LETTER DECISION. File OF-Fac-OtherComm-H October 2016

Transcription

1 LETTER DECISION File OF-Fac-OtherComm-H October 2016 Mr. Shawn Gowrie Regulatory Technician Husky Oil Operations Limited Box 6525, Station D th Avenue SW Calgary, AB T2P 3G7 Facsimile shawn.gowrie@huskyenergy.com Mr. Don Lemna Regulatory Affairs Manager Husky Oil Operations Limited Box 6525, Station D th Avenue SW Calgary, AB T2P 3G7 Facsimile don.lemna@huskyenergy.com Dear Mr. Gowrie and Mr. Lemna: Abandonment Hearing Husky Oil Operations Limited (Husky) Application to Abandon the Marsden Salt Water Injection Pipeline System (Project) The National Energy Board (NEB or Board) has considered the above-referenced application dated 5 May 2016 (Application). Pursuant to paragraph 74(1)(d) of the National Energy Board Act (NEB Act), the Board has issued the attached Order ZO-H (Order), the effect of which is to grant Husky leave to abandon the Marsden Salt Water Injection Pipelines (Pipelines). The attached Order sets out the conditions the Board has imposed on the Project. The Board notes that on 19 June 2016 the Pipeline Safety Act came into force making changes to the Board s jurisdiction over abandoned pipelines. The Pipeline Safety Act provides the Board with the jurisdiction to take measures that the Board considers necessary for the safety and security of the public, the company s employees or the abandoned pipeline, or the protection of property or the environment. The Board s analysis and conclusions in support of its decision to issue the Order are set out below. In reaching its conclusions, the Board considered all of the evidence on the record. The regulatory documents on file in the proceeding are available on the Board s website, /2

2 1.0 Project Overview and the NEB Process 1.1 Application and Project Overview On 5 May 2016, Husky filed the Application pursuant to paragraph 74(1)(d) of the NEB Act and section 50 of the National Energy Board Onshore Pipeline Regulations (OPR) to abandon, inplace, the Pipelines. In the Application, Husky stated that the Pipelines are currently out of compliance with Section 74 (1)(d) of the NEB Act because abandonment activities were carried out in 2002 by the previous Pipelines owner, without Board approval. Consequently, Husky is seeking Board approval for leave to abandon. The Pipelines are located approximately 47 km south of Lloydminster, Alberta/Saskatchewan on entirely private land, which include four salt water commodity pipelines with the following specifications: Pipeline Name Location Length (km) Outside diameter (mm) AB 9704 Line 1 From W4 to W4 AB 9704 Line 2 From W4 to W4 SK Line 1 From W3 to W3 SK Line 2 From W3 to W On 9 May 2012, the Board issued Order MO , which granted leave to Husky to purchase the Pipelines. 1.2 The NEB Process Under the NEB Act, the Board must hold a public hearing to consider an application for leave to abandon a pipeline. The Board issued a Notice of Abandonment Hearing for the Project (Notice) on 22 July 2016, which set out the hearing process. The Board directed Husky to serve a copy of the Notice on all persons potentially impacted by the Project, including: landowners; tenants; lessees; users and occupants; Aboriginal groups; interested government bodies (e.g., municipalities, provinces); third party shippers; and other persons identified by Husky. Page 2 of 6

3 The Notice indicated that any member of the public that is potentially impacted by the Project could be involved in the Board s written public hearing process by filing a letter and any supporting documents with the Board. No letters were received by the Board. 2.0 Assessment of the Application 2.1 Engineering Matters Husky confirmed in the Application that at the time of abandonment Penn West Petroleum Ltd. (Penn West), the previous owner, met all Canadian Standards Association (CSA) Z662 requirements along with all abandonment requirements through the Alberta Energy Utility Board (EUB) licensing process. At the time of Pipelines acquisition, Penn West did not supply Husky with any of the EUB audit documentation. As a result, Husky reinitiated landowner consultation and received no concerns or objections from the current landowners. The Board finds that the Project s abandonment activities were carried out in accordance with the CSA Z662 standard. The Board notes Husky s comments on the potential condition regarding the project to be abandoned in accordance with CSA Z Although the pipeline was abandoned in 1997, the Board is of the view that this condition still applies, particularly with respect to Clause which requires records to be maintained for pipelines that are abandoned in-place, including information such as length, diameter, material type and location. The Board requires Husky to maintain records of the abandoned line as specified in Clause The Board is also of the view that abandoning the Pipelines in-place is acceptable in this instance and expects subsidence to be minimal given the small diameter of the Pipelines. 2.2 Economics Matters As the Pipelines have been abandoned, Husky provided no details of the costs associated with proposed abandonment, including estimated costs for post-abandonment monitoring and contingency. Husky noted that the Board currently holds a letter of credit from Husky for $7.7 million, in compliance with MH The Board has no concerns regarding the economics or financial matters of the Project. 2.3 Environment Matters Husky acquired the already abandoned in-place Pipelines from Penn West in The abandonment work for the Pipelines was completed in 2002 by Penn West. The Pipelines are located entirely on private previously disturbed agricultural lands. Husky stated that no physical abandonment work is needed. Page 3 of 6

