Filing Manual – Guide B – Abandonment

Table of Contents

1. B.1 Funding for Abandonment
   1. Goal
   2. B.1.1 Filing Requirements for Cost Estimates
   3. B.1.2 Filing Requirements for Protection of Funds
      1. B.1.2.1 Trusts
      2. B.1.2.2 Letter of Credit
      3. B.1.2.3 Surety Bond
   4. B.1.3 Filing Requirements for Regular Reporting
2. B.2 Applications to Abandon (CER Act subsection 241(1) and OPR section 50)
   1. Goal
   2. B.2.1 Notice of Proposed Abandonment
      1. Filing Requirements
      2. Guidance
   3. B.2.2 Application to Abandon a Pipeline
      1. Filing Requirements
         1. General
         2. Engineering
         3. Guidance – Engineering
         4. Environmental and Socio-economic Assessment
         5. Guidance – Environmental and Socio-economic Assessment
         6. Engagement
         7. Lands
         8. Economics and Finance
         9. Guidance – Economics and Finance
            1. Abandonment Costs
            2. Liability Exposure
            3. Financing
            4. Provisions for abandoned pipeline monitoring and maintenance activities
            5. Termination of Service
            6. Accounting Treatment
   4. B.2.3 Reference documents – physical and technical issues related to abandonment
3. B.3 Applications to Access Funds from the Trust to Fund Abandonment
   1. Goal
   2. Filing Requirements to Access Funds from a Trust
4. Table B-1: Pipelines – Comparison of predicted effects from Abandoning in place and removal
5. Table B-2: Environmental and Socio-Economics Interactions

The first section, B.1, is about filing requirements applicable to all CER-regulated pipeline companies. These information requirements are largely financial in nature.

The second section, B.2, concerns filing requirements for abandoning a pipeline.

The final section, B.3, provides filing requirements for those companies wanting to apply to access funds held in Abandonment Trusts.

B.1 Funding for Abandonment

CER-regulated pipeline companies must have a process and mechanism in place that will provide adequate funds to pay for pipeline abandonment. Companies are also expected to institute governance practices relating to pipeline abandonment, which are one component of the systematic approach required by the OPR.

Goal

Companies provide the CER with all required information and reports related to abandonment costs and abandonment funding.

B.1.1 Filing Requirements for Cost Estimates

1. Companies are required to file their Abandonment Cost Estimates (ACE) for the Commission’s approval. Any changes to an ACE must also be approved by the Commission. Companies must include Tables A-1 through A-4 from the National Energy Board’s letter dated 4 March 2010 [Filing A24600], along with a description of the methodology and assumptions used to estimate costs. A level of detail and technical description should be provided to understand the estimate and its reasonableness. The Commission will regularly review ACE (at least every five years) to verify that any material changes to the pipeline system are reflected in the abandonment cost estimate, and that an appropriate level of funds is being set aside. If a company chooses not to use Tables A-1 through A-4, then it must provide a rationale for not using them, as well as the unit costs used and an explanation of their chosen methodology and assumptions.

B.1.2 Filing Requirements for Protection of Funds

1. Pipeline companies are required to have a set-aside mechanism in place that will provide adequate funds to pay for pipeline abandonment. The set-aside mechanism must be filed with the CER and approved by the Commission. Pipeline companies must establish a trust or provide a letter of credit issued by a bank listed in Schedule 1 of the Bank Act^Footnote 10, or a surety bond supplied by a surety company regulated by the Office of Superintendent of Financial Institutions. A model trust agreement can be found in Reasons for Decision MH-001-2013 [Filing A60676]. Models of a letter of credit and surety bond can be found on the CER’s website under Financial Regulation of Group 2 Pipeline Companies.

B.1.2.1 Trusts

A trust can be a suitable mechanism to set aside funds for pipeline abandonment. However, the question of whether any particular trust is suitable depends on the terms and conditions that govern the trust. In its Reasons for Decision MH-001-2013, the National Energy Board set out the Indicative Terms for companies proposing to use a trust in Appendix VI, PDF pages 135-139. Companies using trusts must file a statement of investment policies and procedures with the CER, the minimum requirements for which can be found in the Reasons for Decision MH-001-2013.

