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2009-10
Report on Plans and Priorities

Northern Pipeline Agency Canada

The original version was signed by
The Honourable Lisa Raitt, P.C., M.P.
Minister Responsible for Northern Pipeline Agency

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Table of Contents

Section I: Overview 

• Summary Information
• NPA – Plans and Priority

Section II: Analysis of Program Activity by Strategic Outcome

• Strategic Outcome
• Analysis by Program Activity

Section III: Supplementary Information

• Organizational Information
• Voted and Statutory Items Displayed in Main Estimates
• Departmental Planned Spending and Full Time Equivalents
• Non-Respendable Revenue
• Legislation Administered by the Northern Pipeline Agency

Section IV: Other Items of Interest

• Chronology of Events
• Figure 1: The Alaska Natural Gas Transportation System
• Figure 2: The Foothills Prebuild
• References

Section I - Overview

Commissioner’s Message

It is my pleasure to present the 2009-10 Report on Plans and Priorities for the Northern Pipeline Agency (NPA).             

The NPA was established with the proclamation of the Northern Pipeline Act (the Act) in 1978 to facilitate the planning and construction by Foothills Pipe Lines Ltd. (Foothills) of the Canadian portion of the Alaska Highway Gas Pipeline Project and to maximize social and economic benefits from its construction and operation, and minimize any adverse effects.  The pipeline, also referred to as the Alaska Natural Gas Transportation System, was certificated in 1978 and is intended to transport Alaskan natural gas to southern markets in Canada and the United States.

The southern portion of the pipeline (the prebuild) was constructed in the early 1980's and presently transports Canadian gas sourced from south of the 60th parallel. Unfavourable economic conditions led to indefinite delays in the completion of the northern portion of the pipeline, and consequently, the NPA's activities have been limited to overseeing the expansion of the southern portion of the pipeline.

Interest in building an Alaska Highway pipeline has now been rekindled.  Foothills, a wholly-owned subsidiary of TransCanada Pipelines Limited, is actively advancing its Alaska Highway pipeline project.  Recognizing the role of the NPA in facilitating the efficient and expeditious planning and construction of the pipeline, NPA activity will increase as an Alaska Highway pipeline project builds momentum.

The NPA remains committed to fulfilling the responsibilities of the Government of Canada that are embodied in the Act by continuing to work with TransCanada Pipelines Limited and also with federal agencies, provincial and territorial governments, First Nations and the public.

Cassie J. Doyle
Commissioner

Summary Information

 The NPA was created by the Act in 1978 to:

• facilitate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project, for which National Energy Board (NEB) certificates were granted to Foothills taking into account local and regional interests;
• facilitate, in relation to the pipeline, consultation and coordination with the governments of the provinces and the territories;
• maximize social and economic benefits and the opportunities for employment by Canadians while minimizing any adverse social and environmental effects; and,
• advance national economic and energy interests and maximize related industrial benefits through Canadian participation in all aspects of the pipeline.

Prior to commencing construction of any particular section of the pipeline, Foothills is required to obtain a series of specific approvals from the NPA pursuant to the Act and the terms and conditions specified under the Act. These approvals relate to socio-economic and environmental factors, routing issues, technical design, and other matters such as demonstration of financing. For certain authorizations, approval from the NEB is necessary.

The project authorized under the Act envisaged the construction of a natural gas pipeline to carry gas from Alaska, through the Yukon, British Columbia and Alberta to markets in Canada and the United States. A portion of the pipeline was built in Alberta by 1982, with further expansions, under the NPA, as recently as 1998. However, the weak market conditions for natural gas, prevailing from the mid-1980s and in the 1990s resulted in an indefinite delay in construction of the northern portion of the line from Alaska to Alberta. 

For the better part of this decade natural gas prices have been rising, at the same time as supplies from traditional North American supply basins in the United States and western Canada have declined, leading to a corresponding increase in interest in reviving the Alaska Highway natural gas pipeline. As TransCanada Pipelines Limited’s project builds momentum, this will place additional demands on the NPA.