4 Husky said that there have been spills associated with the Pipelines over the life of their operation and prior to Husky acquiring the Pipelines. The spills included produced water and hydrocarbon. Husky said that a Phase 1 Environmental Site Assessment (ESA) was performed on the battery site in 2002 for the previous owner, Penn West, along with a Phase 2 ESA and Phase 3 Remediation in Ongoing groundwater monitoring has been in place on the site since 1998 (piezometers are on site and checked at some periodicity) and environmental imaging was completed for Penn West in An additional Phase 2 ESA was also conducted in 2009 for Penn West. Husky conducted a Phase 1 ESA and an electromagnetic scan in July 2010, which showed elevated conductivity near the well centre, spreading to the north, east, and west. Husky stated that the 09B W4 lease contains piezometers around the lease edge to continue monitoring potential ground contamination. Husky said that there is no data to suggest that the land where the Pipelines exist is contaminated; it has been farmed since pipeline abandonment in 2002 with no complaints from landowners about stunted crop growth or lower crop yields. Husky said it is evaluating a cost-effective way to remediate and reclaim the 09B-25 lease. Husky said that it is in the process of completing a Phase 1 ESA that meets CSA standard Z768-01, and the results of the Phase 1 ESA will be provided to the NEB upon completion. Husky further said that if the Phase 1 ESA indicates any areas of potential environmental concern, it will investigate and provide subsequent actions or remedial plans to the NEB for review. Husky acknowledged its ongoing responsibility and liability as long as ownership is maintained and said that it will address any potential future remediation or problems that may arise. Husky said that, while it has taken every measure to ensure the Pipelines are left in a safe condition and all apparent risks have been mitigated, periodic inspections are carried out to ensure no subsidence or erosion has occurred along the line. Husky committed to maintaining and following a management system in compliance with the OPR, including Husky s Operational and Integrity Management System program that includes an environmental stewardship element. The Board notes that the Project is not subject to the requirements of an Environmental Assessment under the Canadian Environmental Assessment Act, Environmental matters were considered by the Board pursuant to the NEB Act. The Project involves formalizing the in-place abandonment of the Pipelines, with no physical work proposed as part of abandonment. Page 4 of 6

5 The Board notes that there have been spills associated with the Pipelines during their operation and prior to Husky acquiring the Pipelines. The Board further notes that Husky is evaluating a cost-effective way to remediate and reclaim the 09B-25 lease. The Board acknowledges that Husky is in the process of completing a Phase I Environmental Site Assessment. The Board requires assurance that any contamination associated with the Pipelines has been identified. Conditions 4 and 5 of the Order address these concerns. Given the nature and scope of the Project as applied for, and the implementation of the Board s prescribed mitigative conditions, the Board anticipates that any environmental effects would be of limited geographic extent (limited to the Project site), of low magnitude, reversible, and the right-of-way would be restored to equivalent land capability in the short term (in the order of weeks or months). Therefore, the Board finds that the Project is not likely to cause significant adverse environmental effects. 2.4 Consultation Matters The Project is located on private, previously disturbed agricultural lands. Husky notified interested parties of the plan to abandon the Pipelines prior to filing the Application and stated that it did not receive any issues or concerns regarding the abandonment plans. On 3 August 2016, Husky submitted to the Board a list of potentially impacted persons upon which it served the Notice. This list included landowners, occupants, the local authorities, and Aboriginal groups. The Notice set out the Board s hearing process and required those interested in participating in that process to indicate their intention to do so by 29 August No letters were filed with the Board. The Board is satisfied that anyone potentially affected by the Project was given sufficient notice and had the opportunity to voice their concerns. The Board is of the view that the design and implementation of consultation activities was appropriate for the scale and scope of the Project. The Board also notes that under the Pipeline Safety Act, the Board has jurisdiction over pipelines abandoned in-place; as such, landowners and land users may contact the Board if any issues or concerns arise. 2.5 Socio-Economic Matters Husky stated that the abandonment work for the Pipelines was completed in 2002 by Penn West prior to Husky acquiring the Pipelines. Husky also stated that the Project lands have been farmed since the abandonment with no complaints from landowners. The company stated that it is confident that all associated risks and concerns regarding the Pipelines abandonment have been addressed and mitigated. Page 5 of 6

6 The Board expects applicants to identify the effects projects may have on socio-economic elements, to identify mitigation measures they will implement to reduce those effects, and to assess the significance of any effects that would remain once the mitigation has been applied. The Board notes the abandonment activities have already taken place and is satisfied that Husky has identified and addressed all relevant socio-economic effects associated with the Project. The Board is of the view that the Project is not likely to cause any significant socio-economic effects. 3.0 Decision Based on all of the foregoing considerations and reasons, the Board grants Husky leave to abandon the facilities set out on Schedule A of the attached Order. R.R. George Member Attachment Page 6 of 6