2014 SaskEnergy Annual Report

Corporate Highlights

SaskEnergy’s Strategic Objectives align with the Government of Saskatchewan’s Crown Sector Priorities and Growth Plan. The Corporation’s operating environment, the provincial economy, commodity market fluctuations, and public expectations of pipeline companies have influenced the strategic direction of the Corporation.

System Integrity and Risk Management Initiatives SaskEnergy is committed to safety across its more than 84,000 kilometres of pipeline by leveraging industry best practices with a risk-based asset management system, which is evidenced by its $101 million in 2014 system integrity spending. To maintain the safe and reliable operation of the distribution and transmission networks, the Corporation invested in a number of initiatives throughout the year, including upgrades to 2,349 gas service connections in Regina and Rosetown at a cost of $12.8 million. In addition, TransGas successfully used ultrasonic Electro Magnetic Acoustic Transducer (EMAT) technology for the first time to detect stress, corrosion and cracking in its Beacon Hill- to-Prince Albert pipeline, resulting in the identification of deficiencies and their ultimate management. The Corporation also removed pipelines from bridges in Saskatoon and Moose Jaw, replacing them with underground facilities, in an effort to mitigate ongoing risk associated with the integrity of the bridge structures themselves.

Service Excellence

Damage Prevention Initiatives In addition to its ongoing support of the Sask 1st Call service, SaskEnergy engaged in a number of new initiatives in 2014 to reduce damage to its buried infrastructure. Partnering with Sask 1st Call , the Saskatchewan Common Ground Alliance (SCGA), SaskPower and SaskTel, SaskEnergy launched safety patrols to target neighbourhoods in Regina and Saskatoon where Crown utilities have reported higher percentages of facility contacts. Face-to-face contact was initiated between patrollers and homeowners or local contractors to ensure contact was made with Sask 1st Call for line locates before projects got underway. The Corporation also adopted a line supervision practice in which operations personnel were present during excavations near critical transmission infrastructure in Regina and Saskatoon. As a result of these programs, there was a 23 per cent reduction in third-party line hits (60 fewer line hits province-wide in 2014 compared to 2013), six straight months of reduced line hit damage during the 2014 construction season, and significant damage reduction in Safety Patrol areas. Corporate Safety Performance Safety is the core focus of SaskEnergy/TransGas, and in 2014, the Corporation achieved its best-ever corporate safety performance with a Total Recordable Injury Frequency Rate (TRIR) of 2.22. This is down from 2.46 in 2013, which was also a record year. As part of its continued commitment to safety, SaskEnergy/TransGas also launched its new incident reporting system, Report Everything Online (REO), which combined several safety recording databases into one, easy- to-use platform. REO streamlines the process of reporting hazards, near-misses, and incidents by making the system more accessible through employees’ computer systems and allows the Corporation to ensure that accurate and complete information is being reported to all applicable provincial and federal governing bodies. In addition, through SaskEnergy’s Competency Assessment Program, the Corporation is committed to safe pipeline operations and alignment with Canadian Gas Association directions through formal evaluations of worker skill sets and knowledge, to confirm that SaskEnergy/TransGas employees are well-trained and prepared to work safely on pipelines.

Achieving Growth

Distribution and Transmission Growth In 2014, economic and population growth in Saskatchewan benefited SaskEnergy, as the Corporation added 7,332 customers to its distribution base, bringing total customers to 380,768. With the continued expansion of its system, SaskEnergy has added, on average, approximately 5,300 customers per year during the past 10 years. Transmission volume in 2014 increased by 14 petajoules (PJ), or 5.2 per cent, from 2013. SaskEnergy has made significant investments in its distribution and transmission system to connect customers in a wide range of key Saskatchewan industries, including power production, potash mining and enhanced oil recovery. Bayhurst-to-Rosetown Pipeline Project In 2014, TransGas completed the 132-kilometre Bayhurst-to- Rosetown pipeline project. This pipeline increases gas receipt capacity from Alberta while adding storage cycling capacity at the Bayhurst Gas Field and helps to manage increasing supply requirements as natural gas production in Saskatchewan declines. The pipeline also will allow TransGas to meet growing load requirements on the northern part of its system, which have been driven by added industrial activity, namely potash mines, new gas-fired power plants and enhanced oil recovery projects. With an investment of $70 million, half of the 2014 TransGas capital budget, the Bayhurst-to-Rosetown pipeline project was the Corporation’s largest capital project in 2014, and one of its largest pipeline projects in recent history.

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