Companies proposing to collect abandonment funds from shippers to be set aside in the trust must file a tariff application, which includes their annual contribution amount, for Commission approval. The requirements are set out in the Reasons for Decision MH-001-2013 on PDF page 118.

B.1.2.2 Letter of Credit

If a company is using a letter of credit in regard to their funding for abandonment, the financial instrument must meet the criteria included in the checklist below. Companies must file the letter of credit with the CER for approval by the Commission. Companies should review the letter of credit template before filing and contact CER staff if they have any questions.

Letter of Credit Checklist:

• Ensure that the physical letter of credit is filed with the CER. It must be the original signed letter of credit and not a duplicate copy nor a draft. Do not file a copy of the letter of credit through the Electronic Document Submission System (E-file).
• Amount: The letter of credit must be equal to a company’s approved ACE. Growing letters of credit are not allowed.
• Beneficiary: The beneficiary must be identified as “Her Majesty the Queen in Right of Canada as represented by the Canadian Energy Regulator or any successor administrative body”;
• The letter of credit must reference the underlying regulatory obligations of the principal. For pipeline abandonment, the letter of credit should reference the CER Act, RH-2-2008 Reasons for Decision [Filing A21835], the MH-001-2013 Reasons for Decision, and the Commission document approving the pipeline company’s cost estimate;
• Duration: The letter of credit must automatically renew on an annual basis without notice or amendment, and without a maximum number of renewals;
• Issuer: The issuer of the letter of credit must be a Canadian chartered bank set out on Schedule 1 to the Bank Act;
• Access to funds: The full amount of the letter of credit must be payable to the Beneficiary on demand upon presentation of the letter of credit at the bank’s main Calgary branch. Alternatively, presentation of documents can be made by fax^Footnote 11 where there is not a Calgary, Alberta branch;
• Notification: The Beneficiary must be notified by fax and registered mail (to the attention of the Secretary of the Commission) at least 60 days before the letter of credit may be cancelled or not renewed. Upon notification the Beneficiary must be entitled to draw the entire amount of the letter of credit; and
• Additional terms: The letter of credit must be irrevocable, non-transferable and non- assignable, and must be subject to the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits, 2007 revision (UCP600).^Footnote 12

B.1.2.3 Surety Bond

If a company is using a surety bond in regard to their funding for abandonment, the financial instrument must meet the criteria included in the checklist below. Companies must file the surety bond with the CER for approval by the Commission.

Surety Bond Checklist:

• Ensure that the physical surety bond is filed by courier or registered mail with the CER. It must be the original signed surety bond and not a duplicate copy nor a draft. Do not file a copy of the surety bond through the Electronic Document Submission System (E-file). The surety must be regulated by the Office of the Superintendent of Financial Institutions (OSFI);
• The Obligee must be the “Her Majesty the Queen in Right of Canada as represented by the Canadian Energy Regulator or any successor administrative body”;
• The term of the surety bond must be indefinite. The surety bond may have a form of evergreen provision that automatically renews the surety bond unless notice of termination is given;
• The surety bond must be terminable by the surety providing 60 days’ notice, with the Obligee then having a further 60 day period to make a written demand of the surety;
• The surety bond must be structured as an on-demand instrument. This may be accomplished by requiring the surety to pay the surety bond amount upon receiving a written demand of the Obligee consistent with the form of bond provided to the Ontario Minister of the Environment under Part XII of the Environmental Protection Act (Ontario);
• The surety bond must reference the underlying regulatory obligations of the principal. For pipeline abandonment, the bond should reference the Canadian Energy Regulator Act, RH-2-2008 Reasons for Decision, the NEB or Commission document approving the pipeline company’s cost estimate, and the Reasons for Decision MH-001-2013; and
• The surety may fulfill its obligations under the bond by: i) remedying the default, ii) completing the pipeline company’s abandonment obligations, or iii) paying the bond balance to the CER. If these options are set out in the surety bond, then the CER must have the discretion to choose among them.

