Canada Steps Up Pipeline Security

'Pinch Points' Scrutinized

America is at war, and with temperatures plunging below freezing, winter has arrived in the northern latitudes of the North American continent.

As Americans enter the winter heating season, they must rely upon the security of foreign imports of oil and natural gas to heat their homes, offices and factories -- and Canada, with its highly integrated, transcontinental system of pipelines, is a key energy supplier to the United States.

But is Canada's oil and gas infrastructure immune to terrorist threats?

Twenty-four Canadians were among those who died in the terrorist attacks of September 11. In response, Canada joined the allied efforts. At press time, one-third of the Canadian Navy was en route to join the war.

And as a military ally of the United States, Canada's population -- and its critical infrastructure -- could be vulnerable to terrorist attack.

"To date, there have not been any terrorist threats to Canada's pipelines," said Bob Hill, president of the Canadian Energy Pipeline Association (CEPA). "Accordingly, we believe that security levels taken, to date, are adequate, given the risk."

Canadians, however, remain on guard.

"Pipelines are really hard to protect," said David Ray, managing director-western Canada, for Kroll, a risk management firm, and former head of security for Shell Canada. "The risk is getting up there ... I could see a situation where terrorists might shut down hydro and gas supplies to the United States in a multi-phased attack at a pinch point."

A pinch point, he explained, is an area that includes several terminals in close proximity.

"The perception is that the Americans would freeze in the dark," Ray added, "but it would only be for a matter of a few days." Because of their modular design, pipelines are usually easy to repair.

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America is at war, and with temperatures plunging below freezing, winter has arrived in the northern latitudes of the North American continent.

As Americans enter the winter heating season, they must rely upon the security of foreign imports of oil and natural gas to heat their homes, offices and factories -- and Canada, with its highly integrated, transcontinental system of pipelines, is a key energy supplier to the United States.

But is Canada's oil and gas infrastructure immune to terrorist threats?

Twenty-four Canadians were among those who died in the terrorist attacks of September 11. In response, Canada joined the allied efforts. At press time, one-third of the Canadian Navy was en route to join the war.

And as a military ally of the United States, Canada's population -- and its critical infrastructure -- could be vulnerable to terrorist attack.

"To date, there have not been any terrorist threats to Canada's pipelines," said Bob Hill, president of the Canadian Energy Pipeline Association (CEPA). "Accordingly, we believe that security levels taken, to date, are adequate, given the risk."

Canadians, however, remain on guard.

"Pipelines are really hard to protect," said David Ray, managing director-western Canada, for Kroll, a risk management firm, and former head of security for Shell Canada. "The risk is getting up there ... I could see a situation where terrorists might shut down hydro and gas supplies to the United States in a multi-phased attack at a pinch point."

A pinch point, he explained, is an area that includes several terminals in close proximity.

"The perception is that the Americans would freeze in the dark," Ray added, "but it would only be for a matter of a few days." Because of their modular design, pipelines are usually easy to repair.

In terms of market share, Canada supplies over 15 percent of America's natural gas needs and is one of the country's major foreign oil suppliers. According to Canada's National Energy Board, natural gas exports to the United States have risen steadily from 0.92 tcf in 1985 to 3.6 tcf in 2000.

Similarly, heavy and light oil exports to the United States have risen from 187 million bbls (heavy) and 201 million bbls (light) in 1995 to 284 million bbls (heavy) and 222 million bbls (light) in 2000.

"When you look at risk, you look at probability and criticality," said Ray, who helps his clients to assess which sites and components in those sites are most critical to the companies' continued operations. "Since September 11 the probability changes -- sometimes hourly."

Ray recommends a staged approach where the probability of risk is ramped up from levels one to three, with three being the most serious. For example, risk level one might involve increasing alarm systems for pipeline compressor stations; level two stepping up aerial over-flights and manned patrols; and level three shutting down the pipeline.

Ray says that some insurance companies are canceling their insurance warrants on terrorism, and describes how one Calgary-based oil and gas company has had its policy cancelled three times since September 11 -- only to have to renegotiate with a higher premium each time.

"If companies can't transfer their risk through insurance," Ray said, "they need to be even more vigilant in protecting their critical infrastructure."

