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National Energy Board Hearing Order RH-1-2010 Enbridge Pipelines Inc

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National Energy Board Hearing Order RH-1-2010 Enbridge Pipelines Inc National Energy Board Hearing Order RH-1-2010 Enbridge Pipelines Inc. Line 9 Application – Tolls and Tariff Responses of Enbridge to Information Requests of Imperial Oil Limited May 18, 2010 RH-1-2010 Responses of Enbridge to Imperial IRs Page 2 of 323 IOL-Enbridge 1 Reference: Written evidence of Enbridge (Adobe Number A1R0U9), Appendix A-1, page 9, paragraph 21. Preamble: Enbridge refers to the reversal project and indicates that modifications would need to be completed if Line 9B and Line 9A were to be re- reversed to provide eastbound service. Requests: (a) Provide details, including expected locations, of the modifications referred to and the current estimate of the cost of those modifications and the expected year that they would be incurred. (b) How quickly could Line 9 be re-reversed? That is, how long would a Line 9 re-reversal project take? Responses: (a) Enbridge Pipelines considered the possibility of re-reversing Line 9 in the context of the Eastern Access/Trailbreaker Project.1 Based on the parameters of that Project, Enbridge would expect that re-reversing Line 9 would entail, at a minimum, the following facility modifications or additions: (i) installation, relocation or re-configuration of pumping units at Sarnia Terminal to inject into Line 9; (ii) piping modifications at Sarnia Terminal associated with (i) above; (iii) piping changes at each Line 9 station to re-configure the suction/discharge lines for the reversed flow operation; (iv) piping reconfigurations at Montreal Terminal to permit the reversed flow operation; (v) SCADA and control system changes to permit the reversed flow operation; and (vi) terminal reconfiguration to allow access to all tanks, if required. If the assumptions regarding crude slate, flow rate, delivery location, and other variables are not the same as those used for the Eastern Access/Trailbreaker Project, then the foregoing facilities 1 See Prologue to response to NOVA Chemicals 1.2. RH-1-2010 Responses of Enbridge to Imperial IRs Page 3 of 323 would have to be revised accordingly. See Attachment 9 to NOVA Chemicals 1.2(b) for information respecting the estimated costs of the Eastern Access/Trailbreaker Project. (b) The time required to bring a re-reversed Line 9 into service would depend upon many factors including requirements related to crude slate, flow rate, delivery location and other variables. It would also depend upon securing sufficient shipper support and, thereafter, the time required to complete related modifications to upstream or downstream facilities in addition to factors such as: long lead item procurement; land acquisitions; environmental and regulatory applications; power infrastructure requirements; and construction timelines. A typical timeframe for such projects, after securing sufficient shipper support, would be at least 18 months. It could be possible to complete a re-reversal in less time in a crisis situation. RH-1-2010 Responses of Enbridge to Imperial IRs Page 4 of 323 IOL-Enbridge 2 Reference: Written evidence of Enbridge (Adobe Number A1R0U9), Appendix A-1, pages 13 to 14, paragraphs 33 to 38. Written evidence of Enbridge (Adobe Number A1R0W5), Statements C-2.1.9 and C-2.5 Preamble: Enbridge refers to $1.974 million of deferred regulatory costs with respect to the RH-2-2007 proceeding. Requests: (a) Provide a detailed explanation of the regulatory principles, and citations to NEB or other regulatory authority, relied upon to recover 2007 costs from future customers over a five year period and explain why they should not have been collected from 2007 customers. Response: (a) Enbridge is not relying on regulatory principles to justify its proposal to recover, as an administrative expense, the cost of the regulatory costs over a five-year period commencing on January 1, 2008. The rationale for the proposal is provided in paragraph 35 of Appendix A-1. RH-1-2010 Responses of Enbridge to Imperial IRs Page 5 of 323 IOL-Enbridge 3 Reference: Written evidence of Enbridge (Adobe Number A1R0U9), Appendix A-1, page 15, paragraphs 39 to 42. Written evidence of Enbridge (Adobe Number A1R0V0), Appendix A-2, page 3, paragraph 9. Preamble: Enbridge refers to operating Line 9 in a Start-Stop fashion and the risks and the changes to the integrity and maintenance programs. Requests: (a) Provide a detailed explanation