Canada regulator plans new rules as firms find bad pipeline parts

CALGARY, Alberta (Reuters) - Canada’s National Energy Board (NEB) will push for a shift in standards for pipeline parts after TransCanada Corp and Enbridge Inc discovered some that they were using had been substandard, a senior regulatory official told Reuters.

A man enters the National Energy Board building in Calgary, Alberta, March 24, 2015. REUTERS/Todd Korol

The NEB’s changes must pass external standards committees that include the pipeline industry and would change the way manufacturers have been designing parts, making production more complicated, NEB chief engineer Iain Colquhoun said.

The NEB will set out precise measures after a multi-party workshop in June, Colquhoun said in an interview in late May.

“They’re big changes in philosophy because the standards that we are (currently) using evolved over many decades,”

The changes are unlikely to significantly affect pipeline operators, although parts manufacturers may see some increased costs as they try to meet new requirements.

The NEB in April warned about parts from Tecnoforge, a subsidiary of Italy’s Valvitalia SpA, and South Korea’s TK Corp, but did not name the companies using them.

An internal NEB memo seen by Reuters under access-to-information laws named TransCanada as the company using Tecnoforge fittings and noted it had two similar cases with other manufacturers.

Colquhoun, who spoke to Reuters after it had seen the memo, identified Enbridge as the company using TK Corp fittings.

TransCanada and Enbridge said in separate statements they acted immediately and proactively after discovering the issues and that all their pipes were safe. Valvitalia and TK Corp declined to comment, with the latter calling the issue “sensitive.”

Both firms discovered the substandard parts prior to putting them into operation, and the companies were not penalized.

Pipe parts are usually made stronger than needed, and the substandard ones had not caused safety issues, but the “repeated occurrence” of the matter demands broad action, according to the NEB memo, dated October 2016.

Colquhoun said the NEB would push for manufacturing processes in which strength was determined at the design level through more calculations in coming up with attributes such as thickness and diameter.

The NEB may also push for other changes to production processes, including in heat treatment, he said.

According to the NEB, TransCanada discovered a substandard Tecnoforge fitting in 2016 on a compressor station on its Nova Gas Transmission Ltd [TCPNG.UL] network, which spans the provinces of Alberta and British Columbia. The company has since removed at least 44 of its “several hundred” fittings from the maker installed since 2011, the NEB said.

According to the NEB, Enbridge discovered a substandard TK Corp part in 2012 on a minor pipeline system under the authority of the province of Alberta.

Enbridge said that it has replaced more than 400 fittings, although it did not name the pipeline system they had been on.

Additional reporting by Yuna Park in Seoul; Editing by Andrew Hay