The NPA's jurisdiction extends only to the Foothills project, as authorized under the Act. In anticipation of receiving detailed project plans from Foothills, the NPA has begun reviewing key issues, including environmental concerns and First Nations interests. 

As a small agency, the NPA obtains its administrative services from NRCan and is benefiting from the shared services initiative launched by that department in late 2004. 

For the right of easement, Foothills pays the NPA an annual amount of $30,400; of this amount $10,000 is collected on behalf of and forwarded directly to the Yukon Government. The balance of $20,400 is remitted to the Government of Canada.

Financial resources for 2009-2010 are based on an assumption that the NPA will continue planning for a Foothills project. However, recognizing TransCanada Pipelines Limited’s commitment to advancing their project, the NPA is anticipating significantly increased activity during 2009-2010 (not reflected in the tables below).  Resource levels may need to be revised upwards depending on the actual level of project activity and demands from TransCanada Pipelines Limited.

NPA's Financial Resources ($ thousands)

2009-10	2010-11	2011-12
265.0	265.0	265.0

NPA's Human Resources

2009­10	2010-11	2011-12
2 FTEs	2 FTEs	2 FTEs

The 2 FTE’s are the Assistant Commissioner/Comptroller and the Commissioner. The costs of the NPA are fully cost recovered from Foothills.

NPA Priority

To achieve results for Canadians over the period of this three-year financial plan, the NPA has one strategic priority in respect of its strategic outcome:

NPA's Priority

Priority	Type	Planned Spending* ($ thousands)
		2007-2008	2008-2009	2009-2010
To effectively administer the Act in respect of any prebuild expansions and to conduct work related to the reactivation of the northern portion of the pipeline when required.	ongoing	265.0	265.0	265.0

*Expenditures and human resource requirements for the planning period are summarized in the table.  It should be noted that the NPA's costs are not borne by the taxpayer. The NPA recovers 100% of its operating costs from Foothills through existing authorities pursuant to section 29 of the Act and determined in accordance with section 24.1 of the National Energy Board Act and the National Energy Board Cost Recovery Regulations.

NPA - Plans and Priority

The challenge for the NPA is to be in a state of readiness in the event Phase II of the pipeline project is reactivated.  Since the Act came into force, the external environment relevant to environmental and public considerations, prior to the commencement of construction, has changed significantly. Some of the changes in Yukon include new environmental legislation, devolution of some federal responsibilities, and settlement of most First Nations land claims along the pipeline route.

The NPA will need to develop regulatory processes which fully meet modern environmental standards and respect the rights of First Nations. Simultaneously these processes must respect the rights granted to Foothills under the Act and recognize the continuing validity of the existing certificates.  To carry out these responsibilities, the NPA is working closely with relevant federal departments, principally the Canadian Environmental Assessment Agency, Indian and Northern Affairs Canada, the NEB, Foreign Affairs Canada, and Natural Resources Canada (NRCan).

Section II:  Analysis of Program Activity by Strategic Outcome

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. The planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline project is efficient and expeditious while ensuring environmental protection and social and economic benefits for Canadians.

Analysis by Program Activity

Program Activity: Regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.  This program activity is aligned to the Strong Economic Growth outcome.

NPA's Financial Resources ($ thousands)

2009-10	2010-11	2011-12
265.0	265.0	265.0

NPA's Human Resources

2009­10	2010-11	2011-12
2 FTEs	2 FTEs	2 FTEs

Expected Results: In concert with other federal government departments, the NPA will develop a regulatory framework which accommodates modern environmental practices, takes into account the rights of First Nations communities, and considers the interests of provincial-territorial governments, so as to be prepared to effectively regulate and to facilitate the planning and the construction of the Foothills pipeline, when a detailed project plan comes forward. The NPA's activities are dictated by the timing and pace of the planning and construction of the pipeline.

Performance Indicators: The NPA will effectively respond to any regulatory filings by Foothills and make certain that the Act is properly administered.

