Aging Pipelines – What Are The Risks?

Canada’s nationally regulated oil and gas pipelines were originally constructed more than 50 or 60 years ago.  Many of these pipelines are reaching the end of their useful economic life.  The National Energy Board (NEB) has the regulatory authority to authorize pipeline companies to decommission or abandon these pipelines.  While the NEB has implemented a toll surcharge to generate funds for this purpose, the abandonment funding currently being generated will be sufficient only to accomplish removal of approximately 20% of this pipeline infrastructure.  Landowners across Canada who may be left with the remaining pipelines buried in their lands are becoming increasingly concerned about resulting interference with their agricultural operations, human and livestock health and safety risks, and potential future costs and liabilities.

Enbridge Pipelines Inc. has recently applied to the National Energy Board for authorization to decommission its aging Line 3 pipeline in Western Canada and to replace it with a new Line 3 pipeline in an adjacent easement.  The Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA), the Manitoba Pipeline Landowners Association (MPLA) and the Saskatchewan Association of Pipeline Landowners (SAPL) have jointly intervened in this proceeding to represent their landowner member interests with respect to Line 3 decommissioning.  Enbridge’s Line 3 decommissioning plan contemplates leaving the decommissioned Line 3 pipeline in place after internal cleaning while continuing cathodic   protection to reduce corrosion rates and periodic monitoring for ground subsidence.

In responding to this proposal, CAEPLA/MPLA/SAPL have raised landowner concerns including definition of appropriate cleaning criteria; development of segmentation methodology to prevent the pipeline becoming a conduit for ground water and contaminants; and hazards for agricultural equipment, people, machinery and livestock  which will result from pipe collapse and ground subsidence.  Enbridge has acknowledged that the extensive disbonding of the Line 3 polyethylene tape pipe coating will render cathodic protection ineffective to prevent corrosion and has estimated time to through wall penetration at 25-50 years.  Progressively greater agricultural surface loads increase the potential for pipeline collapse and ground subsidence.  In addition to health and safety concerns and related costs and liabilities, topsoil loss upon ground subsidence will result in permanent long term production losses.

In the negotiated settlement resolving landowner concerns with respect to the new Line 3 construction in March of this year, CAEPLA/MPLA/SAPL and Enbridge agreed to continue consultation on how to resolve these Line 3 decommissioning issues.  CAEPLA/MPLA/SAPL and Enbridge have now concluded and filed with the NEB a further Settlement Agreement addressing Line 3 decommissioning.  Under the terms of this agreement, Enbridge acknowledges its liability with respect to decommissioned or abandoned pipelines and agrees to implement measures similar to active pipelines to maintain depth of cover, facilitate crossing with agricultural equipment and address subsidence/drainage issues.  Recognizing the considerable uncertainties related to anticipated Line 3 corrosion rates, pipe collapse potential and resulting implications for landowners, CAEPLA/MPLA/SAPL and Enbridge have agreed to jointly commission and direct independent, third party research at a Canadian university to study the impacts of decommissioning and abandoning pipelines in place with a view to further defining the associated risks and consideration of alternative decommissioning/abandonment methodologies.  It is anticipated that the final report will be filed with the NEB prior to Line 3 decommissioning and will then form the basis for regulatory approval for possible required changes to Enbridge’s current Line 3 decommissioning plan.  Enbridge is responsible both for the funding of this research project and for the costs of CAEPLA’s participation, including CAEPLA’s own independent consultants.  In the meantime, Enbridge will also be providing to landowners a prepayment to be applied on account of possible future decommissioning or abandonment damages.

The CAEPLA/MPLA/SAPL – Enbridge Line 3 decommissioning Settlement Agreement is a first step to better defining the risks and liabilities of pipelines decommissioned and abandoned in place and to developing acceptable methodologies to reduce these risks for landowners.  It is anticipated by these parties that the results of the independent research to be undertaken will assist landowners, the industry, and regulators in addressing these issues as Canada’s aging energy pipeline infrastructure is removed from use.

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