO ENERGY BOARD Volume: 2 March 22, 2002 BEFORE: S. HALLADAY PRESIDING MEMBER R. BETTS MEMBER P. SOMMERVILLE MEMBER 1 HEARING RP-2000-0059 2 IN THE MATTER OF the Ontario Energy Board Act, S.O. 1998, c. 15, Schedule B; 3 AND IN THE MATTER OF an Application by Imperial Oil for an order or orders granting leave to construct a liquid hydrocarbon transmission line, (the "PRISM Pipeline") in the former Township of Flamborough, the City of Hamilton, the Township of Onondaga, County of Brant and the Township of Walpole, Haldimand County. 4 APPEARANCES 5 PAT MORAN Board Counsel WILFRED TEPER Board Staff ZORA CRNOJACKI Board Staff DAVID HUNTER Imperial Oil SHARI ELLIOT Imperial Oil GREG BROWN Imperial Oil CHRIS HERSH Union Gas 6 TABLE OF CONTENTS 7 DECISION: [16] 8 EXHIBITS 9 EXHIBIT NO. 10.3: DRAFT NO. 4 - ONTARIO ENERGY BOARD STAFF PROPOSED CONDITIONS OF APPROVAL [74] 10 UNDERTAKINGS 11 12 --- Upon commencing at 11:40 a.m. 13 MS. HALLADAY: Good morning. Please be seated. 14 MR. HUNTER: Good morning. 15 MS. HALLADAY: Good morning. We apologize for the delay in starting this morning. 16 DECISION: 17 On November 23rd, 2001, Imperial Oil, a partnership between Imperial Oil Limited and its wholly-owned subsidiary McColl-Frontenac Petroleum Inc., filed an application with the Board pursuant to section 90 of the Ontario Energy Board Act for an order granting leave to construct the PRISM pipeline, a 61-kilometre, 12-nps, liquid hydrocarbon transmission line from lot 27, concession 3, at Peters Corners in the former Township of Flamborough, City of Hamilton, through the Township of Onondaga Brant County, to the Imperial Oil Nanticoke refinery in lot 9, concession 3, geographic Township of Walpole, Haldimand County. 18 Imperial Oil advised the Board that it will would also be constructing a valve station to tie in with Imperial Oil's existing Sarnia Products pipeline, at SPPL, a metering inlet station at the Nanticoke refinery, as well as motor-operated isolation valves located along the pipeline at major river crossings and other appropriate locations. 19 The Board assigned file number RP-2001-0059 to this application. The notice of application was published on December 19th, 2001. Union Gas Limited intervened. In addition, the Board received letters of comment from Mr. and Mrs. Lainson and Ms. Lorraine Bergstrand, the mayor of Haldimand County. An oral hearing of the application was held at the Board's offices on March 21, 2002. While the Board has considered all of the evidence, submissions and arguments in arriving at this decision, the Board has only referenced the evidence and positions necessary to our finding. 20 Background. By way of background, in June, 1999, regulations were promulgated under the Canadian Environmental Protection Act requiring a 97-percent reduction in the allowable sulphur content in motor gasoline in two stages, from 1,000 parts per million to 30 parts per million. The first stage requires that the average sulphur level in gasoline between July 2002 and December 31, 2004, not exceed 150 parts per million. Ultimately, the 30 parts per million level must be achieved by January 1st, 2005. 21 Imperial Oil advised the Board that it owns and operates two refineries in Ontario: the Sarnia refinery and the Nanticoke refinery. Refined products such as motor gasoline, diesel fuel, aviation fuel, and home-heating oil are transported from the Sarnia refinery to Imperial Oil's major distribution centres in St. George and Toronto by a combination of transportation along Imperial Oil's Sarnia Products pipeline, SPPL, and service on Enbridge Pipeline Inc.'s line 8. 22 Imperial Oil has owned and operated the SPPL since it was originally constructed in 1952. The majority of refined products produced at the Nanticoke refinery is transported to market through Trans-Northern Pipeline Inc.'s pipeline system. 23 Imperial Oil's evidence is that sulphur occurs naturally in crude oil, and at the refinery, crude oil is split into various components and sulphur concentrates in specific streams. 24 The Sarnia refinery produces cat naptha, one of the components which requires sulphur reduction. The Nanticoke refinery, which produces 50 percent more gasoline than the Sarnia refinery, produces two gasoline component streams requiring further processing: cat naptha and light virgin naptha. 25 Imperial Oil must process these three naptha streams to reduce their sulphur content. Imperial Oil considered several alternatives to meet the federal gasoline sulphur regulations in central Canada: construct processing units at both the Sarnia and Nanticoke refineries; construct a single process unit at the Sarnia refinery; and construct a single process unit at the Nanticoke refinery. 26 Imperial Oil's evidence was that the first alternative, constructing process units at both the Sarnia and Nanticoke refineries, would create a product blending imbalance and require surface transportation of 15 trucks per day from Nanticoke to Sarnia. This option would also lead to increased labour risks during the period of high construction and higher overall project costs. 