2017 Harvest

2017 Harvest

Tuesday, November 1, 2011

Pipeline Abandonment Plan foreshadows future for landowners

As part of its application for a project approval from the National Energy Board (NEB), Vantage Pipeline Canada ULC (Vantage) has filed a "Preliminary Project Abandonment Plan and Cost Estimate".  Vantage plans to construct 578 km of 10" pipe through Alberta and Saskatchewan to the North Dakota border.  The terrain through which the pipeline will cross is primarily farmland - either in cultivation or pasture.  For all but 1 km of the proposed route, Vantage says that it will abandon the pipeline in place.

Only lands where there is prospective "future development" will see the pipeline removed from the ground once it has outlived its usefulness to Vantage. 

Previously, the NEB had used an estimate of 20% pipe removal on abandonment as part of the "base case" for calculating future abandonment costs (for the purpose of setting advance abandonment funding).  The 20% figure has obviously been abandoned by pipeline companies and the NEB.  The cost of pipeline removal far outweighs the cost of doing nothing.  Likewise, the cost of advance funding for doing nothing is far cheaper than advance funding for pipeline removal. 

It may be that the preference of some landowners in the future will be to leave pipelines in place rather than to have them removed on abandonment.  However, the decisions being made now by pipeline companies and endorsed by the NEB are likely to limit any choice landowners might have in the future.  Many landowners today probably don't even know that their hands are being tied in this way. 

If the NEB's abandonment funding program is premised on the assumption that pipeline companies will need to do virtually nothing in the future to deal with their obsolete infrastructure, then it is a failure.  The funding will be insufficient to allow for future contingencies, let alone to allow for any landowner choice.