B.1.3 Filing Requirements for Regular Reporting

1. All companies must file an annual update with respect to abandonment funding. Companies should make sure they are using the most recent form. The updated annual reporting form for companies using a trust must be filed by 30 April each year and can be found here: Reporting Form – Companies using Trusts for Set-aside mechanism [PDF 142 KB]. The updated annual reporting form for companies using a set-aside mechanism other than trusts and exempt companies (such as a letter of credit or surety bond) must be filed by 31 January and can be found here: Reporting Form – Companies using Set-aside mechanisms other than Trusts, and Exempt Companies [PDF 203 KB].

B.2 Applications to Abandon (CER Act subsection 241(1) and OPR section 50)

Section 50 of the OPR states:

1. 50. A company shall include in an application made under section 241 of the Act for leave to abandon a pipeline or a part of one, the reasons, and the procedures that are to be used, for the abandonment.

Goal

The application includes the rationale for the abandonment project, the method(s) of abandonment, and the measures to be employed as well as evidence that:

• the proposed abandonment will be carried out in a safe manner; and
• potential environmental, socio-economic, lands, economic and financial effects are identified.

B.2.1 Notice of Proposed Abandonment

Section 241 of the CER Act states:

1. 241 (2) If a company has submitted to the Regulator an application to abandon a pipeline, the company must, in the form and manner specified by the Commission,
   1. (a) serve a notice on all owners of lands through which the pipeline passes, insofar as they can be ascertained; and
   2. (b) publish a notice in at least one issue of a publication, if any, in general circulation within the area in which the lands are situated.

Filing Requirements

1. The applicant must confirm that it will serve the Notice of Proposed Abandonment within 72 hours of filing the application with the CER. This confirmation must include a list of the Indigenous Peoples to whom the notice will be served.

2. The applicant must also confirm the name of the publication and anticipated date of publication of the notice.

Guidance

The form of notice indicated in subsection 241(2) of the CER Act is the following template: Notice of Proposed Abandonment [WORD 719 KB] and Avis de cessation d’exploitation proposée [WORD 720 ko]. The CER expects companies to follow the form of notice specified by the Commission.

Companies must also provide to Indigenous Peoples the letter from the CER’s Chief Executive Officer outlining the CER’s approach to Crown consultation for which the CER, through its Commission, is the final decision-maker.

Indigenous Peoples that may be affected by the project can be identified by:

• requesting, at any time, a preliminary list of Indigenous Peoples that may be affected from the CER;
• reviewing the list of Indigenous Peoples that may be affected by the project, which will be provided by the CER after an application has been received;
• considering the location of Indian reserve lands, Métis settlements, Métis or other Indigenous populations, and the traditional territory that may be claimed by one or more Indigenous Peoples;
• contacting regional Indigenous organizations or relevant federal, provincial or territorial government departments or agencies;
• consulting the Government of Canada’s Aboriginal and Treaty Rights Information System; and
• taking into consideration past experience working in the area.

When publishing notices, consider the availability of English and French newspapers and their respective regional coverage. The CER expects companies to publish notice in the respective language in both an English and French newspaper in general circulation in the region or, in the event that newspapers in the region are published in only one official language, publish both the French and English versions side by side in compliance with the Official Languages Act.

If the applicant is unable to serve the notice of proposed abandonment on owners of land and Indigenous Peoples within 72 hours of filing the application with the CER, or have to change the anticipated date of publication, it must inform the Commission.

B.2.2 Application to Abandon a Pipeline

Filing Requirements

General

1. A complete description of the pipeline(s) and facility(ies) being abandoned. For pipelines, this must include, but not be limited to, the history of products carried, length, diameter, wall thickness and coating type. Companies should consider any other information that is relevant to the pipeline(s) and facility(ies), and its operation that would assist the Commission in assessing the abandonment application.

