When should the records for a pipeline segment be transferred from the seller (transferor) to the purchaser (transferee)?
The seller must transfer the records for the pipeline segment being sold before applying to the AER to transfer the applicable pipeline licence. The seller and the purchaser must confirm on the licence transfer application that the applicable records have been maintained and transferred.
The seller and the purchaser should discuss records transfer before finalizing the sale and consider including records-related matters in the contractual agreement.
Who is responsible for ensuring that all required records are transferred?
Both parties are responsible. Sellers are responsible for transferring the records. Purchasers must ensure that the records meet the applicable requirements (e.g., have been properly maintained) and demonstrate that the pipeline is safe to operate for the intended purpose.
The new licensee is responsible for producing the records required by CSA Z662: Oil and Gas Pipeline Systems and the Pipeline Rules on request by the AER. A licensee failing to do so will be in noncompliance with our requirements.
Incomplete records must be re-established, and an engineering assessment must determine whether the pipeline is fit for service. The purchaser’s pipeline expert should use professional judgement to determine the scale of the assessment based on the risk associated with the pipeline. (Clauses 3 and 10 of CSA Z662 should be used as a reference.) We recognize that some records cannot easily be replaced; the engineering assessment should provide confidence that the pipeline can be operated safely.
Does the purchaser need to review all required records before agreeing to the licence transfer on the AER’s system?
The seller and purchaser must agree on the records for transfer as part of the sales arrangement, which likely involves technical experts, before transferring the licence. The purchaser’s pipeline expert must use professional judgement in determining that the pipeline can be operated safely based on the records.
Does the pipeline licence transfer process announced in Bulletin 2015-34: Confirmation of the Transfer of Pipeline Records to Be Added to the Licence Transfer Application apply to discontinued and abandoned pipelines?
Yes. The purchaser must review available records to confirm that the pipeline has been properly discontinued or abandoned. If records are insufficient, the parties must decide how to address this. An appropriate engineering assessment and additional work may be required. The pipeline expert should use professional judgement to determine the scale of the assessment based on the risk associated with the pipeline.
Does the pipeline records transfer process announced in Bulletin 2015-34 apply to licensees that are bankrupt or otherwise unable to conduct normal business?
Yes. Records transfer should be discussed between the seller and purchaser and part of the sales arrangement, even if the party responsible for a pipeline is a receiver. The purchaser must evaluate the available records to determine whether the pipeline is safe to operate. If records are missing, the purchaser must undertake an appropriate engineering assessment to re-establish those records and determine whether the pipeline is fit for purpose.
If, after the licence transfer is completed, the purchaser finds that the pipeline records are not in accordance with CSA Z662 and the Pipeline Rules, what should be done?
As the current licensee, the purchaser must conduct an appropriate engineering assessment to re-establish any missing or nonconforming records and demonstrate that the pipeline is fit for service and safe to operate. The engineering assessment must be included in the purchaser’s integrity management program so that records are re-established in a timely manner.
What would the AER consider an appropriate engineering assessment?
The purchaser must use professional judgement to determine an appropriate engineering assessment; the assessment must demonstrate that a pipeline is fit for purpose and safe to operate. Assessments should be scaled according to the risk associated with the pipeline. Use clauses 3 and 10 of CSA Z662 as a reference for engineering assessments.
Does the AER have a list of the kinds of records that should be transferred, including what it considers an adequate substitute if those records are missing?
No. The records a pipeline licensee must maintain are set out in CSA Z662 and the Pipeline Rules and are based on several factors, including the pipeline specifications and product transported. The purchaser reviewing the records should use professional judgement to determine record adequacy.
How will the AER choose a licence transfer application for compliance review?
We randomly choose applications to review or as part of routine field inspection. We may also review an application for a high-risk pipeline segment (e.g., a major water crossing). As we complete more reviews, licensee performance in complying with record transfers may become a factor in the selection process for future compliance reviews.
What are the consequences of noncompliance if the AER determines that the records are inadequate?
The licensee of record is responsible for complying with our requirements. Noncompliances are addressed under our Compliance Assurance Program. The consequences vary with the circumstances. If records are missing, the licensee, at a minimum, will be required to obtain or generate adequate records. This action may include a risk-based engineering assessment to demonstrate that the pipeline is fit for purpose and safe to operate. We may also shut in a pipeline segment until we are satisfied with record adequacy.
