The Minnesota Public Utilities Commission is in the final hearing days prior to coming to a decision on whether there is a Need for Enbridge’s proposed new Line 3 pipeline to transport Tar Sands oil from Canada through Minnesota. This report is on the first two days’ of hearings (of a possible six days… originally scheduled for four). Unfortunately, I will be unable to watch the hearings live next week so will be catching up as I can, hopefully before the final decision is made.
How to summarize all this information? As I watched the hearings, I captured over 5000 words on Opening Statements alone! But I will try to make this report as brief as possible while still covering highlights. A good but even more brief summary was published by the Bemidji Pioneer.
Enbridge starting the day by offering three new incentives during their opening statement, though without details, it’s unclear whether these will be viable, credible, and/or useful. What did they offer?
Enbridge said it would buy renewable energy credits to offset energy use after a new Line 3 is in service. In addition, Enbridge offered to work with those concerned about the old Line 3 to set up a trust fund to decommission all old pipelines in Minnesota. Finally, Enbridge would put a guarantee in place by its parent company, Enbridge Inc., to ensure there would be cleanup money available in the event of a spill. ~MPR News coverage
It remains to be seen whether these offers will make a difference. Enbridge was scheduled to release a detailed document on these offerings but it has yet to show in the record. It seems it may release today meaning a very small window for their opposition to review it, likely causing further legal delays. [There was another surprise document put in the record last week, a letter from Pipeline and Hazardous Materials Safety Administration, which will be discussed in this weeks’ hearings. It seems rules are being violated left and right in this process.] It has been argued that, with fossil fuels companies hanging on in a dying industry, the parent company guarantee would be meaningless if Enbridge, Inc. goes bankrupt. Their work on decommissioning could take years, if not decades, and would require additional permit approvals. And buying offset credits is hardly going to make a difference to Minnesotans when their pipeline leaks into our environment. Nor to our grandchildren who will inherit an unlivable planet due to climate change brought on by our continued addiction to hydrocarbons.
It was made clear that Enbridge wants things both ways. They want the PUC to believe that the current Line 3 is so unsafe that a full replacement is the only way to return to safe operations while simultaneously maintaining that they can safely operate the existing Line 3 for another 15 or twenty years if needed.
That said, opposition parties spoke to the willingness to live with an existing Line 3, even with its failings, rather than adding a new corridor for a completely new Line 3 because the existing Line 3 is almost out of time. While a new line will run for another 20-40 years or more, the existing Line 3 will certainly shut down within 15 years (the term to which Enbridge did studies on the integrity dig information), 10 years (when Leech Lake easements expire in 2029 and they tell Enbridge to remove the pipe from their land immediately), or even 5 years or shorter if Enbridge or the DNR realize safe operation of the line is no longer possible and the company shuts the line down or the DNR revokes Enbridge’s license for operating.
I was surprised that Kevin Prentis for the Laborers made no mention of the removal of Line 3 and the jobs that would supply to his constituents. He did make sure to comment on the new corridor noting: Spreading risk around is more fair and environmentally just than putting it all in the same corridor! (SMH)
Bill Grant, Deputy Director of the Department of Commerce, made their stance very clear – they see no reason to grant a CoN. He noted that Enbridge is asking for 340 miles of northern Minnesota to be released to a private company via eminent domain. As such, it is their burden to prove need for this line is needed with data and statistics that defy scrutiny, not just their word and claims from their supporters.
The following is from the ALJ report and summarizes the demand data failings. Mr. Earnest testified on behalf of Enbridge and Dr. Fagan on behalf of the Department of Commerce.
Demand for Refined Product
- Dr. Fagan’s second criticism of Mr. Earnest’s analysis is that Mr. Earnest ignores demand for refined product and assumes that consumer demand will remain unchanged for the entire forecast period (until 2035).
- Mr. Earnest does not deny that his analysis completely ignores refined product demand. He confirms:
- Dr. Fagan is correct that the demand for refined product does not play a role in the analytical modeling for assessing utilization of the Enbridge Mainline. This is fundamentally because the Enbridge Mainline transports crude oil, not refined product, and it is the demand for crude oil that will drive the utilization of the Enbridge Mainline, not refined product.
- Mr. Earnest explains that, because he sees “no direct connection between Minnesota (and Midwestern and U.S.) crude oil runs and refined product demand,” he found “little utility in providing a refined product demand forecast.”