2. Reasons for abandonment of operation of the pipeline and facility(ies). See section 3.2 and section 5 of this manual.

3. Appropriately scaled map(s) or site plan(s) which shows the locations and dimensions of the pipeline right of way and the facility(ies) to be abandoned.

4. The digital location data of pipeline segment(s) and facility(ies) to be abandoned. The data should accurately represent the location of pipeline segments and right-of-way, or facility footprint and it can be derived from any available sources.

5. A description of known temporary work space required for abandonment activities, including location and dimensions.

6. Photomosaic maps or alignment sheet(s) which show the pipeline right of way and facility(ies) overlain on satellite or aerial imagery and any areas of temporary work space. If not available, provide photographs showing the pipeline right of way and facility(ies).

7. An explanation of the abandonment method options (abandonment in-place, removal, segmentation, fill) considered, and rationale for the chosen option(s), including how factors such as current and future land use, safety, effects on the rights of Indigenous Peoples, how individuals and communities may be affected by the proposed abandonment, property, land acquisition or lease agreements, impacted and potentially impacted engineered structures^Footnote 13, environment and economics were identified, considered and managed.

8. A description of the proposed activities to be carried out to abandon the pipeline and facility(ies).

9. Proposed schedule for the various abandonment activities to be conducted, including any reclamation, to be conducted.

10. A monitoring plan which describes the type, frequency and duration of monitoring to be conducted for the pipeline(s) and facility(ies) that will remain in place. This plan should include considerations for maintaining depth of cover and potential environmental and socio-economic risks of the abandoned pipeline remaining in-place (e.g., water conduit, subsidence and pipe exposure), as informed by the company’s environmental and socio-economic assessment and engagement activities.

Engineering

1. For pipeline(s) and facility(ies) to be abandoned in place or removed, confirmation that the abandonment activities will follow the requirements of the latest version of CSA Z662.
2. For the pipeline(s) to be decommissioned, confirm the following, and provide an explanation of how the results were/will be achieved and maintained:
   • no internal pressure remaining;
   • purged and cleaned and left in a state of minimal residual contamination, including the pipe cleaning plans, procedures or standards to be used;
   • left in a state where road, railway or utility crossings are not at significant and unmanaged risk of disturbance due to settlement;
   • equipped with signage;
   • a description of the fill material to be used for railway and road crossings, if applicable (abandonment in place with special treatment), including where along the pipeline fill material will be used and why; and
   • a description of the potential soil subsidence, pipe exposure, water conduit, corrosion, and pipe collapse effects for pipelines to be abandoned in place, including anticipated duration to failure, and a plan to monitor these potential effects.
3. In the event that cathodic protection is not maintained, identify and justify if ground bed anodes will be removed or left in place.
4. Confirmation that abandonment activities and the abandoned pipeline will not impact engineered structures (e,g., roads, utilities, infrastructure, drainage, modified slopes, foundations).

Guidance – Engineering

• Companies may be required to submit a plan that identifies, evaluates, and manages all hazards and risks associated with the abandonment activity and for areas where the pipeline is abandoned in place, including a description of the controls used to address these hazards and risks. The plan shall include a cleaning plan for any pipeline that will be abandoned in place.
• CSA Z662 contains requirements for abandonment of pipeline systems. This standard is referenced in the OPR and must be adhered to as such. Companies are advised that the standard is updated on an ongoing basis and to remain current in their adherence to the requirements.
• CSA Z341 contains requirements for abandonment of underground formations used for the storage of hydrocarbons.