27 The second alternative, constructing a single process unit at the Sarnia refinery, would require the movement of two Nanticoke gasoline component streams to Sarnia, which would be twice the volume. Transportation would be by surface means only - truck, marine or rail - since pipeline's infrastructure does not exist. Again, this would result in higher project costs. 28 Imperial Oil chose the third alternative, constructing a single process unit at the Nanticoke refinery, for a number of reasons. A single process unit at Nanticoke and transportation of the Sarnia cat naptha to Nanticoke would result in lower project costs and reduce project execution risk with respect to labour availability. 29 While the transportation of the cat naptha by surface could be accomplished through a combination of rail, marine or road transport, road transport would require 50 trucks per day. The existing SPPL pipeline would permit pipeline transportation for the full distance between Sarnia and -- sorry, the existing SPPL line and the extension of that pipeline would permit pipeline transportation for the full distance between Sarnia and Nanticoke. 30 Imperial Oil advised the Board that the PRISM pipeline would operate one to one and a half days for every five days. During the time that it was idle, it would remain full of product. Although not specifically planned at this time, the pipeline connection also provides the opportunity to deliver other volumes by pipelines from Sarnia to Nanticoke to increase the integration and efficiency of the two refineries. 31 The Board is satisfied with the needs for the PRISM pipeline. 32 Route selection. Imperial Oil retained ESG International Inc., ESG, in 2000 to define an environmentally preferred pipeline route for the proposed PRISM pipeline between SPPL and the Nanticoke refinery. ESG International prepared an environmental and socioeconomic impact assessment report, the EA, in 2001. The EA report, which was filed as part of the evidence in this application, was prepared in accordance with the Board's "Environmental Guidelines for Location, Construction and Operation of Hydrocarbon Pipelines and Facilities in Ontario, Fourth Edition, 1995." 33 The EA was conducted by ESG. The EA, the public, and agency consultation and the routing determination that was done followed OEB guidelines. Imperial Oil and ESG undertook an extensive public consultation process. Imperial Oil also consulted with the First Nations band, Councils of Six Nations of the Grand River, and Mississaugas of the New Credit. 34 The study area is predominantly agriculture, with the Grand River being the main natural feature. Three alternative routes were considered. ESG considered the easement characteristics, agricultural impacts, natural heritage resources, and socioeconomic considerations. The preferred route is within a municipal corridor called the Hagarsville path, "the path." The path is a designated land-use in the current Official Plan of the Haldimand-Norfolk region. Overall the preferred route was selected for its location within the path for easement considerations and for a high-ranking in most of the routing considerations. 35 ESG selected the preferred route based on detailed environmental assessment and comments received through public consultation. The preferred route is approximately 61 kilometres in length and is essentially within an existing utility corridor that contains other pipelines and electricity transmission lines of Hydro One Networks Inc. Imperial Oil evaluated all of the alternative routes in terms of engineering, economic, environmental, land, and operational factors and determined that the preferred route was acceptable. The Board is satisfied with the selection of the proposed route. 36 Land rights. Imperial Oil submitted that there are four types of land stakeholders affected by the proposed PRISM pipeline: Hydro One Networks Inc. and Hydro One Telecom Inc. (Hydro One); Tenants of Hydro One; private landowners; and crossing land stakeholders. 37 Ninety-eight percent of the pipeline will be within the Hydro One-owned utility corridor. Imperial Oil advised the Board that Hydro One has agreed to grant Imperial Oil a 10.5-metre wide easement within the Hydro One transmission corridor, provided the Board grants leave to construct. 38 The final route alignment requires easements from five private landowners. Imperial Oil advised the Board that four of the five have signed agreements to rent easement and temporary work-space agreements and letters of understanding. 39 The fifth private landowner, who is also a Hydro One corridor tenant, Mr. Forth, is proposing to develop a golf course. Imperial Oil's evidence is that negotiations with Mr. Forth have been cordial and that he has agreed with Imperial Oil in principle, and that they expect to conclude a letter of understanding and an easement agreement in the future. 40 In addition, in its updated evidence, Imperial Oil indicated that there are 49 Hydro One corridor tenants affected. Imperial Oil advised the Board that 46 of these tenants have signed letters of understanding with Imperial Oil. Imperial Oil has attempted to resolve the outstanding issues with the other three tenants. The Board notes that none of these tenants participated in the proceeding, either by filing letters of comment or attending the oral hearing. The Board notes that Imperial Oil has offered these tenants the same terms and conditions as have been accepted by the other 45 tenants. 