Faced with growing uncertainties over the future of fossil fuels, Enbridge wants to cut by a decade the estimated economic life span of its Upper Midwest pipeline system, which includes the newly built Line 3.
Enbridge's acknowledgement of growing climate policy pressure on its pipelines' longevity came in federal regulatory filings earlier this year.
Last week, Indigenous environmental group Honor the Earth asked Minnesota regulators to "promptly" start setting up a decommissioning fund for new Line 3, given a possible shorter-than-expected life span.
Enbridge maintains that its controversial new Line 3 oil pipeline in Minnesota will have a 30-year economic life extending to 2051, regardless of the new life span analysis of its pipeline system that pegs 2040 as an ending point.
Assets can continue to operate well beyond their originally scheduled economic life; Enbridge has oil pipelines running through Minnesota and other states that date back to the 1950s.
The new Line 3, completed in October, replaces a 1960s pipeline.
As part of its approval of the Line 3 project, the Minnesota Public Utilities Commission mandated a decommissioning fund for the pipeline's eventual demise. However, the fund has not been established, nor have any details on how much money Enbridge must pay into it.
"We thought it was useful to put some pressure on them," said Paul Blackburn, an attorney for Honor the Earth.
Enbridge said in a statement it is awaiting direction from the PUC on the decommissioning fund.
The PUC said in a statement that "there is no requirement that the trust fund be established or funded on a specific timeline." The commission said, however, that last week it created a docket specifically to move forward on the issue.
When new Line 3 was proposed, Calgary, Alberta-based Enbridge said it would have an economic life of at least 30 years. Economic life marks how long an asset will be useful and profitable — and over how many years its costs will be depreciated.
In May, consultants for Enbridge prepared a "technical depreciation update" for the company's Lakehead pipeline system. The Lakehead system — the largest conduit of Canadian oil into the United States — includes six pipelines across Minnesota and several more in Wisconsin and other states.
Enbridge's consultants, looking at the Lakehead system as of 2020, calculated that generally its economic life would be "truncated" as of Dec. 31, 2040, according to a document filed with the Federal Energy Regulatory Commission (FERC).
That truncation date was based on expectations of increasing competition to Enbridge's system combined with "uncertainty" from a rising tide of "decarbonization" legislation in Canada and the U.S., according to another document filed with FERC.
The filing specifically noted President Joe Biden's "detailed climate plans" to achieve a 100% clean energy economy by 2050 and Canada's plans for a four-fold increase in its carbon taxes by 2030.
"Unprecedented actions by state, local and tribal governments to attempt to regulate, and ultimately shut down, existing pipeline infrastructure, such as experienced by Enbridge Energy in Michigan and Wisconsin with respect to Line 5, is a new and emerging risk not imagined [just five years ago]," the filing said.
Line 5 runs from Superior, Wis. — where Enbridge's Minnesota pipelines terminate — across Wisconsin and Michigan to Sarnia, Ontario. The state of Michigan is in an epic legal battle with Enbridge to shut down Line 5, which runs for a stretch under the Straits of Mackinac.
In Wisconsin, the Bad River Band of Lake Superior Chippewa has been fighting to remove Line 5 from its land, spurring Enbridge to look for a new route.
In Minnesota, regulatory battles over the new Line 3 went on for six years before Enbridge got the green light to build the pipeline in November 2020.
Environmental groups and Ojibwe bands who opposed the project said it will open a new region of Minnesota waters to oil spill degradation — while exacerbating climate change. Enbridge said new Line 3 was a big improvement over old Line 3, which was corroding and could only operate at half capacity for safety reasons.
Since Line 3 was not scheduled to start shipping oil until late 2021, it was not included in Enbridge's 2020 depreciation report, which was an update of a 2015 depreciation study.
In past depreciation analyses, Enbridge had set the economic life of its Lakehead system at 30 years, Honor the Earth said in a filing with the PUC. But Enbridge's 2020 depreciation study marked a "dramatic change," reducing the system's life span to 20 years, the filing said.
In a statement, Enbridge said its new depreciation assessment does not apply to Line 3.
"Certain of Enbridge's assets have commercially stipulated depreciable lives (including the Line 3 project at 30 years for example) that were unaffected by the selection of a 20-year depreciable life for other assets," Enbridge said.
Blackburn, of Honor the Earth, questioned how one piece of Enbridge's sprawling Midwestern pipeline network could have a longer life than the rest. "I don't think it makes sense that the rest of the pipeline system could be shut down in 2040 and Line 3 would still be there."
Enbridge's customers – oil producers and shippers that use its pipelines – are questioning Enbridge's proposed new depreciation schedule and the 2040 obsolescence date.
"This represents a reduced life for the Lakehead system that has not been sufficiently justified," the Canadian Association of Petroleum Producers (CAPP) said in a FERC filing.
CAPP is fighting Enbridge over rate increases before FERC. It has asked FERC to investigate Enbridge's depreciation filing.
"The claim that the Lakehead system will be out of business in 18 years is remarkable given the entirety of the factual circumstances," the CAPP filing said.