- Dr. Fagan disagrees. According to Dr. Fagan, under the economies of oil markets, demand for refined products drives refineries’ demand for crude oil. Dr. Fagan explained that, with very few exceptions, no one consumes crude oil except a refinery; and a refinery does not consume crude oil unless refined products are expected to be sold profitably. It follows that demand for refined products drives demand for crude oil, and is, therefore, is a driver of the price of crude oil. This means that weak demand for refined products can lead to lower prices for refined products; lower prices of refined products can lead to lower refinery margins (lower profitability), which impacts the viability of some refineries, which, in turn, can lead to lower refinery demand for crude oil. Thus, by focusing only on crude oil supply (as reported by Canadian oil producers) and totally ignoring refined product demand (local and global demand), Dr. Fagan concludes that Mr. Earnest’s analysis is materially flawed.
- The ALJ agrees. It is commonsense that reduced demand for refined products would impact the price, supply, and profitability of crude oil. By ignoring the demand for refined products — and focusing only on the supply of Canadian crude — Mr. Earnest’s analysis ignores an important factor in forecasting the need for additional transportation of crude.
When it comes to apportionment (not receiving all oil nominated as being needed) causing problems for MN Refiners, the ALJ reported: 1) “Applicant has presented no evidence that Minnesota refiners are being harmed by apportionment or that these refiners are not receiving the oil supplies they need.” and 2) “Minnesota refiners’ comments simply state that reduction of apportionment will improve their ability to access crude oil supplies and will benefit them. They did not present any evidence of harm.”
The ALJ also noted on Reliability that Enbridge has assured us “it can continue to operate Existing Line 3 in a safe and reliable manner”, while also noting that a new line is more reliable than an old line. However, in line 731 of her report: “Because much can change by 2035, it is important to consider what will happen to the new Line 3 if global demand for oil significantly decreases as some parties’ experts have projected; and the cost of oil is too low to make Canadian tar sands oil extraction and export profitable. The Commission should give serious consideration to the possibility that if oil prices continue to decline and Canadian oil is no longer profitable or in sufficient demand, Minnesota could be left with abandoned infrastructure”.
In her conclusions I love this line:
890. The ALJ further finds that the impacts on Minnesota’s natural resources could be mitigated by: (1) a route alternative that utilizes the existing Mainline corridor where impacts have already occurred and the risk of contamination can be contained to one, existing corridor; (2) a permit that does not allow for abandonment of roughly 300 miles of steel pipe; and (3) a route that does not open a new pipeline corridor through some of Minnesota’s most precious water and natural resources – a new corridor that could be used to locate or relocate other pipelines before or after 2029, when Enbridge’s Mainline easements expire.
Mr. Grant later made it very clear that Enbridge, rather than making a business decision to discontinue the pipeline on its own, is putting decision on the PUC – not an appropriate ask of the State of MN. This decision belongs with company executives in Calgary and having it pushed off on the PUC has seemed inappropriate to the Department of Commerce all along. He further says that: A lot has changed since the Alberta Clipper case and PUC issuance of an order in 2014. We were seeing a lot of refinery capacity expansion then, but not now. The late 2015 US policy change to allow global exports was a game changer causing DOC to think differently on demand for oil as a function of Minnesota’s need and looking at how to answer CN requests from companies for MN to support the process. (When it comes to the apportionment issue…) One state agency cannot do a full Environmental Impact Statement AND determine demand forecasts as well. This is a failing of DOC and the record and they own this. Even with the deficiency noted by the ALJ, none of this changes the fact that Dr. Fagan provided with, what ALJ agrees, are material flaws in the Embridge analysis – whose burden it is – to prove demand. Since Enbridge bears the burden of proof, the DOC cleared the threshold to Deny the CN. Perhaps an independent forecast would have proved the demand fallacy but it is not there. Perhaps tellingly, Lange replied, “Not sure enough doubt has been cast.” She then noted that the ALJ asked why the DOC didn’t reach out to the refineries. This was refuted by Julia Anderson, counsel for the DOC, who noted that it was Enbridge, not the ALJ, who asked this question. In responding, she noted the first letter of response from Flint Hills Refinery was addressed to the DOC. Flint Hills, not being a party or subject to discovery for this case, along with the additional and concurrent case load she bore, led to a lack of resources to dig deeper proactively. However, Flint Hills filed three letters. And in none of them did it state that they had been harmed by apportionment.
