Millions of litres spilled and not a single fine: 16 years in a little-known Canadian oilpatch

Some 6.5 million litres of oil, saltwater and other petroleum products have spilled from Manitoba pipelines since 2008, according to spills records reviewed by The Narwhal and the Winnipeg Free Press. None have garnered provincial penalties or fines.

Instead, the bulk of pipeline monitoring and oversight is left to the industry itself, including the responsibility for reporting, cleaning and rehabilitating pipeline spill sites. 

Manitoba Environment Minister Tracy Schmidt called the previous government’s cuts to the Environment Department and government inspection capabilities a “decimation” that led to “gaps” in oversight, and said her government has been taking steps to make changes since a major pipeline was shut down due to safety concerns in March.

“I think that we have really seen the decimation of the petroleum branch, the mines branch, the Environment and Climate Change Department,” Schmidt said in an interview.

Manitoba’s oil patch, tucked into arid farmland in the southwestern corner of the province, has seen more than 11,400 wells drilled — 4,000 of which are currently producing — and comprises more than 5,000 kilometres of active pipelines and flowlines. Thousands of barrels of oil are extracted every day. The industry currently generates more than $1 billion in revenues annually. 

Pipelines have accounted for more than half of the 12 million litres of oil and saltwater — used for horizontal fracturing, or fracking — that  spilled from oil and gas facilities, including wells and storage tanks, in the last 16 years. 

Leaving industry to self-regulate can leave Manitobans without access to transparent information about how pipeline spills impact their communities, or what remedial actions are being taken, experts say.

“It’s really a self-governance model where industry gets to mark its own homework,” Alan Andrews, a Vancouver-based lawyer with the environmental law charity EcoJustice, said in an interview.

‘The land still doesn’t produce today’: farmers have long voiced concerns about pipeline spills impacting their crops

In the aftermath of a preventative maintenance shutdown of Winnipeg’s main fuel supply line in March, the Winnipeg Free Press and The Narwhal undertook an examination of pipeline oversight in the province.

The Narwhal and the Winnipeg Free Press analyzed two publicly available provincial oil spill records: annual spill summaries from 2008 to 2023 and itemized reports detailing the size, approximate location and cause of each spill since 2017.

According to the annual summaries, there’s been an average of 61 spills per year. While the spills most frequently occur at well sites and storage tanks, pipelines have, in most years, made the biggest mess.

More than half of the total volume of oil and saltwater spilled since 2008 — some 6.5 million litres, or 41,500 barrels worth — has come from 219 pipeline and flowline spills.

Oil spills from pipelines can contaminate soil and water, harm wildlife and impact Indigenous hunting, fishing and traditional land-use rights, while saltwater spills can render cropland barren, pose risks to freshwater ecosystems and contaminate drinking water, Andrews said in an interview.

“The risk of this self-regulation model is that industry has no real incentive for being transparent and owning up to their mistakes.”

One of the province’s largest oil spills occurred in 2013 when a flowline near the Manitoba-Saskatchewan border ruptured, spilling more than 100,000 litres. Cleanup operations involved digging down 4.5 metres to remove contaminated earth across an area the size of about two football fields.

“There’s land in the Virden area that had salt water spilled on it in the 1950s and that land still doesn’t produce today,” Carlyle Jorgensen, a Cromer-area farmer and then-vice president of landowner advocacy group the Manitoba Surface Rights Association, told the Brandon Sun in 2013.

“We feel that the province needs some specific regulations for the oil companies to follow because leaving it up to the oil companies obviously isn’t working,” he added.

While the province provides data through the annual and itemized spill reports, it does not provide any information on enforcement, inspections or remedial actions. 

The spill data is also inconsistent. The provincial spill summary for 2021, for example, references six pipeline spills totalling 550,000 litres. The itemized spill report, however, lists just five pipeline or flowline spills that year totalling 46,000 litres, a figure a provincial spokesperson later said is the result of reporting errors.

Andrews said it’s crucial the public is able to access transparent information about the environmental impact of spills in their community and steps being taken to address them. 