41 As previously stated, Imperial Oil has reached an agreement with Mr. Forth. With respect to Mr. Somerville and Mr. Slack, the Board is satisfied that Imperial Oil's proposal is appropriate. 42 With respect to non-tenant issues, Mr. and Mrs. Lainson wrote letters of the comment to the Board expressing concern with respect to the impact on the Boston Creek crossing, a wood lot and testing of their well which is less than 100 metres from the proposed pipeline. The Board is satisfied that Imperial Oil has addressed these issues with the Lainsons and will treat all of the similar landowner concerns in the same manner. 43 Imperial Oil also requires other crossing agreements such as an easement from Canadian National Railway, crossing agreements from operators, and licence from the Hamilton Regional Conservation Authority and other permits and certificates. Imperial Oil's evidence is that they are proceeding expeditiously to obtain these. 44 The Board notes that the proposed pipeline traverses an area that falls within a land claim by the Six Nations of the Grand River. Imperial Oil advised the Board that on March 14th, 2002, agreements were signed with Six Nations. The land agreement includes provisions for Imperial Oil to pay fair compensation for a pipelines easement should the land claim be settled in favour of Six Nations. The other agreement, the employment and education agreement, is an extension of Imperial Oil's Aboriginal Policy and focuses on preparing Six Nations' people for the employment in the processing and manufacturing industries and seeks to encourage participation in construction-related activities. 45 The forms of temporary and permanent easement agreements with private landowners and Hydro One have been filed and are approved by the Board. 46 Construction. Imperial Oil advised the Board that the design specification will meet or exceed applicable industry standards. Imperial Oil has undertaken to radiographically inspect a minimum of 15 percent of all welds. This is in compliance with the applicable CSA Z662-99 standards as have been modified and adopted by the Technical Standards and Safety Authority. 47 In addition, Imperial Oil has undertaken to radiographically inspect every welded joint located at rail, water, and road crossings and other tie-ins. While there was evidence that the TSSA suggested that all welds associated with the project should be radiographically assessed, there is no regulatory standard requiring this extent of radiographic assessment, and the Imperial Oil project exceeds the applicable standard. 48 In order to achieve required flow rates, Imperial Oil has chosen a 12-inch, 223.9-millimetre diameter, grade 359 steel pipe. Imperial Oil has proposed a pipe wall thickness of 7.92 millimetres generally, 9.53 millimetres for road and water crossings, and 10.31 millimetres for railway crossings. 49 Imperial Oil proposes a pipe burial depth of 1.2 metres which exceeds the minimum required standard. The designed pressure of the pipeline is 9,930 kilopascals with an operating pressure of 6,895 kilopascals. The pipelines will be hydro-tested to 1.25 the design pressure. Corrosion protection of a high order will be provided to mitigate the effects of induced electrical currents in a hydro corridor. The integrity of the corrosion protection will be monitored on an ongoing basis. 50 The emergency response plans and contingency plans effective for the SPPL will be applicable to the PRISM pipeline. Imperial has undertaken to provide an amended SPPL emergency response plan prior to the PRISM pipeline being put into service. The pipeline will be inspected with internal inspection tools after one year and then again on an approximately five-year basis. Imperial desires -- sorry, Imperial advised the Board completion of the project by October 2003 will allow Imperial Oil to meet both the interim and final federal sulphur reduction specifications. The Board is satisfied with the emergency response plans and the construction proposal. 51 Environmental matters. The route crosses 180 water courses as follows: the Grand River, which is a high-sensitivity stream; 14 other high-sensitivity streams; 58 moderate-sensitivity streams; and 108 low-sensitivity streams. The water crossing techniques and mitigation plans for each sensitivity class have been specified. The required crossing permits are being processed by effective conservation authorities. 52 The Grand River will be crossed by the horizontal directional drilling method, the method with the least disruption and environmental impact. The crossing will take about 40 days to complete. Imperial Oil proposed the dam-and-pump method for crossing the other 14 high-sensitivity streams. All such crossings will be governed by permits issued by the responsible regulatory authorities having jurisdiction. Imperial Oil will be required to comply with the requirements of the respective regulatory authorities and any crossing permits issued by them, even if such permits require a different water course crossing method than that proposed by Imperial Oil. 53 Mitigation measures have been recommended by ESC and the OPCC review to protect three provincially significant wetlands along the route. Mitigation is also recommended if any of the provincially rare flora or fauna species are identified within the corridor by pre-construction field surveys. Imperial Oil, in its evidence, indicated that it was adopting all recommendations in the EA report and would incorporate them into its construction specifications. 