August 30, 2015 / 12:33 AM / 2 years ago

UPDATE 1-Regulator in Canada's Alberta shuts in 95 Nexen pipelines over "noncompliance"

3 Min Read

(Adds company comment in paragraphs 5-8)

By Mike De Souza

CALGARY, Canada, Aug 29 (Reuters) - Alberta's energy regulator has shut in 95 Nexen Energy pipelines, over concerns the company allegedly violated pipeline maintenance and monitoring rules.

The order, issued on Friday evening by the regulator in the oil-rich Canadian province, comes more than a month after Nexen, which is owned by CNOOC Ltd, discovered one of the largest ever oil-related pipeline spills on North American soil at its Long Lake Facility in northern Alberta.

The Alberta Energy Regulator (AER) said it received information that indicated noncompliance with pipeline safety rules on multiple lines in the course of its investigation at the site, southeast of Fort McMurray.

The order suspends 15 pipeline licences for 95 pipelines that carry a range of products including crude oil, natural gas, salt water, fresh water and emulsion, the regulator said. It is also requiring Nexen to demonstrate that its pipelines can be operated safely.

In a statement, Nexen said it discovered "a number of non-compliances" in an internal audit related primarily to maintenance activities and disclosed this to the regulator last Tuesday, along with an action plan.

It also said it was preparing to comply with the suspension order as it works to compile other records requested by the regulator.

It was not immediately clear whether the order would affect production. Long Lake has a capacity of 72,000 barrels per day, but following the spill, Nexen said in July that it was producing about 50,000 bpd.

A company spokeswoman on Saturday said Nexen would provide more information about the impact of the suspension as it becomes available.

Nexen apologized for the spill in July, explaining that it would likely take months to find the root cause of the leak, which released more than 31,500 barrels of emulsion, a mixture of bitumen, water and sand.

The incident dealt another blow to Canada's oil sands industry in northern Alberta, which is under fire from environmental groups for its carbon-intensive production process.

"Given that this company has already had a pipeline failure at this site, the AER will not lift this suspension until Nexen can demonstrate that they can be operated safely and within all regulatory requirements," said Jim Ellis, the president and chief executive officer of the provincial regulator, said in a statement. "We will accept no less than concrete evidence."

The regulator is still investigating the causes of the spill discovered in July and said it may impose additional sanctions on Nexen. (Reporting By Mike De Souza; Editing by Raissa Kasolowsky and W Simon)

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