Environmental and Socio-economic Assessment

1. Describe the biophysical and socio-economic setting found at the project location. The description should indicate whether or not the proposed abandonment is located on federal lands^Footnote 14.
2. For pipelines to be abandoned, use Table B-1 of this guide:
   1. Categorize the pipeline right of way by land use (for example, agricultural lands, forested lands, native prairie, developed lands, wetlands, watercourse crossings). If any known or reasonably foreseeable development is anticipated for any part of the right of way, include these areas in the table; and
   2. For each land-use segment of the pipeline, provide a high-level assessment of the potential short-term and long-term environmental and socio-economic effects on each valued environmental and socio-economic component that may result from the pipeline being abandoned in place and/or removed, regardless of the preferred abandonment method.
3. For the preferred abandonment method(s), complete the environmental and socio-economic interactions table (see Table B-2 of this guide), or provide an environmental and socio-economic assessment.
4. Provide a copy of the Phase I Environmental Site Assessment conducted for the pipeline right of way and associated facility(ies), as per the guidance in the most recent version of CSA Standard Z768. The Phase I Environmental Site Assessment should identify all areas of existing and/or potential contamination, and include an evaluation of the status of any existing contamination currently documented or contamination previously remediated. Provide a list of previously reported contaminated sites within the pipeline right of way and associated facility(ies), including CER-assigned Remediation Event Number(s).
5. If the results of the Phase I Environmental Site Assessment indicate that a Phase II Environmental Site Assessment is warranted, provide a copy of a Phase II plan that describes the procedures to be implemented for investigating all existing and/or potential contamination identified in the Phase I assessment, including sampling methodology. The Phase II assessment should be conducted per the guidance provided in the most recent version of CSA Standard Z769-00, Phase II Environmental Site Assessment.
6. Provide an Environmental Protection Plan (EPP), or a description of the environmental protection procedures, mitigation measures, and commitments that will be implemented during the abandonment activities, including remediation, reclamation, and reclamation activities monitoring, to avoid or minimize potential adverse environmental and socio-economic effects. The level and detail of information should be commensurate with the nature and scale of the project.
7. Describe the desired goal(s) for reclamation, including restoration (where applicable), for the entire length and width of the pipeline right of way and facility sites (not just limited to the disturbance sites), and provide a plan for how the environment will be reclaimed to achieve the desired goal(s).
8. Provide a preliminary Reclamation Monitoring Plan which describes the reclamation/restoration parameters to be monitored, the criteria that will be used to monitor the success of those parameters, and the monitoring methods that will be used. Describe the criteria for when adaptive or corrective actions will be implemented, and provide a schedule of when monitoring will be conducted and the results reported to the CER.

Guidance – Environmental and Socio-economic Assessment

• As noted in section A.2.4 Level of Detail, the depth of analysis should be commensurate with the nature of the project and the potential for effects.
• Assessments and studies should be provided to support the selection of abandonment in place or removal of the pipeline.
• Refer to Table A-2 and Table A-3 of this manual for the circumstances and interactions that lead to the need for detailed information.
• While an Applicant’s full environmental and socio-economic assessment is not required to be filed, it must still be prepared and may be requested at any time. It may be helpful to include the environmental and socio-economic assessment for applications where there are multiple or complex issues, or to provide clarity and efficiency in the review of an application.
• For pipeline segments which are being proposed to be abandoned in place, the following information should be considered in the assessments provided (including the required Table B-1 and Table B-2 of this guide):
  • the potential environmental and socio-economic effects that may result from the abandonment activities (including reclamation);
  • the potential environmental and socio-economic effects that may result from the abandoned pipeline remaining in place over the long term; and
  • the environmental and socio-economic risks of the abandoned pipeline remaining in place (e.g., water conduit effect, pipeline exposure, ground subsidence) and the mitigation measures to be implemented to reduce those risks (e.g., segmentation, fill), including an explanation of how those measures will sufficiently reduce the risks identified.
• The environmental and socio-economic assessment should include a discussion of means that were considered to reduce any potential greenhouse gas emissions of the project, and how the preferred option was chosen (for example alternatives to venting gas).
• The environmental and socio-economic assessment should discuss the effects of the proposed method of abandonment on the rights of Indigenous Peoples.
• If cathodic protection systems are proposed to be abandoned in place, the assessment should include consideration of the potential effects that may result from that infrastructure remaining in place over the long term (e.g., soil and groundwater contamination potential).
• For pipelines proposed to be abandoned in place, the assessment should include consideration of the potential risk to land and resource use (e.g., forestry, agriculture, urban development) over the long term, and the mitigation measures that will be implemented to reduce those risks.
• For projects that may traverse through the Environment and Climate Change Canada (ECCC)-designated critical habitat, the CER expects applicants to consider that critical habitat when determining reclamation goals. In these cases, additional restoration measures (e.g., tree planting, access control measures) may be warranted to align the goals with the relevant ECCC Recovery Strategy or Action Plan for that species. Applicants should consult with appropriate federal authorities (e.g. ECCC (Canadian Wildlife Service), Fisheries and Oceans Canada, Parks Canada), and appropriate provincial authorities regarding the proposed project prior to application submission.
• Once contamination has been confirmed by analytical testing, a notice of contamination must be submitted to the CER as soon as possible in accordance with the CER’s Remediation Process Guide.
• Applicants are expected to prepare an EPP for all projects. While it is not a requirement for an EPP to be filed as part of an application, it must be available for review if requested or may be a condition of approval to be complied with before construction. Refer to section A.2.6.2 for more detail regarding EPPs.
• The EPP, or the environmental protection procedures, should include a contingency plan to be implemented in the event that previously unidentified contamination is identified (including measures to be implemented in accordance with the CER’s Remediation Process Guide).
• A condition on the Abandonment Order may be imposed to require the applicant to file reclamation/restoration monitoring reports after the completion of abandonment activities. The time period for required reporting can vary and is dependent upon the method of abandonment, mitigation measures applied and nature of the environmental setting. Projects requiring a longer period of time to reach reclamation/restoration goals may be required to submit monitoring reports of greater scientific rigor or over a longer time period.

