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TransCanada’s Alberta System Showing Its Age, Audit Finds

Lingering risks of ruptures, explosions, fires and breakdowns haunt the western supply side of TransCanada Corp.'s natural gas delivery network 16 years after a corporate merger included taking over the aging system.

Findings of non-compliance with current pipeline safety standards by a federal regulatory audit arise often from aging issues in the Alberta grid of Nova Gas Transmission Ltd. (NGTL), which TransCanada acquired in 1998 for C$14 billion (US$12.6 billion).

The 99-page audit report discloses that about three-quarters of the NGTL web is beyond the reach of modern hazard detection technology, and that the system is riddled with risk-prone inlets from gas fields operated by other companies.

NGTL started small in 1957 as Alberta Gas Trunk Line (AGTL), with 190 kilometers (118 miles) of pipe and a provincial charter to be a storage, sales, and delivery hub between wells and long-distance transmission conduits enabling producers to shop around for the highest-value markets.

NGTL grew and reshaped itself, by piecemeal additions every year, into a web that reaches every gas-producing corner of Alberta with 24,828 kilometers (15,393 miles) of pipe of varying size and quality dictated by constantly changing economic conditions and construction standards. The network has capacity to move 14 Bcf/d and still averages about 10 Bcf/d or 70% loaded despite reduced output from aging gas fields and rising industrial consumption inside the province.

Ruptures and breakdowns are routine. Little public alarm is raised. The leaks and blazes are clean gas flares. The accidents usually happen in remote spots where blasts and fires only send wildlife or roving gas-field personnel scurrying for cover and pose no threat to human residents.

Since last October, there have been four ruptures on widely dispersed stretches of NGTL. The mishaps included a spectacular explosion and fire on a large-diameter, high-volume northern branch line that forced temporary production cuts or suspensions on thermal oil sands projects that use gas as fuel for pumping out 800,000 b/d.

The National Energy Board (NEB) ordered the safety audit after a TransCanada whistle blower engineer reported inspection practices that were inconsistent with current standards. The agency sided with the engineer's insistence that regulation requires construction inspection by independent experts rather than a staff of contractors carrying out particular installations. TransCanada is complying with the rule clarification.

But the audit uncovered much bigger issues, chiefly in the NGTL web, that cannot be resolved with procedural changes.

The result of the Alberta grid's evolution is a patchwork that is "mostly un-piggable," says the safety audit report. The pipeline is unable to accommodate mobile remote sensors made in packages that resemble pigs' torsos of various diameters. The shapes and sizes of the tools, known as pigs, enable them to glide through buried pipe and detect corrosion, metal fatigue or other hazards without digging up and manually examining questionable sections.

The modern remote-sensing method is also known as in-line inspection (ILI). But the approach only works in stretches of pipeline with consistent diameters.

The NEB audit found that only 25% of NGTL has ever been in-line inspected and disclosed that 234 segments of the web exceeded TransCanada's own stated standards of risk tolerance.

The company responded to the auditors' discovery by whittling the number of at-risk sections down to one with revisions of the stated standards. The NEB refused to accept the sidestepping as compliance with regulatory requirements. The same went for attempts to substitute modeling reviews of supposedly comparable pipe and ground conditions for direct inspection by pigs or manual methods.

The NEB report calls the second built-in NGTL weakness "overpressure risk." Like the un-piggable pipe beyond the reach of remote detection, the additional hazard arises from the system's age and complexity.

NGTL has accumulated more than 1,100 gas-field inlets or "receipt points" where operating pressures of its customers' and its own equipment have to match up in order to prevent risks of mishaps, the audit disclosed. Modern standards require frequent supervision of receipt points and installations of protective hardware at locations prone to episodes of pressure mismatches.

"The NEB has reviewed TransCanada's past incident history and identified over-pressure incidents on the NGTL system," says the audit report. "TransCanada only recently initiated a plan of action to verify compliance."

On the highest rungs of the TransCanada staff ladder, the audit also found that senior executives have not yet caught up with recommended pipeline best practices for ensuring safety is a top corporate priority and action to control risks is swift.

Along with poor responses to the inspection flaw whistle-blower, who was fired, "non-compliances identified during the audit such as insufficient overpressure protection...illustrate the results of a management review process that was not effective," says the NEB report.

After disclosing results of the audit this week, the board stopped short of imposing fines on TransCanada with newly acquired authority to levy potentially stiff "administrative penalties" on regulatory offenders without prosecuting them in the law courts. But the NEB ordered the pipeline giant to submit a "corrective action plan" within 30 days.

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