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Departmental Performance Reports (DPR) 2012-2013

 

2012-13
Departmental Performance Reports

 

Northern Pipeline Agency Canada



 
 
 

The original version was signed by
The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources Canada

 

Table of Contents

Commissioner's Message

Serge P. Dupont, Commissioner

It is my pleasure to present the 2012-13 Departmental Performance Report for the Northern Pipeline Agency (Agency).

The Agency was established by the Northern Pipeline Act (the Act) in 1978 to facilitate the planning and construction, by Foothills Pipe Lines Limited (Foothills), of the Canadian portion of the Alaska Highway Gas Pipeline (AHGP) project and to maximize social and economic benefits from its construction and operation while minimizing any adverse effects. The pipeline, also known as the Alaska Natural Gas Transportation System (ANGTS), was certificated in 1978 under the Act to transport Alaskan and possibly northern Canadian natural gas to southern markets in Canada and the United States (U.S.), as foreseen by the Canada-U.S. Agreement on Principles Applicable to a Northern Natural Gas Pipeline (the Agreement).

The southern portion of the pipeline was constructed in the early 1980s and presently transports Canadian gas sourced from Western Canada south of the 60th parallel. Unfavourable economic conditions led to delays in the completion of the northern portion of the pipeline. In 2008, TransCanada PipeLines Ltd. (TCPL), which now owns Foothills, was granted a license by the State of Alaska to pursue the development of Stage Two (the northern section) of the pipeline and partnered with ExxonMobil in 2009 to form the Alaska Pipeline Project (APP).

On March 30, 2012, the APP, along with BP and ConocoPhillips, announced that they are now working to assess a liquefied natural gas export project from south-central Alaska as an alternative to a natural gas pipeline through Canada. However, TransCanada continues to maintain its AHGP assets while reducing project activities. In 2012-13, the Agency worked with the APP, other federal agencies, the government of the United States, provincial and territorial governments, Aboriginal organizations and the public to meet the objectives of the Act and the Agreement and preserve work done to date on the Canadian section off the AHGP. The results of the Agency’s efforts are presented in this report. In 2014, and to align with reduced AHGP project activities in the foreseeable future, the Northern Pipeline Agency will scale down its operations while continuing to fulfil Canada’s obligations as set out in the Agreement and the Act.

Serge P. Dupont
Commissioner

 

 

 

Section I: Organizational Overview

Raison d’être

The Agency has a number of responsibilities, primary among them is to regulate the project. The government recovers one hundred percent of the operational costs of the Agency from TransCanada PipeLines Ltd (TCPL).

The first stage of the AHGP (the Pre-build) was constructed in the early 1980s for the initial purpose of transporting gas sourced from Western Canada to the U.S. The current flow capacity of the Pre-build is approximately 3.3 billion cubic feet per day (Bcf/d).

If constructed, Stage Two of the AHGP in Canada would comprise approximately 1,555 km of pipeline from the Yukon-Alaska border near Beaver Creek to the British Columbia-Alberta border near Boundary Lake, as defined in the certificates granted in 1978. Additional pipeline construction in Alberta (Stage Three) might also be required.

Unfavourable economic conditions from the mid-1980s to the beginning of the last decade led to delays in the completion of the AHGP and a prolonged period of low activity for the Agency. In 2008, TransCanada PipeLines Ltd. was selected by the State of Alaska under the Alaska Gasline Inducement Act (AGIA) to receive up to USD $500M in State assistance to pursue an Alaska gas pipeline. The large-scale project would transport 4.5-5.9 Bcf/d of natural gas in a buried 48-inch, high-pressure pipeline from Prudhoe Bay to markets in the lower 48 states. In 2009, project costs were estimated at USD $32-41B by TCPL.

In March 2012, project proponents decided to put the project through Canada on hold as they study an alternative liquefied natural gas project.

Responsibilities

Under the Act, the Agency can be called upon 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 of Aboriginal 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 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(s) and Program Alignment Architecture

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

Strategic Outcome: Facilitate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project while maximizing social and economic benefits and minimizing adverse social and environmental effects.

Program: Oversee and regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project

Organizational Priorities

 

Risk Analysis

Risk Risk Response Strategy Link to Program Alignment Architecture

The Agency is faced with uncertainties associated with planning for a single large-scale international pipeline project which has already been given approval. Failure to make timely preparations could jeopardize the Government of Canada’s performance of its responsibilities under the Agreement and the Act.