Engagement

The CER expects applicants to perform engagement activities for all projects depending upon the respective project scope. Companies must justify the extent of engagement carried out for each project. In designing engagement activities, companies can refer to section 3.4 and section 3.5.

1. Provide a summary of the engagement activities undertaken with individuals and communities, which may be affected by the proposed abandonment including:
   • landowners;
   • land users;
   • Indigenous Peoples;
   • occupants;
   • land managers (Crown);
   • federal, provincial or municipal agencies or levels of government;
   • shippers; and
   • other commercial third parties who could be affected by the project, including prospective future shippers.
   • The summary of engagement should include, at minimum:
     • a description of any issues or concerns for each abandonment method(s) identified;
     • how input from the engagement activities was considered in determining the proposed abandonment method(s);
     • how input from the engagement activities was considered in the development of the applicant’s preliminary reclamation plan;
     • a description of how the applicant has addressed or will address any concerns or issues raised and when;
     • a description of any concerns or issues raised that will not be addressed and why; and
     • a description of any outstanding concerns, including how the applicant intends to address any outstanding concerns, or an explanation as to why no further steps will be taken.
2. Provide any details of consultation undertaken for developing reclamation and abandoned pipeline monitoring plans.

Lands

1. Describe any land rights proposed to be acquired for the abandonment, including the location and dimensions of the land rights that have not already been acquired or leased (for example, temporary work space). Provide a description (for example in a table) of the land tenure along the right of way, including the approximate length of the pipeline segments that are located respectively along freehold, Federal or Provincial Crown land. For a description of types of land rights, refer to Guide A.4 of this manual.
2. If any land acquisition or lease agreements will be disposed;
   1. identify the locations where land acquisition or lease agreements will be disposed
   2. identify the proposed timing of disposition and process to notify landowners; and,
   3. describe the process available to the landowner should subsequent land issues or concerns arise following the abandonment of the facility and disposition of the easement.

