Canada's energy regulator ups pipeline abandonment cost estimate to C$18.6 bln

Canada Energy Partners

16/06/2023 17:38

By Nia Williams
       June 16 (Reuters) - The Canada Energy Regulator (CER)
has raised its estimate of the cost of abandoning the pipelines
it regulates by 79% to C$18.6 billion ($14.10 billion), in a
preliminary review calculating how much companies should set
aside for taking oil and gas pipelines out of service.
    Pipeline abandonment costs are reviewed every five years and
the steep increase from C$10.4 billion in 2019 is due to
inflation, changes to company-owned infrastructure and updated
abandonment assumptions, the regulator said in a statement
released on Thursday.
    "This will enhance our ability to ensure that pipelines are
safely abandoned while safeguarding the environment and
surrounding communities," the CER said.
    The increase means most of the 93 companies whose Canadian
pipelines are regulated by the CER will face higher abandonment
costs, the regulator said. 
    However the final amount will be confirmed in the second
part of the review process when companies and other stakeholders
can ask for changes to the preliminary cost estimates for
particular pipelines.
    The CER regulates all pipelines that cross provincial
boundaries or the U.S.-Canada border, amounting to roughly
73,000 kilometres or 10% of all pipelines in the country.
    Major operators include Enbridge Inc  ENB.TO  and TC Energy
 TRP.TO . Neither company immediately responded to requests for
comment.
    Abandonment involves permanently removing a pipeline from
service, by emptying it of fluids, conducting inspections and
when necessary, cutting, capping, and filling it with materials
like concrete.
    Companies must gradually accumulate the funds in a dedicated
trust by the end of 2054 or earlier, or post a financial
guarantee, essentially an agreement with a third-party to cover
the cost of abandonment if the company cannot pay. 

($1 = 1.3188 Canadian dollars)

 (Reporting by Nia Williams; editing by David Evans)
 ((nia.williams@thomsonreuters.com; +1 403 531 1624; Reuters
Messaging: nia.williams.thomsonreuters.com@reuters.net))