A compromise between Enbridge and the Department of Commerce will require the oil company to pay more than $61 million a year into a decommissioning fund until 2041.

Minnesota regulators OK rare fund to decommission new Enbridge pipeline

By Walker Orenstein  Star Tribune  October 26, 2023

Enbridge‘s new oil pipeline across northern Minnesota has only been operating for two years, but state regulators approved a plan Thursday aimed at making the company pay for eventually decommissioning the project.

The Minnesota Public Utilities Commission (PUC) greenlit a compromise between the Calgary-based Enbridge and the state’s Department of Commerce, which had disagreed about how long the pipeline — called Line 93 after replacing the former Line 3 — might operate while the energy sector transitions away from fossil fuels. But the trust fund, unusual in the U.S. but common in Enbridge‘s Canada, still drew criticism from at least one environmental nonprofit.

Despite that, Katie Sieben, a Democrat who chairs the five-member PUC, said it was a “good outcome” that pushed Enbridge “to commit a significant amount of resources to ensuring that the existing Line 93 now is pulled out of the ground at the end of its useful life.”

Under the deal, Enbridge will pay more than $61 million a year into the trust fund until Oct. 1, 2041. That’s 20 years after the pipeline started operating. The company estimated decommissioning the new pipeline will cost $1.25 billion.

Weekly bannering and vigil by Women Against Military Madness and Veterans for Peace 27 at the Governor’s Mansion on Summit Ave. in St. Paul. Pipelines Blues composed by Roger Garbanzo Cuthbertson and Jo ChickPea Schubert of the Garbanzo Beans. All are welcome Mondays from 4 to 5 pm, rain, shine, snow… 

The PUC required this fund when granting a Certificate of Need for the controversial 337-mile project in Minnesota, but it took until now to finalize all the details.

Before the deal between Enbridge and Commerce, Enbridge and oil shippers split from Commerce on how quickly Enbridge would need to fill the trust fund. The companies, including Cenovus Energy and ExxonMobil, said contributing over 30 years would better align with what they expect will be the economic life of the pipeline.

Shippers like ExxonMobil “bear the majority of the costs of the operation of a pipeline” through tariffs and tolls, including “end-of-life costs” like decommissioning, read a July 28 letter to the PUC from Praveen Duggal, Exxon’s manager for logistics, optimization and business development.

“An abbreviated collection period would front-load the costs and adversely impact rates for shippers during that period,” wrote attorney Brian B. Bell of Dorsey & Whitney LLP, representing Cenovus Energy. “The increased shipper costs will, in turn, unduly increase costs for consumers.”

ExxonMobil also said in regulatory filings there are no such funds for crude pipelines in the U.S.

In July, Commerce officials asked Enbridge to fund the trust through 10 years. Gov. Tim Walz’s administration argued, in part, the oil industry will decline long before the 30-year mark as energy systems shift away from fossil fuels with the advance of technology like electric cars.

“The purpose of the trust is to assure the funds to decommission the line will be available if Enbridge goes out of business,” read a letter Attorney General Keith Ellison’s office submitted to the PUC while representing Commerce. “That purpose will not be served unless the Commission establishes a contribution schedule that takes into account the reality that the oil business is not sustainable in the long term.”

On Thursday, Enbridge spokeswoman Juli Kellner maintained the settlement “does not reflect the physical, economic or useful life of Line 93.”

“Our industry experience tells us that with monitoring and maintenance, the serviceable life of pipelines can be indefinite,” Kellner said.

Assistant Attorney General Katherine Hinderlie said the 20-year term was a compromise that has merit. The deal would ensure Enbridge is making monthly contributions by next summer, rather than later on, she said. And Hinderlie said it would help protect Minnesota from shouldering any decommissioning costs.

Friends of the Headwaters, which opposed the pipeline, still asked for a larger trust fund and a shorter contribution timeline. On Thursday, the environmental nonprofit’s attorney Scott Strand said the agreement was better than nothing but wouldn’t adequately protect the state.

But the commission sided with Commerce and Enbridge, approving the settlement on a 4-0 vote. There are three Democrats on the commission, one Republican and one independent. One Democrat, vice chair Joseph Sullivan, did not participate in the proceeding.

Commissioner John Tuma, a Republican, said the trust fund was “one of the critical linchpins” for approving the project. “I’m sure you probably took a little heat from the C-suite for willing to put this kind of money.”

The often-bitter public debate about the Line 93 project stretched years before its construction. Enbridge said its older Line 3, built in the 1960s, was corroding, operating at half-capacity and needed replacing. It proposed a pipeline with more capacity along a partially new route it argued would be safer than transporting oil by rail.

Opponents — including environmental nonprofits and some tribes that fought the project at the PUC and in multiple lawsuits — said new fossil-fuel infrastructure carried its own risk of spills and was a bad idea as scientists urge a fast transition away from oil to avoid the worst impacts of climate change.

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