 
  • The Agency identifies and responds to uncertainties by continuous corporate-level forecasting, tracking, and management of issues that could affect or require a response from the Agency.
  • The Agency integrates modern considerations into its approach and preparation for the regulation and construction of the project.

Strategic Outcome:

Facilitate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project while maximizing social and economic benefits and minimizing adverse social and environmental effects.

Program:

Oversee and regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.

 

Summary of Performance

Financial Resources – Total Departmental ($ 1000s)
Total Budgetary
Expenditures
(Main Estimates)
2012–13		 Planned Spending
2012–13		 Total Authorities
(available for use)
2012–13		 Actual Spending
(authorities used)
2012–13		 Difference
(Planned
vs. Actual
Spending)
3,225.3 3,225.3 3,347.4 1,920.1 1,305.2

 

Human Resources (Full-Time Equivalents – FTEs)
Planned
2012–13		 Actual
2012–13		 Difference
2012–13
11 12 1

 

Performance Summary Table for Strategic Outcome (s) and Program (s) ($ 1000s)

Strategic Outcome 1: Facilitate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project while maximizing social and economic benefits and minimizing adverse social and environmental effects.
Program Total Budgetary Expenditures (Main Estimates 2012–13) Planned Spending Total Authorities (available for use) 2012–13 Actual Spending (authorities used) Alignment to Government
of Canada Outcomes
2012–13 2013–14 2014–15 2012–13 1 2011–12 2010–11

Oversee and regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.

 3,225.3 3,225.3 3,123.9 1,923.9 3,347.4 1,920.1 2,107.6 1,124.6

This Program is aligned with the Government of Canada’s Strong Economic Growth outcome as per the Whole-of-Government Framework.
Strategic
Outcome
Total		 3,225.3 3,225.3 3,123.9 1,923.9 3,347.4 1,920.1 2,107.6 1,124.6  

*Completing the Foothills project will result in a possible $20B investment in pipeline infrastructure in Canada. It will enhance North American natural gas supply, make available increased petro-chemical feedstocks, increase the utilization of existing Canadian pipeline infrastructure, and facilitate the development of new northern Canadian natural gas supplies.

1In order to align with departmental authorities by Program, as presented in Vol. II of the Public Accounts, services provided without charge amounts for employer’s contribution to employee insurance plans, such as the Public Service Health Care Plan and the Public Service Dental Plan provided by the Treasury Board of Canada Secretariat,  accommodations provided by Public Works and Government Services Canada, Workers’ compensation provided by Human Resources and Skills Development Canada and legal services provided by the Department of Justice are not to be included in this figure. This information is presented in Departmental Financial Statements only.

 

Total Performance Summary Table ($ 1000s)
Strategic Outcome and Internal Services Total Budgetary Expenditures (Main Estimates 2012–13) Planned Spending Total Authorities (available for use) 2012–13 Actual Spending (authorities used)
2012–13 2013–14 2014–15 2012–13 2011–12 2010–11

 

 3,225.3 3,225.3 3,123.9 1,923.9 3,347.4 1,920.1 2,107.6 1,124.6

Total

 3,225.3 3,225.3 3,123.9 1,923.9 3,347.4 1,920.1 2,107.6 1,124.6

 

Expenditure Profile

Departmental Spending Trend

 

Departmental Spending Trend Graph

[text version]

Estimates by Vote

For information on the Northern Pipeline Agency’s organizational Votes and/or statutory expenditures, please see the Public Accounts of Canada 2013 (Volume II). An electronic version of the Public Accounts 2013 is available on the Public Works and Government Services Canada website.

Section II: Analysis of Programs and Sub-Programs by Strategic Outcome(s)

Strategic Outcome

Facilitate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project while maximizing social and economic benefits and minimizing adverse social and environmental effects.

Program

Oversee and regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.
 

Performance Indicators

Targets

Actual Results

The Agency effectively plans for and responds to potential regulatory filings by Foothills and makes certain that the Act is properly administered.

Timely responses with consideration to the overall Project plans and schedules, continuing operations as mandated, and readiness to respond to changing levels of project activity.

Met all: The Agency maintained a regular dialogue with key stakeholders and carried out its responsibilities as mandated under the Act. It has coordinated with the Yukon government, other federal departments, Aboriginal communities, TCPL and federal and Alaska state governments on issues ranging from the extension of the Canada-Foothills Easement Agreement construction date to the development of a scenario for a streamlined environmental assessment and regulatory review process.

