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This investigation is a collaboration between The Narwhal and the Investigative Journalism Foundation.
The British Columbia government quietly granted one of Canada’s biggest oil and gas companies an exemption for thousands of pipelines that should have been deactivated before a legal deadline, according to documents obtained under freedom of information legislation.
In 2020, the BC Energy Regulator — then called the BC Oil and Gas Commission — exempted more than 4,300 of those pipelines operated by Canadian Natural Resources Ltd. (commonly known as CNRL) from the 18-month decommissioning requirements, according to documents unearthed by The Narwhal and the Investigative Journalism Foundation.
Major gas producers often operate hundreds or thousands of short pipelines that connect wells — including fracking wells — to larger pipeline networks that transport natural gas to buyers. When the wells dry up, those pipelines are no longer needed. B.C. law requires inactive pipelines to be fully decommissioned 18 months after they become inactive — a measure to prevent environmental damage and leaks as pipelines gradually decay.
The exemption given to CNRL is valid until 2028 and applied both to inactive pipelines that had not been decommissioned and proactively to pipelines that would 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 in regard to deactivation.”
The regulator, a provincial agency largely funded by the oil and gas industry, declined an interview request. In an unsigned email in response to questions, the regulator said the exemption is part of an agreement it made with CNRL to gradually decommission the 4,300 pipelines across the province.
The Narwhal and the Investigative Journalism Foundation tried to reach Canadian Natural Resources over a period of five weeks to discuss the exemption. Attempts to contact the company included emailing detailed questions to three company 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
Calgary-based CNRL has decommissioned or confirmed compliance for more than three-quarters of the 4,300 pipelines, according to the regulator.
But policy experts say the scale of the exemption raises questions about how the regulator oversees B.C.’s oil and gas sector, as well as 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 normally result in a fine as high as $500,000.
But 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,” as well as a further 2,046 pipelines “projected to become inactive over the duration of 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 per cent 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 who specializes in environmental law, called the company’s progress “laudable.” But he said the lack of any penalties speaks to a larger problem: Canadian regulators are playing soft with oil and gas companies that break the rules.
“If you’re never caught, if you have no fear of getting a speeding ticket, then people will speed,” Olszynski said.
The relationship between regulators and companies often resembles a “forced marriage,” where both parties prefer compromise over conflict, he explained. That dynamic means regulators may be hesitant to crack down on companies out of a fear they will be seen as heavy-handed, he said.
“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 in more subtle ways as they develop relationships with the companies they oversee.
“I do think it is a problem in Canada generally that our regulators are too timid, and they allow industry to get away with things that 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 their money on lawyers,” she explained.
But the public can only decide if that is reasonable when people have information about non-compliance with regulations and decisions to grant exemptions, she said.
“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.
The Local Journalism Initiative (LJI) is a federally funded program to add coverage in under-covered areas or on under-covered issues. This content is created and submitted by participating publishers and is not edited. Access can also be gained by registering and logging in at: https://lji-ijl.ca
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