Pipeline Abandonment

When a company who owns  a pipeline wants to stop operating part or all of it, the company must inform the Board.  The company might apply to deactivate, decommission, or abandon the pipeline.

Under section 74 of the National Energy Board Act (NEB Act), the company may apply for leave to abandon a section of pipeline or an entire pipeline. Abandoning a pipeline means to permanently stop operating the pipeline and not replace it with another option for shipping product from point A to point B[1].

The NEB’s publication Regulating Pipeline Abandonment outlines its requirements for physical abandonment and how the Board regulates pipeline abandonment.

Process

Under the NEB Act, the Board must hold a public hearing (written or oral) to consider abandonment applications. Information on the hearing process can be found in the Board’s publications National Energy Board Hearing Process Handbook. Availability of funding to participate in an abandonment hearing will depend on the assessment process the Board decides to use.

When a company applies for approval to abandon a section of pipeline or an entire pipeline, it must include certain information in its application which is found in Guide B of the NEB’s Filing Manual.

The company must provide an abandonment plan developed in consultation with persons and groups potentially affected by the proposed abandonment. The company must also demonstrate there will be money set aside to provide for any future and unforeseen events.

The NEB takes safety seriously and will take all available actions to protect Canadians and the environment. A company must demonstrate to the NEB that it will abandon the pipeline in a way that protects the environment and the public and that the company will anticipate, prevent, manage and mitigate any potentially dangerous conditions associated with its pipeline.

If the NEB allows abandonment of a pipeline or a section of it, it issues an Order that usually includes conditions that must be met before abandonment is complete. The NEB verifies that conditions or other legal requirements are met through its review of submissions, site-inspections, and audits. NEB oversight ends when the pipeline abandonment project work is completed and all conditions in the Order are satisfied.

Pipeline Abandonment - Documents and Research

Financial Aspects of Abandonment

In May 2009, the Board issued the RH-2-2008 Reasons for Decision [Filing A21835], setting out the NEB’s guiding principles and an Action Plan to address the monetary costs of abandonment. Large NEB-regulated companies filed their first estimates of future abandonment costs which were considered by the Board in the (Abandonment Cost Estimates (ACE) MH-001-2012) hearing [Folder 782061]. The Board released its Decision on the reasonableness of these estimates and its directions to small companies [Filing A50478] on their estimates in February 2013.

The Board will continue to address the financial aspects of abandonment by considering companies’ plans to collect, store, manage, and access these funds. Companies’ plans will undergo regular reviews and revisions as more information becomes available.

The NEB has assigned a Danielle Moffat as the Process Advisor for the next hearing about financial aspects of abandonment (Set-Aside Mechanism (SAM) and Collection Mechanism (COM) Filings) [Filing A50820]. For more information, please contact Danielle at toll free 1-800-899-1265.

[1] If there is still an alternative way or route to transport product from point A to point B, this is usually called a decommissioning. For additional information on decommissioning, see the National Energy Board Onshore Pipeline Regulations on Justice Canada's Website, or our page entitled National Energy Board Onshore Pipeline Regulations, Related Orders and Guidance.

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