The Agency continues to address regulatory certainty by implementing a framework within a timeline that corresponds with industry decisions on the project.

A regulatory framework that accommodates modern environmental practices and the interests of territorial and provincial governments, First Nations and other residents along the pipeline route.

Met all: The Agency refined potential approaches for a modern environmental, socio-economic and technical update and review and has worked with other departments on the process. As a “single window” regulator, the Agency continued to work through the interdepartmental committee to maintain an efficient approach that recognizes the roles of relevant departments and agencies as well as provincial, territorial and Aboriginal interests.

The Agency maintains an adequate level of staff to refine its plans and state of readiness to respond to and enhance its engagement with other participants that would be involved in the planning and construction of the next phase of pipeline development.

Adequate resource and capacity

Met all: The Agency acquired adequate capacity in terms of human resources and maintained its agreements with Natural Resources Canada, Department of Fisheries and Oceans, National Energy Board and Health Canada. The Agency also maintained its Service Partnership Agreement with NRCan for various corporate and financial services and maintained its Service Partnership Agreement with the National Energy Board and the Department of Justice. It has also engaged other government departments on matters of common concern through its interdepartmental committee.

Program(s) and Sub-Program(s)

Financial Resources – For Program Level ($ 1000s)

Program: Oversee and regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.
 
Total Budgetary Expenditures (Main Estimates) 2012–13 Planned Spending 2012–13 Total Authorities (available for use) 2012–13 Actual Spending (authorities used) 2012–13 Difference 2012–13
3,225.3 3,225.3 3,347.4 1,920.1 1,305.2

 

Human Resources (Full-Time Equivalents — FTEs) – For Program Level
 
Planned 2012–13 Actual 2012–13 Difference 2012–13
11 12 1

 

Internal Services *
Internal Services Total Budgetary Expenditures(Main Estimates 2012–13) Planned Spending Total Authorities (available for use) 2012–13 Actual Spending (authorities used)
2012–13 2013–14 2014–15 2012–13 2011–12 2010–11

 

 0 0 0 0 0 0 0 0

Sub-Total

 0 0 0 0 0 0 0 0

*The Agency did not incur any costs associated with Internal Services. As a smaller and separate federal entity, the Agency purchases services from Natural Resources Canada through a Service Agreement paid as regular program expenditures.

 

Performance Results – For Program Level
Expected Results Performance Indicators Targets Actual
Results

Oversee and regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.

 

The Agency effectively plans for and responds to potential regulatory filings by Foothills and makes certain that the Act is properly administered.

Timely responses with consideration to the overall Project plans and schedules, continuing operations as mandated, and readiness to respond to changing levels of project activity.

Met all: The Agency maintained a regular dialogue with key stakeholders and carried out its responsibilities as mandated under the Act. It has coordinated with the Yukon government, other federal departments, Aboriginal communities, TCPL and federal and Alaska state governments on issues ranging from the extension of the Canada-Foothills Easement Agreement construction date to the development of a scenario for a streamlined environmental assessment and regulatory review process.

The Agency continues to address regulatory certainty by implementing a framework within a timeline that corresponds with industry decisions on the project.

A regulatory framework that accommodates modern environmental practices and the interests of territorial and provincial governments, First Nations and other residents along the pipeline route.

Met all: The Agency refined potential approaches for a modern environmental, socio-economic and technical update and review and has worked with other departments on the process. As a “single window” regulator, the Agency continued to work through the interdepartmental committee to maintain an efficient approach that recognizes the roles of relevant departments and agencies as well as provincial, territorial and Aboriginal interests.

The Agency maintains an adequate level of staff to refine its plans and state of readiness to respond to and enhance its engagement with other participants that would be involved in the planning and construction of the next phase of pipeline development.

Adequate resource and capacity

Met all: The Agency acquired adequate capacity in terms of human resources and maintained its agreements with Natural Resources Canada, Department of Fisheries and Oceans, National Energy Board and Health Canada. The Agency also maintained its Service Partnership Agreement with NRCan for various corporate and financial services and maintained its Service Partnership Agreement with the National Energy Board and the Department of Justice. It has also engaged other government departments on matters of common concern through its interdepartmental committee.
 

