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The Honorable Gary Lunn, P.C., M.P.,
Minister Responsible for Northern Pipeline Agency
Section III - Supplementary Information
Departmental Planned Spending and Full Time Equivalents
Net Cost of Program for 2006-2007
Legislation Administered by the Northern Pipeline Agency
It is my pleasure to present the 2006-07 Report on Plans and Priorities for the Northern Pipeline Agency (NPA).
The NPA was established by 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 and possibly northern Canadian natural gas to southern markets in Canada and the United States.
The southern portion of the pipeline was constructed in the early 1980's and presently transports Canadian gas sourced from south of the 60 parallel. Unfavourable economic conditions led to indefinite delays in the completion of the northern portion of the pipeline, and consequently, the NPA's activities were limited to overseeing the expansion of the southern portion of the pipeline.
Recently, growing North American demand for natural gas, limitations on its supply from conventional sources and strong natural gas prices have rekindled interest in exploring options for bringing northern gas to markets. In response, the NPA has been taking measures to address the commitments of the Government of Canada that are embodied in the Act.
During the period of this report, the NPA will continue to work together with other federal agencies, provincial and territorial governments, First Nations and the public to meet the objectives of the Act.
Cassie J. Doyle Commissioner
Management Representation Statement
I submit, for tabling in Parliament, the 2006-2007 Report on Plans and Priorities for the Northern Pipeline Agency.
This document has been prepared based on the reporting principles contained in the Guide to the Preparation of Part III of the 2006-2007 Estimates: Report on Plans and Priorities and Departmental Performance Reports.
It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;
It is based on the NPA's approved Program Activity Architecture as reflected in its Management Resources and Results Structure;
It presents consistent, comprehensive, balanced and reliable information;
It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
It reports finances based on approved planned spending numbers from the Treasury Board Secretariat.
Cassie J. Doyle Commissioner, Northern Pipeline Agency
The NPA was created by the Act in 1978 to:
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 socioeconomic 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.
Since the beginning 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 are declining, leading to a corresponding increase in interest in reviving the Alaska Highway Gas Pipeline Project.
Foothills has indicated it intends to file detailed project plans to complete the project and has asked that the NPA prepare to expeditiously consider these plans and to facilitate construction. At the same time, natural gas producers, who hold the rights to extract gas in Alaska, have indicated their interest in applying for new certificates, under the National Energy Board Act to build a pipeline to bring the gas to markets south of the 60th parallel.
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 added to its staff and has begun reviewing key issues, including environmental concerns and First Nations interests. During 2006-07, the NPA will be occupied with the development of plans to regulate and facilitate the construction of the pipeline.
In the event that a detailed plan is actually received and commercial arrangements to support construction of the project are finalized, the NPA would be called upon to significantly increase its activity levels. It is unlikely that any such plan would be received before 2007-08.
NPA's Financial Resources
NPA's Human Resources
|4 FTEs||2 FTEs||2 FTEs|
Financial resources for 2006-07 are based on an assumption that the NPA will continue planning for a Foothills project. Resource levels for future years may need to be adjusted depending on the actual level of activity in the Foothills project.
The costs of the NPA are fully cost recovered from Foothills.
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:
To effectively administer the Act in respect of any prebuild expansions and establish the framework to respond to the reactivation of Phase II of the pipeline when required.
*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).
As a small agency, the NPA obtains its administrative services from NRCan and is benefitting 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.
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.
Analysis by Program Activity
Program Activity: Regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.
NPA's Financial Resources
NPA's Human Resources
|4 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, should a detailed project plan come 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.
To allow the NPA to prudently refine its plans and state of readiness to respond and to enhance its engagement with other participants that would be involved in the planning and the construction of this phase of pipeline development, an adequate level of staff will be hired.
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 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 continued low level of activity, arrangements are in place whereby the NPA relies largely on NRCan for administrative and technical assistance. The NPA also receives policy advice from NRCan and other federal departments.
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 relationships of the key officers responsible for the NPA's program activity. The Agency currently has four full-time positions to assist in delivering its program activity. Hiring of additional employees will depend on the nature and timing of decisions by the project proponent.
1. Departmental Planned Spending and Full Time Equivalents
|Forecast Spending||Planned Spending||Planned Spending||Planned Spending|
|Facilitation of the planning and construction of the Alaska Highway Gas Pipeline||1,355.0||946.0||267.0||267.0|
|Budgetary Main Estimates||1,355.0||946.0||267.0||267.0|
|Total Main Estimates||1,355.0||946.0||267.0||267.0|
|Total Planned Spending||1,355.0*||946.0||267.0||267.0|
|Less: Non-respendable revenue||1,403.0||970.0||291.0||291.0|
|Plus: Cost of services received without charge||48.0||24.0||24.0||24.0|
|Net Cost of Program||0||0||0||0|
|Full Time Equivalents||6||4||2||2|
*Reflects the forecast total planned spending to the end of the fiscal year.
2. Non-respendable Revenue
|($ thousands)||Forecast Revenue||Planned Revenue||Planned Revenue||Planned Revenue|
Northern Pipeline Agency Canada
|Total Non-Respendable Revenue||1,403.0||970.0||291.0||291.0|
3. Net Cost of Program for 2006-2007
|Planned Spending (Budgetary and Non-budgetary Main Estimates plus adjustments)||946.0|
|Plus: Services received without charge|
|Accommodation provided by Public Works and Government Services Canada (PWGSC)||0.0|
|Contributions covering employer's share of employees' insurance premiums and expenditures paid by TBS||0.0|
|Costs provided by other departments||24.0|
|Less: Non-respendable Revenue||970.0|
|2006-07 Net Cost of Program||0.0|
4. Legislation Administered by the Northern Pipeline Agency
The Minister has sole responsibility to Parliament for the following act:
Northern Pipeline Act
The Minister shares responsibility to Parliament for the following regulations:
National Energy Board Cost Recovery
(SOR/91-7, 1991 Canada Gazette Part II, p.15.)
Chronology of Events
Interest in the Alaska pipeline project was revived in the early years of this decade by the ongoing strengthening in natural gas markets. An important development was passage of U.S. legislation (October 2004) which provided loan guarantees, fiscal lift and established time lines for regulatory approval processes for a project bringing Alaska natural gas to markets. As well, the State of Alaska intensified its negotiations under its Stranded Gas Act to establish the fiscal and financial terms and conditions to govern natural gas development and transportation in the State. Any contract under the Act between the natural gas producers, pipeline companies, or others would need the approval of the Alaska legislature.
In Canada, Foothills and the natural gas producers have been developing their project plans and have asked the Government of Canada to provide regulatory certainty. The NPA is working with other relevant federal departments and agencies should Phase II of the Foothills project proceed.
For further information about Northern Pipeline Agency Canada, contact:
Northern Pipeline Agency Canada
615 Booth Street
Telephone: (613) 995-1150
Fax: (613) 996-5354
Ms. Cassie J. Doyle - Commissioner
Mr. Philip Jennings - A/Assistant Commissioner and Comptroller