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NEB Puts Canada Pipes on Notice: No Walking Away From Abandoned Lines

Canadian pipeline companies have been put on notice that they will not be allowed to walk away from obsolete lengths that they stop using, empty and seal up but leave in the ground.

A pipeline grave must be tended, said a landmark decision to enforce a contested, decades-long caretaking duty. The test case made an example of a discarded 266-kilometer (160-mile) leg in TransCanada Corp.’s western natural gas supply collection grid, Nova Gas Transmission Ltd. (NGTL).

The National Energy Board (NEB) refused to let NGTL off the hook despite engineering studies that predicted the abandoned pipe would take 9,000 years to rust away enough to collapse and cause a cave-in if a truck were to drive over it.

Such predictions are theoretical, said the ruling.

“To date the board has received relatively few applications for projects to abandon pipelines,” NEB said. “As such, and as reflected in the research presented by all parties in the proceeding, there are uncertainties as to potential outcomes. Mitigation measures have been largely untested by industry.”

NGTL planned to hold costs down to C$29.7 million ($24 million) for discarding a 50-year-old northern Alberta conduit that has been replaced with modern facilities, the Peace River Mainline.

Only 9 kilometers (5.4 miles) of the pipe, across an Indian reserve, are to be dug up and removed. The other 257 kilometers (154.2 miles) would be left in the ground, or “abandoned in-place,” in regulatory language.

On the strength of the engineering reassurance about the durability of empty buried steel pipe, NGTL proposed only to fulfill right-of-way land surface reclamation requirements and let nature take its forecast millennia-long course of metal recycling.

“The effect of this would be to rely on affected stakeholders such as landowners to report on any issues found, without any proactive measures for the company to identify and mitigate risks associated with corrosion, pipe collapse and subsidence,” NEB said.

The ruling directed NGTL to prepare and act upon “a systematic, explicit, comprehensive and proactive Abandoned Pipeline Monitoring Plan applicable to all areas where the pipeline is abandoned in place.”

No end date is predicted for the pipeline grave tending. But the ruling indicated the job would be a long undertaking. The monitoring plan requirements include providing an updated version “every 10 years with changes identified, until the pipeline that is abandoned in-place is removed, or until the Board otherwise directs.”

The extra cost of minding the discarded Peace River Mainline was not predicted. However, taking care of gas conduits left in the ground after their service lives end is projected to generate big bills by an NEB proceeding that covers all Canadian-regulated pipelines, known as abandonment cost estimates, or ACE.

NGTL predicted that eventually shutting down its 24,500-kilometer (14,700-mile) gas grid in Alberta and British Columbia would cost C$2.49 billion ($2 billion). The total includes a “post-abandonment activities” estimate, made under protest in the ACE proceeding, of C$1.05 billion ($800 million).

NEB facilities life-cycle regulation requires the industry to pick up the anticipated pipeline abandonment and grave tending tabs. The ACE estimates are translated into toll surcharges and the cash goes into cleanup trust funds to be used as needed.

Only TransCanada’s cross-country Mainline, which runs from Alberta to Ontario, Quebec and export links into the United States has a higher ACE than NGTL, at C$2.53 billion ($2.02 billion).

The next test of Canadian pipeline cleanup and disposal regulation has surfaced offshore of Nova Scotia, where the NEB has jurisdiction over the transportation aspect of gas production systems.

Two depleted Atlantic gas fields -- ExxonMobil Canada Ltd.’s Sable Offshore Energy Project(SOEP) and Encana Corp.’s Deep Panuke -- are winding down and posting formal project descriptions for discarding 375 kilometers (225 miles) of ocean-floor pipelines.

Both SOEP and Panuke plans call for their pipelines to be abandoned in-place. A duty, if any, to tend the remains of offshore as well as land conduits has yet to be defined by the regulatory regime.

ISSN © 2577-9877 | ISSN © 1532-1231 | ISSN © 1532-1266

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