Performance Analysis and Lessons Learned

Performance Summary and Analysis of Program Activity

Since the Act came into force, in 1978, the external environment has changed, specifically relating to environmental, economic and public policy. Some of the changes include new environmental legislation, devolution of some federal responsibilities to the Yukon government and the settlement of most Aboriginal land claims along the pipeline route in Yukon.

The Agency has worked to develop and release a potential regulatory process which fully meets modern environmental and socio-economic standards and respects the rights of Aboriginal peoples. The process would take into account the rights granted to Foothills under the Act, including the NEB Actcertificates and the Yukon easement. The Agency has worked closely with relevant federal departments and agencies, mainly through the Alaska Pipeline Project Interdepartmental Committee (APPIC), and has coordinated activities with territorial and provincial governments, the U.S. and TransCanada.

Lessons Learned

In the 2012-13 fiscal year, most of the activities undertaken by the Agency concerned the ongoing management of the project in Canada as well as the ongoing engagement with stakeholders and Aboriginal groups. There are no lessons learned to report at this time.

Section III: Supplementary Information

Financial Statements Highlights

Condensed Statement of Operations and Departmental Net Financial Position

Northern Pipeline Agency
Condensed Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31, 2013
($  1000s)
  2012–13
Planned
Results*  		 2012–13
Actual		 2011–12
Actual		 $ Change
(2012–13
Planned
vs.
Actual)		 $ Change
2012–13
Actual
vs.
2011–12
Actual)
Total expenses 3,296.9 2,059 2,262.1 1,237.9 (203.1)
Total revenues 0 0 0 0 0
Net cost of operations before government funding and transfers 3,296.9 2,059 2,262.1 1,237.9 (203.1)
Departmental net financial position 0 0 0 0 0

 

Northern Pipeline Agency
Condensed Statement of Financial Position (Unaudited)
As at March 31, 2013 ($ 1000s)
  2012–13 2011–12 $ Change
Total net liabilities 302.6 701.2 (398.6)*
Total net financial assets 276.5 670.3 (393.8)*
Departmental net debt 26.1 30.9 (4.8)
Total non-financial assets 26.1 30.9 (4.8)
Departmental net financial position 0 0 0

* The amounts in the 2011-12 DPR have been stated as ‘gross liabilities’ in the amount of $1,677.4 instead of ‘net liabilities’ in the amount of $701,207. The ‘net financial assets’ was reported as $1,646.5 instead of $670,337

Financial Statements

The Northern Pipeline Agency’s audited financial statements were not ready at the time this

report was prepared. They are now available under “Departmental Plans and Reports” at http://www.npa.gc.ca.

Tax Expenditures and Evaluations Report

The tax system can be used to achieve public policy objectives through the application of special measures such as low tax rates, exemptions, deductions, deferrals and credits.  The Department of Finance publishes cost estimates and projections for these measures annually in the Tax Expenditures and Evaluations 2 publication.  The tax measures presented in the Tax Expenditures and Evaluations publication are the sole responsibility of the Minister of Finance.

Section IV: Other Items of Interest

Organizational Contact Information

The Agency has been designated as a department for the purposes of the Financial Administration Act. The Agency currently reports to Parliament through the Minister of Natural Resources Canada, who is responsible for the management and direction of the Agency. The Agency has one senior officer, a Commissioner appointed by the Governor in Council. The Commissioner is currently the Deputy Minister of Natural Resources Canada. The Agency’s organizational structure is defined by the Act. The Commissioner is supported by an Assistant Commissioner.

The Agency’s contact information is as follows:

Northern Pipeline Agency
412 - 615 Booth Street
Ottawa, Ontario
K1A 0E9
(613) 995-1150
www.npa.gc.ca

Additional Information

The Minister has sole responsibility to Parliament for the following Act:

  • Northern Pipeline Act (R.S.C., 1977-78, c.20, s.1)

The Minister has or shares responsibilities to Parliament for the following regulations:

  • National Energy Board Cost Recovery Regulations (SOR/91-7)
  • Northern Pipeline Notice of Objection Regulations (SOR/81-235)

Endnotes

  1. Public Accounts of Canada 2013, http://www.tpsgc-pwgsc.gc.ca/recgen/txt/72-eng.html
  2. Northern Pipeline Agency – Reports and Publications
  3. Government of Canada Tax Expenditures, http://www.fin.gc.ca/purl/taxexp-eng.asp

 

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