I was disappointed that no one brought up that the fossil fuel companies are looking to sell as much as fast as they can before someone realizes we only have a couple GigaTons of CO2 to go and we’ll have to stop selling it completely if we are serious about the 2°C idea. Bill McKibben did the math back in 2012. At that time, we could burn only another 565 gigatons of CO2 and remain under 2°C. At that time, we had 2795 gigatons in proven reserves – five times the amount we have space left to burn! His more recent article (2016) showed a continuing concern with the math of climate change. Based on Rystad data (frequently referenced in this PUC hearing), and the new goal of 1.5°C set by world leaders in Paris in 2015, we can only burn another 353 gigatons of CO2. Yet we have 942 gigatons worth of CO2 in the currently operating coal mines & oil and gas wells. So we’re gonna overshoot if we use up all we have found, let alone if we continue pursuit of more fossil fuel sources.
Winona LaDuke gave a challenging, common sense based opening statement for Honor The Earth noting:
- She represents the Home Team – her people have an 8000 year history in this land.
- The Canadian economy is frontier economy, a flawed economy.
- Half the world does not have water – we still do.
- Good corporate citizens do NOT make messes. The PUC needs to tell Enbridge to clean up their old mess before making a new one. $2B to clean up OLD mess is JOBS. Green Jobs for the future of MN, not a Canadian pipeline company.
- Six pipelines is enough.
- 12 cities suing on climate change. Major corporations being sued. $6.15B in divestment. No one wants a Tar Sands pipeline.
- 68,244 people submitted comments against Line 3 to the PUC. There were only 3,756 supporters. [Love seeing Dawn and Maurice in this below post.]
While several Commissioners stated that they did not know yet where they would land on the question of Need, it seemed to be that they often used the language of Enbridge, not the language of the opposition. They would state assumptions about rail being more unsafe than pipeline, even after just hearing input that rail, while experiencing more spills per barrel than pipeline also allowed for more easy cleanup of much smaller and known releases. In fact, rail was finding renewed support in the industry as a cheaper alternative to pipelines as they can transport crude without the added dilbit (chemical soup that allows the sludge to flow), meaning more crude can be shipped on rail per barrel than in a pipeline. Some companies are actually rolling the crude into solid balls that can ship in open containers and, even that shipped in closed containers, should there be a leak, would not actually release from the car as it is solid, especially in the cold temps we often see in Minnesota! Yet the Commissioner’s statements continued to reference Enbridge’s assumptions for rail safety, crude oil demand (based solely on supply), and what Enbridge says is in the best interest of society as a whole.
I am hoping that the tide is turning for the fossil fuel industry. People are recognizing that we need to move to renewables and that in their end game, we need to hold the fossil fuel companies responsible for their infrastructure. California recently denied a new gas pipeline calling it “unnecessary” and forcing the company to conduct expensive safety testing on the existing pipeline rather than replacing it. This will also save customers from having to pay a monthly increase to support this new build. In addition, US News & World Report is urging a stop for financing for the Line 3 project, calling it a “potential disaster”. The article reports on a recent commitment by Crédit Agricole which pledges to take into account climate change and vows to exclude hydrocarbons that pose the biggest threat to the environment, specifically mentioning oil sands, and notes: “Wall Street darling JPMorgan Chase and French behemoth Crédit Agricole are set to renew a $625 million line of credit for Enbridge Energy Partners, the subsidiary building the U.S. portion of Line 3, on June 29th. … Banks can’t claim to want to avoid financing Line 3 while they continue to pour hundreds of millions of dollars into the company building it.”
Meanwhile, the PUC Hearing process has received much criticism on its recent hearing procedures. Did you know participants are barred from bringing in water bottles even though the hearings are an all day affair? Even a woman with medical condition that requires access to water was denied this basic human need. Meanwhile the Commissioners sip their lattes… But even worse are the ways their ticketing process was being abused.
“Once the doors finally opened on Tuesday, a couple of dozen teenagers (or very young adults) wearing “Minnesotans for Line 3” T-shirts got their tickets and promptly exited the building as a group, never to return to the meeting. They effectively ate their tickets so that no authentic members of the public could take those spots. …
Some who had spoken with the kids in line — trying to strike up a conversation about Line 3 — learned that they didn’t know what Line 3 is, or were “not allowed” to talk or were there because it had “paid really well.”
Despite the PUC’s knowing that this had happened, and despite numerous complaints about 26 empty seats in the main room that could have been filled by the overflow audience, staff members were rigid about the ticketing policy. ~ Star Tribune article linked above
The charge is that the PUC could have found a larger venue, in light of the packed hearing rooms throughout the last year of this Line 3 process. I have charged many times that the PUC does not appear to be truly interested in hearing the public input as I have faced many difficulties and obstructions in finding data throughout my investigations. It would seem that, if they truly represent Minnesotans, there should be as many of us in the room as we would like to encourage civil participation. Their actions in this last step of the process do not convey an attitude of encouraging public involvement.
Perhaps their final decision will redeem them.