Trial ordered for pipeline right-of-way abandonment case

Calgary landowner Genstar Development Company applied to the Alberta Court of Queen's Bench remove a right of way held by Plains Midstream Canada ULC from title to its property.  Plains Midstream opposed proceeding on the basis of an application with written materials, arguing that a trial was necessary.

In the 1950's, Cremona Pipe Lines Ltd. constructed the Cremona Pipeline stretching 444 km between Calgary and Sundre.  Cremona had an Easement Agreement with one of Genstar's predecessors in title.  The Agreement provided that it would be binding on all future owners of the land and would remain in effect from May 19, 1956 and "for so long thereafter as [Cremona] may desire to exercise" its rights and privileges.

While the northernmost 314 km of the pipeline remains in operation, operation of the southernmost 130 km was suspended by Pembina Pipeline Corporation (a Genstar predecessor) in 1997; the pipeline under the lands owned by Genstar was removed from the ground.  In 2009, Plains Midstream purchased the line from Pembina, including the rights of way under all lands along the Cremona Pipeline.

In 2010 and subsequently, Genstar asked Plains Midstream to discharge the right of way on its lands.  Plains Midstream responded with an offer to re-route its right of way, but Genstar eventually commenced the court application. 

In reviewing the application materials, the Court concluded that a trial would be necessary in order to have all of the evidence required to answer the legal issues in play: "Given the complex and unsettled legal issues identified above, it is my view that any decision in this case should be founded on complete and nuanced findings of fact resulting from a trial, rather than on a paper record resulting from an originating application."

Read the decision at: Genstar Development Company v. Plains Midstream Canada ULC.

Pipeline Companies plan to remove substantially less than 20% of pipelines on abandonment

In the ongoing NEB LMCI process looking at funding for future pipeline abandonment costs, the Canadian Energy Pipeline Association (CEPA), the industry group representing pipeline companies, has told the NEB point-blank that its companies have no intention of removing the 20% of large diameter pipelines proposed by the NEB in its base case:

... in canvassing the NEB Group 1 member companies that are CEPA members, each Group 1 member company is planning on filing a pipeline specific application for each asset as opposed to using the Base Case that was set out by the NEB in its December 21, 2010 Decision. That Decision re-affirmed the abandon-in-place versus removal ratio of 80% and 20% respectively for certain land usage categories.. Based on the principled approach whereby each specific land usage has an associated optimal method of abandonment, most, if not all CEPA member companies will be filing cost estimates that reflect substantially less removal of pipe than would be indicated by the Board’s Base Case Assumptions. CEPA has also heard from Group 2 companies indicating that if Group 1 member companies do not plan on filing with the Base Case assumptions, then it would not be appropriate for them to use the Base Case either. 

Read CEPA's letter at: CEPA to NEB January 12 2011.