“The right to know whether your water has been contaminated or your air polluted is really a fundamental human right,” he added.

40 spills on 5,000 kilometres of pipeline in five years. Zero fines

The petroleum branch, under the department of Economic Development, Investment, Trade and Natural Resources, is responsible for pipeline spill investigations. Companies are legally mandated to report any leaks to the regulator within 12 hours, and inspectors are to attend the site within 24 hours. 

Under Manitoba’s oil and gas laws, companies are responsible for containing and cleaning up spills, including mitigating harms to people, property and the environment and rehabilitating any impacted land. Companies must also “take steps to prevent the occurrence of a similar spill.”

But it’s unclear how often Manitoba’s inspectors are following up.

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An analysis by The Narwhal and the Winnipeg Free Press revealed petroleum inspectors conduct few formal, documented inspections. Staff informally visit and inspect oil and gas infrastructure, but there are no records of these inspections.

According to a provincial spokesperson, there were a total 13 formal inspections for all 5,000 kilometres of active pipelines and flowlines in the last five years. In that same time, there were more than 40 pipeline spills. 

When spills are investigated, Manitoba’s oil and gas act allows the regulator to issue oil companies with fines of up to $100,000, but the province has yet to make use of this enforcement tool.

The provincial spokesperson said no fines have been issued since at least 2008. 

“Most [recent spills] would be the result of something minor like a corroded valve so there would not have been any negligence involved,” the spokesperson said in an email.

Economic Development, Investment, Trade and Natural Resources Minister Jamie Moses said the province is able to issue non-compliance notices as a “first step” in its enforcement system. It is also able to order a pipeline to shut down. Fines can be issued if companies disregard such notices, Moses said.

“We get into a much better position after those compliance notices are issued,” he added.

The province does not publicly report the number of non-compliance notices issued to oil companies.

Environment minister says the government is now aware of ‘gaps’ in oversight 

In an interview, Environment and Climate Change Minister Schmidt said the province became aware of “gaps … in governmental oversight” of pipelines after Winnipeg’s main fuel supply pipe was shut down for preventative maintenance by owner Imperial Oil in March. The company took steps to repair the Gretna, Man., to Winnipeg pipeline after an internal inspection revealed a section of the pipe running under the Red River was at risk of failing. 

During the previous government’s tenure, Schmidt said, inspector jobs were slashed and environmental inspections across the province — be it oil and gas or otherwise — were reduced by half. 

“In the past, and certainly under the previous government, there might be some legitimate concerns about inconsistent reporting procedures,” she added.

The province is taking steps, she said, to close those gaps.

Schmidt said the government recently introduced a policy mandating “every single incident will have formalized inspection reports completed by the province.” (She did not specify when this policy change took place.)

The government is also taking steps to restore staffing in the petroleum branch, hiring two inspectors since the Imperial Oil pipeline shutdown and bringing the total number of inspectors to three.

On the enforcement front, the province tabled legislation that will allow the government to issue administrative penalties for companies with projects licensed under the Environment Act. (Nine provincially regulated pipelines are currently listed in the environmental licensing registry.) 

“That will improve our ability to enforce environmental standards against proponents when there are situations such as these,” she said, referring to the mid-March pipeline shutdown over safety concerns. 

Moses added the government is also looking at “regulatory changes” to strengthen its oversight system but could not give further details.

Cost of pipeline spills are ‘an order of magnitude greater’ than effective enforcement

Effective pipeline management is dependent on the province having enough capacity to take the lead on oversight, Andrews said.

“It’s much better to have a model where regulators are properly armed with the powers, expertise and capacity they need to get the job done, are independent from industry and can do inspections, monitoring, enforcement and — crucially — issue fines that are at least equivalent to the damage that has been done,” he said.

“If you scrimp and save on environmental enforcement, you’re going to pay the price down the line in terms of the cost of clean up, which is always going to be an order of magnitude greater than the cost of running an effective compliance and enforcement regime.”