The exemption given to CNRL is valid until 2028 and applies both to inactive pipelines that have not been decommissioned and proactively to pipelines that will become inactive during that period. The regulator’s decision was never made public.

According to the documents, in October 2022, a BC Energy Regulator official flagged an apparent problem with a CNRL pipeline while inspecting oil and gas sites in northeast B.C., noting, “This pipeline may fall under the exemption given to CNRL for over 4,000 pipelines that are not compliant concerning deactivation.”

The regulator, a provincial agency primarily funded by the oil and gas industry, declined an interview request. In an unsigned email responding to questions, the regulator said the exemption is part of its agreement with CNRL to gradually decommission the 4,300 pipelines across the province. 

The Narwhal and the Investigative Journalism Foundation tried to contact Canadian Natural Resources over a period of five weeks to discuss the exemption. Attempts to contact the company included emailing detailed questions to three executives, among them CEO Scott Stauth and the company’s director of corporate communications. Journalists also spoke to the company’s investor relations team, who confirmed receipt of the questions but did not respond.

Exemptions to pipeline regulations ‘should be public’: policy expert

According to the regulator, Calgary-based CNRL has decommissioned or confirmed compliance for over three-quarters of the 4,300 pipelines. 

But policy experts say the scale of the exemption raises questions about how the regulator oversees B.C.’s oil and gas sector and about the influence wielded by large companies like CNRL, which posted revenues of more than $35 billion last year. 

Kathryn Harrison, a political science professor at the University of British Columbia who studies climate and energy policy, said she was shocked to learn about the exemption. 

“If a company, whether large scale or small, is being given a formal exemption from a binding law, that should be public,” Harrison said in an interview. “Because otherwise, how are citizens to know that laws are being evenhandedly and faithfully executed?”

B.C. Energy Minister Adrian Dix did not respond to an interview request or provide answers to emailed questions.

In its email, the regulator said it became aware of the inactive CNRL pipelines after an audit found the company “had a large number of pipelines that were non-compliant” with B.C. law.

The regulator said contravening those rules could typically result in a fine as high as $500,000. 

However, instead of fining CNRL, the regulator said it agreed to the company’s proposal to exempt the pipelines from the rules while CNRL gradually decommissioned them. 

The regulator said it granted a similar exemption in 2020 for 54 pipelines operated by TAQA North Ltd., a United Arab Emirates company with Canadian headquarters in Calgary. It also said it does not publicly disclose those exemptions, and there is no mechanism for members of the public to comment or object to them. 

In a separate email, the regulator said it could still issue an “administrative monetary penalty” if CNRL did not meet the requirements supporting the exemption. 

The BC Energy Regulator said the exemption applied to 2,266 CNRL pipelines that “were identified as potentially inactive at the time of the exemption,” a further 2,046 pipelines “projected to become inactive throughout the exemption.” 

In its response to questions, the regulator said it made the decision “based on the impracticality of CNRL achieving compliance of the pipelines with the [regulation] timeline requirements and the public interest in having the pipelines brought into compliance more quickly with less land disturbance.” 

The regulator said CNRL had decommissioned all but 865 pipelines as of March 7, or nearly 80 percent of the pipelines exempted from oversight.

Relationship between regulator and companies like a ‘forced marriage’: law professor

Martin Olszynski, a professor at the University of Calgary’s faculty of law specializing in environmental law, called the company’s progress “laudable.” But he said the lack of penalties speaks to a larger problem: Canadian regulators are playing soft with oil and gas companies breaking the rules. 

“If you’re never caught, if you have no fear of getting a speeding ticket, then people will speed,” Olszynski said. 

He explained that the relationship between regulators and companies often resembles a “forced marriage,” where both parties prefer compromise over conflict. That dynamic means regulators may be hesitant to crack down on companies out of a fear they will be seen as heavy-handed.

“Sometimes there are concerns that these companies have significant political clout, and if they start complaining about the working environment, the regulator is going to hear about that,” Olszynski said. He said regulators can also be influenced more subtly as they develop relationships with the companies they oversee. 

“I think it is a problem in Canada generally that our regulators are too timid, and they allow industry to get away with things they shouldn’t.” 

Harrison said granting exemptions runs contrary to the spirit of the law, arguing transparency would keep the regulator and companies accountable. 

“If the company is taking the actions that might need to be taken anyway, it might be a better use of the government’s resources and the firm’s resources to get the thing done and not spend their time and money on lawyers,” she explained. 

She said the public can only decide if that is reasonable when they have information about non-compliance with regulations and decisions to grant exemptions.

“I think people need to know if companies are not following the law, and they need to know that they are being brought into compliance with the law,” Harrison said.

https://thenarwhal.ca/b-c-quietly-allowed-an-oil-and-gas-giant-to-sidestep-rules-for-more-than-4300-pipelines/