Economics and Finance

1. Provide details of the estimated costs associated with the proposed abandonment, including details of any estimated costs for maintenance and monitoring, as well as contingency funds for unforeseen events, of any pipelines abandoned in place^Footnote 15.
2. Confirm that funding is and will be available to finance the proposed abandonment project, and indicate how the proposed abandonment project will be funded (through the trust, tolls or other).
   1. If funding is through the abandonment trust, indicate whether applying to access the abandonment trust in this application or in a subsequent application.
      1. If applying to access the abandonment trust to pay for the abandonment activities in this application, provide the information required for accessing a trust found in section B.3.
   2. Explain how funding will be available for both monitoring and in the event of any unforeseen events.
3. Indicate whether any service would be terminated as a result of the proposed abandonment. If an existing or prospective future commercial party or other user could be negatively impacted by the termination of service, provide evidence that:
   1. the Company has been responsive to the needs, inputs, and concerns of commercial parties or other users;
   2. the estimated relative impacts to all parties from the abandonment of the facilities versus continuation of service have been considered;
   3. alternatives to the abandonment of the facilities were considered (including physical and tolling alternatives) and that abandonment is the optimal outcome; and
   4. impacted parties will be able to wait until after the Commission issues its decision on the application to make any potentially costly, irreversible choices necessary to continue their business operations after any approved abandonment activities have begun. If this is not the case, provide evidence justifying why not.
4. Provide the original book cost of the facilities and accumulated depreciation to the retirement date.
   1. Describe whether the retirement is ordinary or extraordinary.
   2. Explain any impact on remaining rate base, providing accounting details as outlined in the Gas Pipeline Uniform Accounting Regulations (GPUAR) or Oil Pipeline Uniform Accounting Regulations (OPUAR).
5. Provide, along with supporting documentation, any relevant exemptions the Applicant has been granted by the Commission with respect to 3 or 4 above.

Guidance – Economics and Finance

Abandonment Costs

Describe the methodology and assumptions used to estimate costs. Provide a level of detail and technical description appropriate to allow regulators, the public, and others to understand the estimates to a reasonable level.^Footnote 16 For example, where pipe is proposed to be left in the ground, describe plugging intervals and costs. Where facilities are proposed to be removed, identify the costs for dismantling and removal, reclamation, any remediation, and, where relevant, the costs and expected proceeds from salvage activities, including the timing of receipts of salvage proceeds.

In addition, include information on the topics below in the submission:

Liability Exposure

A description of future liabilities including:

• the types of each liability and an estimate of the associated cost; and
• a statement of which abandonment work is associated with a legal obligation and which work is not.

Financing

The confirmation that funding is and will continue to be available to fund the abandonment should include:

• an explanation of the economic feasibility of the abandonment; and
• the expected toll treatment and toll impact, including:
  • an explanation of how the tolls were determined;
  • the expected impact, if any, on shippers and other parties;
  • a statement regarding the extent of shippers’ and other parties’ support for any toll increase; and
  • describe any funding, financial guarantees or other arrangements designed to cover these costs.

If applying to access the trust, see guidance under section B.3.

Provisions for abandoned pipeline monitoring and maintenance activities

• Provide a description of the mechanisms to be used to set aside funds for these activities.
• Provide information for landowners regarding the company’s intent to access the trust.
• Provide estimates of average annual future costs, in current year dollars, for these activities, as well as the number of years for which the company believes it is to be responsible for such activities.

Termination of Service

In addition to the information required and guidance provided in section 3.5, if the application would result in the termination of service currently provided to any party, and a commercial party or other user could be negatively impacted by the termination of service, provide the following:

• A description of the process used to assess and identify facilities for abandonment on the pipeline system. In addition, describe how this process was developed (including the consultations that informed the process), how it provides shippers or other users with the ability to meaningfully plan for and mitigate the impacts of potential terminations of service, how it has been communicated to parties and how it ensures equitable treatment of shippers and other users across the pipeline system.
• Sufficient detail to demonstrate that the proposed abandonment construction schedule does not create unnecessary uncertainty for impacted commercial parties or other users, so as to require them to make costly, irreversible choices to continue their operations prior to a Commission decision on the abandonment application.

Accounting Treatment

The GPUAR or OPUAR prescribe the accounting treatment for both ordinary and extraordinary retirements, including informing the CER if the gain or loss on an extraordinary retirement is material.