The NPA will continue to address regulatory certainty by establishing a framework to proceed with the construction of the northern portion of the pipeline within a timeframe that corresponds with industry decisions on the project.  The timing of these decisions is affected by such considerations as project economics, natural gas markets and negotiations between Foothills and Alaska gas producers and, therefore, is unpredictable.

Section III - Supplementary Information

Organizational Information

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

Given the low level of activity in recent years, arrangements are in place whereby the NPA relies largely on NRCan for administrative and technical assistance.

To further assist the responsible Minister in carrying out the NPA's mandate, there is provision for federally-appointed advisory councils. One of the councils consists of Aboriginal, business and other parties representing communities in Yukon. A similar council was also established for northern British Columbia. Membership in these councils has lapsed over the years in view of the dormant state of Phase II of the pipeline.

As a separate employer, the NPA conforms closely with the principles of personnel administration that apply in the Public Service of Canada.

The figure below provides a schematic of the reporting relationship of the key officers responsible for the NPA's program activity. In recent years, the Agency’s day-to-day responsibilities have been primarily administrative in nature, however this is expected to change.  The Agency receives support from Natural Resources Canada, to assist in delivering its program activity.  The NPA may require additional dedicated employees as the project continues to build momentum.

*Information shown is the 2007-08 Main Estimates.

1. Voted and Statutory Items displayed in the Main Estimates
($ millions)

Vote or Statutory Item ($ thousands)	Truncated Vote or Statutory Wording	2009-10 Main Estimates	2008-09 Main Estimates
30	Program expenditures	244	244
(S)	Contributions to employee benefit plans	20	21
Total Agency		265	266

2. Departmental Planned Spending and Full Time Equivalents

($ thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Facilitation of the planning and construction of the Alaska Highway Gas Pipeline	266.0	265.0	265.0	265.0
Budgetary Main Estimates	266.0	265.0	265.0	265.0
Total Main Estimates	266.0	265.0	265.0	265.0
Adjustments*	43.5	-	-	-
Total Planned Spending	309.5	265.0	265.0	265.0
Less: Non-respendable revenue **	333.5	289.0	289.0	289.0
Plus: Cost of services received without charge	24.0	24.0	24.0	24.0
Net Cost of Program	0.0	0	0	0
Full Time Equivalents	2	2	2	2

*   Reflects funds carried forward from 2008-2009.
** Reflects the forecast total planned spending to the end of the fiscal year.

3. Non-respendable Revenue

The NPA's Non-Respendable Revenue table can also be found on the Treasury Board Secretariat's website at: http://www.tbs-sct.gc.ca/rpp/st-ts-eng.asp

4. Legislation Administered by the Northern Pipeline Agency

Section IV - Other Items of Interest

Chronology of Events

Interest in the Alaska pipeline was revived in the early years of this decade by the ongoing strengthening in natural gas markets.  An important development was the passage of U.S. federal legislation in 2004 which provided loan guarantees, fiscal lift and established time lines for regulatory approval processes for a project bringing Alaska natural gas to markets. 

Alaska Governor, Sarah Palin’s administration is committed to commercializing Alaska’s vast natural gas resources.  Governor Palin has vowed to make an Alaska natural gas pipeline a priority for her government.  In March 2007, Governor Palin introduced new legislation, the Alaska Gasline Inducement Act (AGIA).  The act was designed to induce construction of the pipeline and offer a transparent, expedient and competitive process to strike the right balance for the State, project proponents, gas producers and the United States.  TransCanada Pipelines Limited was ultimately awarded the AGIA license and is now eligible for up to $500 million in State funding to advance the pipeline proposal.

The Agency will continue to work collaboratively with relevant federal departments and agencies to develop a regulatory structure, in anticipation of a filing under the Northern Pipeline Act. 

References

For further information about Northern Pipeline Agency Canada, contact:

Northern Pipeline Agency Canada
580 Booth Street
Ottawa, Ontario
K1A 0E4

Telephone: (613) 992-9612
Fax:  (613) 995-1913

Ms. Cassie J. Doyle  Commissioner

Mr. Kevin Stringer A/Assistant Commissioner and Comptroller