Heightened Awareness

"Business as usual has changed," said Greg Stringham, vice president of markets and fiscal policy for CAPP, the Canadian Association of Petroleum Producers. "Companies are evaluating prudent practices for communications and early warning systems for new vulnerabilities."

Stringham cited examples of companies that have cancelled public tours of pipeline control rooms and field facilities.

"We're operating at a heightened level of awareness," said Jay Godfrey, manager of public affairs for the Alliance Pipeline Limited Partnership in Calgary. "Regardless of the method of the incident, the response and reaction is the same."

Alliance, like all other pipeline companies operating in Canada and the United States, has an emergency response plan (ERP) in place to deal with leaks, ruptures and explosions. Responsibility for pipeline security and integrity lies with each pipeline company. In control rooms that resemble an air traffic control center, companies monitor pipeline performance around the clock. Operators can shut down segments of the pipeline, isolating leaks, ruptures or explosions.

Field surveillance consists of routine over-flights and manned patrols to monitor activity on the right-of-way.

In rural areas, companies rely upon local residents to report anything of significance.

"Through the rural areas, you have the eyes and ears on those folks," Godfrey said. "It's a policy of watch and protect."

The Alliance pipeline started commercial service on Dec. 1, 2000. Originating in northeastern British Columbia, the pipeline stretches 1,768 kilometers through Alberta, Saskatchewan, North Dakota, Minnesota, Iowa and Illinois, delivering about 1.4 bcf of natural gas to Chicago every day.

The Alliance line is an express -- or bullet -- line with 40 receipt points for small laterals. In the event of a stoppage, "shippers" or oil and gas companies could redirect their product through other pipelines, given capacity.

"Shippers don't have all their eggs in one basket," Godfrey said. "This adds flexibility so that they can manage their portfolios."

Ready for Emergencies

TransCanada Pipelines Limited (TCPL) has built an impressive network of approximately 38,000 kilometers of pipeline that services markets in Canada and the United States.

On its mainline, TCPL ships 7 bcf of natural gas per day, with 60 product heading south of the 49th parallel. Additionally, TCPL owns or controls approximately 1,900 megawatts of power -- enough energy to meet the needs of two million average North American households.

The National Energy Board (NEB) is the federal agency that monitors pipelines crossing interprovincial and international borders. According to Ross Hicks, a NEB public affairs officer, "the pipeline facilities have been designed to meet any unauthorized access" -- and that includes terrorist attacks.

Hicks said that a loss of shipping capacity from a terrorist attack might be similar to a loss experienced during a routine shut down for maintenance and cleaning -- the product is usually re-routed through an extensive series of interconnected lines.

Canada boasts a 540,000-kilometer pipeline system, comprised of three different kinds of pipelines -- upstream, transmission and downstream distribution networks.

Only 10 percent of the critical infrastructure in Canada is controlled by the federal government -- the remainder is controlled by provincial governments and the private sector. In order to disseminate communications and intelligence between all levels of government, military, police and the private sector, the Canadian government established the Office of Critical Infrastructure Protection and Emergency Preparedness (OCIPEP) this past February, which issues informational notices, advisories and alerts from its 24-hour monitoring center in Ottawa.

Within weeks of the September 11 tragedy, OCIPEP met with the energy and utility sector in Calgary.

"We're somewhat unique worldwide because we're the only country that combines emergency management with critical infrastructure protection," said Max London, OCIPEP's chief of public affairs.

The agency communicates with its international and American counterparts: FEMA (Federal Emergency Management Agency), the FBI and the newly-formed Homeland Security Office.

The U.S. Energy Information Administration (EIA) in October published its Short-Term Energy Outlook, in which it predicts that demand for electricity, heating oil and natural gas will decline during the winter heating season 2001-2002.

A slowdown in the U.S. economy is to blame, the report said. Weak industrial demand -- combined with a temperate summer in 2001 -- has led to the collapse of North American natural gas prices. Accordingly, working gas in underground storage has swelled to close to 20 percent above last year's level and about 10 percent above the previous six-year average.

Barring any unforeseen disruptions of production or pipeline transmission -- and using the EIA's projections -- America appears to be in good shape get through the winter heating season.

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