B.2.3 Reference documents – physical and technical issues related to abandonment

The National Energy Board, in 2009, published a Land Matters Consultation Initiative [Filing A21836] report which recommended that knowledge gaps on the physical issues of pipeline abandonment be addressed. Det Norske Veritas (DNV) was commissioned to conduct a literature review regarding the current understanding worldwide with respect to the physical and technical issues associated with onshore pipeline abandonment and use the results of the literature review to critically analyze and identify gaps in current knowledge, and make recommendations as to potential future research projects that could help to fill those gaps (DNV Scoping Study [Document A2Y0S9]).

The Canadian Energy Pipeline Association (CEPA) and Petroleum Technology Alliance Canada (PTAC) have established the Pipeline Abandonment Research Steering Committee to guide and direct innovation and applied research, technology development, demonstration, and deployment to address knowledge gaps summarized in the DNV Scoping Study. Following are the studies that have been completed and can be found on the PTAC website.

1. Understanding the Mechanisms of Corrosion and their Effects on Abandoned Pipelines
2. Frost Heave Effects on Pipeline Exposure Rates
3. Decomposition of Pipe Coating Materials in Abandoned Pipelines
4. Cleaning of Pipelines for Abandonment
5. Water Conduit Effect in Abandoned Pipelines
6. Review of Previous Pipeline Abandonment Program – TransCanada Peace River Mainline
7. Potential Impact of Power Lines on Corrosion of Abandoned Pipelines
8. Analysis of Pipeline Exposure Data and Scoping Review of Exposure Scenarios
9. Review of Previous Pipeline Abandonment Program – Phase 3 Abandonment on Farmland
10. Risk-Based Decision Making Framework for Pipeline Abandonment

B.3 Applications to Access Funds from the Trust to Fund Abandonment

In the MH-001-2013 Reasons for Decision, the National Energy Board re-affirmed that funds set aside for pipeline abandonment purposes can be made available for abandonments, decommissioning and deactivation.

Goal

Submissions to access funds which have been set aside fully describe and explain the context, objectives, and impacts of the request.

Filing Requirements to Access Funds from a Trust^Footnote 17

1. Provide a justification for requesting access to funds from the trust. Include:

1. In the case of decommissioning or deactivation activities:
   1. why other revenue is not sufficient to undertake the work;
   2. the impact on future tolls or abandonment surcharges, relative to other funding options; and
2. Any impacts on the abandonment cost estimate and annual contribution amount from removing funds for end of life work.

2. Provide the actual costs of the project, broken down by cost category and abandonment activity, as reflected in Table A-3 and Table A-4 of the MH-001-2012 Reasons for Decision or reasonable alternative, explaining how the alternative reflects the cost categories of Table A-3 and Table A-4. In addition, provide a justification for not using Table A-3 and Table A-4.

3. Describe the accounting treatment that will be used for net salvage (salvage value less end of life costs), if any, and any associated impacts on rate base.

4. Provide an explanation of the impact on the coverage for other future costs of remaining activities needed to complete abandonment.

5. If there has been changes to a previously filed abandonment funding plan, or if an abandonment funding plan has not been previously filed, provide an abandonment funding plan, which includes:

1. Preliminary timelines for abandonment activities;
2. Preliminary plans for drawing on the funds, including cash needs;
3. A preliminary forecast of the annual balance of funds to be set aside each year; and
4. In circumstances where abandonment activities are not anticipated prior to the end of the collection period, adequate market information to justify the use of the same collection period for all components of the system.

6. If the costs were for decommissioning activities, confirm that the activities done during decommissioning will not need to be repeated at time of abandonment and therefore the costs that have been incurred will not need to be repeated.

7. If the decommissioning/abandonment activities are completed, provide all relevant approvals for those activities.

Table B-1: Pipelines – Comparison of predicted effects from Abandoning in place and removal

(Note: This table is provided as a template, and Applicants should modify the table to ensure that all applicable land uses are identified)

Table B-1: Pipelines – Comparison of predicted effects from Abandoning in place and removal [WORD 18 KB]