54 About 11 hectares of tree cover will be cleared; a tree replacement plan is being developed in consultation with the municipalities and conservation authorities. Imperial Oil contacted all local and regional municipalities regarding the tree-related bylaws or exemptions from the bylaws. 55 Well survey and water-quality monitoring programs have been described. Blasting is not anticipated but maybe necessary if ripping or hoe-ramming to remove bedrock is not feasible. Blasting will require construction specifications and mitigation techniques to be followed, especially in proximity to water wells. The conditions of approval require Imperial to provide to the Board a blasting specification to govern such activities should it be necessary to blast. 56 In addition, the conditions of approval contain a protocol for Imperial to follow in such eventuality. Imperial Oil has undertaken to provide the construction specifications which will govern the project to the selected contractor who will be obliged to adhere to such specifications. 57 About 70 percent of soils along the route are classified as prime agricultural land. Imperial Oil has committed to implement a stipulated wet-soil shutdown practice, tile-damage repair and restoration, topsoil protection and restoration, soybean cyst nematode testing and other measures to protect the soils during and after construction. The letter of understanding signed by the majority of the corridor tenants and private landowners outlines many of the soil protection practices as well as crop loss and damage compensation methods. 58 Stage I archaeological surveys have been completed and stage II surveys will be conducted as required by the Ministry of Tourism. 59 The cumulative-effects assessment, the CEA, has been completed using the approach outlined in the recent Board decision, RP-2000-0110. The cumulative-effects assessment concludes the potential cumulative impacts are of low significance. Imperial Oil has provided updates on the status of numerous applications for permits from municipalities, provincial ministries, conservation authorities, Department of Fisheries, Canadian Coast Guard, and utilities. 60 The OPCC review has been completed except for ongoing cooperation with the conservation authorities and the MNR. 61 In summary, the EA and routing process appears to be acceptable in terms of identifying the least-impact route, predicting the potential impacts and proposing mitigation and monitoring. Imperial Oil agreed that the Board will be notified of the Grand River crossing commencement, that landowner concerns will be diligently and responsibly addressed both during and after construction, that all the necessary permits will be secured, and that Imperial Oil will implement all of the environmentally related recommendations of the ESG and OPCC. 62 Board staff has provided Imperial Oil with a revised draft conditions of approval. As we understand it, Imperial Oil has agreed to these revised draft conditions of approval. The Board finds that the revised draft conditions of approval are appropriate. 63 In conclusion, the Board finds that the construction of the PRISM pipelines as proposed by Imperial Oil is in the public interest. Therefore, the Board will issue a written order granting leave to construct the PRISM pipeline subject to the revised draft terms and conditions of approval. 64 The Board directs Imperial Oil to pay the Board's costs related to this proceeding upon receipt of the Board's invoice. 65 Are there any questions? 66 MR. HUNTER: No, and as I indicated yesterday, I'd like to thank the Board for their -- sorry, Mr. Betts -- for their courtesies, and to staff. On behalf of the client, I'd like to also say that we've resolved the concerns that we discussed yesterday in a way that's both fair and reasonable and appropriate, and we're quite pleased with the result. Thank you. 67 MS. HALLADAY: Thank you, Mr. Hunter. 68 Before we adjourn, the Board would like to thank Imperial Oil, their witnesses, the court reporter, and of course Board staff for your assistance. I adjourn this proceeding. 69 Mr. Moran. 70 MR. MORAN: Just one minor housekeeping matter, Madam Chair. We should probably give an exhibit number to the revised conditions of approval. 71 MS. HALLADAY: Fair enough. 72 MR. MORAN: 10.3 would be the exhibit number. "Draft No. 4 - Ontario Energy Board Staff Proposed Conditions of Approval," March 22nd, 2002. 73 MS. HALLADAY: Thank you. 74 EXHIBIT NO. 10.3: DRAFT NO. 4 - ONTARIO ENERGY BOARD STAFF PROPOSED CONDITIONS OF APPROVAL 75 MR. HUNTER: Thank you, Madam Chair. 76 MS. HALLADAY: We are adjourned. 77 --- Whereupon the hearing adjourned at 12:03.p.m.