of changes to the integrity and maintenance programs as a result of the stop-start operation of Line 9 together with cost of such programs by year. (b) Provide details of the “increased mechanical maintenance” and indicate the estimated cost by year. (c) Indicate the nature and the expected cost of the “post-2010 integrity programs”. (d) Please confirm that pipeline integrity and maintenance programs are directed at maintaining the integrity of a pipeline for both current pipeline operation and future pipeline operation. If not confirmed, why not? Responses: (a) Though Line 9 has experienced some level of stop-start operation since the line was put into east-west operation in 1999, average daily throughputs until 2005 generally allowed for continuous flow. During the period from 2005 to date, Line 9 has been subject to more significant levels of start-stop operation. Line 9 integrity data for the period of 1999 to 2005 identified medium to high stress levels on the pipeline due to required pumping pressures. While the pressure cycling frequency was not high, the severity resulting from start-stop occurrences suggested the potential for crack growth. As a result, a crack inspection program was initiated in 2004. The crack tool inspection runs identified a number of crack indications along Line 9. Follow-up digs were performed to allow for evaluation of the indications and rehabilitation and mitigation work. Stop-start operation also increases the potential for internal RH-1-2010 Responses of Enbridge to Imperial IRs Page 6 of 323 corrosion due to water and sediment settling in the pipeline. This may give rise to a requirement for additional cleaning tool runs in future. See response to IOL-Enbridge 3(b). See Attachments 1 and 2 to NOVA Chemicals 1.25(a). (b) The low flow rates that Line 9 has been experiencing for the past number of years have required the mechanical equipment to operate below its most efficient flow rate in an effort to maximize the periods of continuous flow. This prolonged operation at less than ideal conditions has increased the maintenance requirements for pumps and other equipment. The maintenance costs for mechanical equipment have been summarized in the table below. These costs are included in the costs shown on line 4 of Statement C-1.2. Mechanical Maintenance Costs ($000) 2007 2008 2009 2010 140 146 249 349 (c) The information requested is not relevant to any of 2008, 2009 or 2010 tolls. Enbridge therefore objects to filing the information requested and declines to so. (d) The pipeline integrity and maintenance programs are directed at maintaining the integrity of Line 9 for both current and future pipeline operation. RH-1-2010 Responses of Enbridge to Imperial IRs Page 7 of 323 IOL-Enbridge 4 Reference: Written evidence of Enbridge (Adobe Number A1R0V0), Appendix A-2, pages 2 to 3, paragraphs 5 to 7. Preamble: Enbridge refers to Consultations. Requests: (a) Please provide the materials used in the slide presentation referred to in paragraphs 6 and 7. (b) Please provide the information distributed to stakeholders on November 16, 2009 and referred to in paragraph 6. Responses: (a) See Attachment 1 to IOL-Enbridge 4(a). (b) See Attachment 1 to IOL-Enbridge 4(b). RH-1-2010 Responses of Enbridge to Imperial IRs Page 8 of 323 IOL-Enbridge 5 Reference: Written evidence of Enbridge (Adobe Number A1R0V1), Appendix A-3, page 9, paragraph 28. Written evidence of Enbridge (Adobe Number A1R0V4), Appendix A-6, pages 2 to 8. Preamble: Enbridge refers to risk of not recovering its revenue requirement and its revenue requirement is no longer guaranteed. Requests: (a) If the NEB approves all of the deferral accounts and toll adjustment mechanisms it has requested, please explain what risks Enbridge will incur with respect to the recovery of Line 9 test period revenue requirements. Response: (a) The proposed deferral accounts would mitigate the risk of variances between forecast and actual revenue requirements for Enbridge only to the extent that oil losses, throughput and costs for regulatory proceedings contribute to such variances. However, neither the deferral accounts nor the toll adjustment mechanism address the risk of Line 9 becoming idle, in which case Enbridge would not recover its revenue requirement. RH-1-2010 Responses of Enbridge to Imperial IRs Page 9 of 323 IOL-Enbridge 6 Reference: Written evidence of Enbridge (Adobe Number A1R0V8), Appendix A-8, pages 2 to 4, paragraphs 1 to 7. Preamble: Enbridge seeks exemption from recording its system of accounts according to the OPUAR and from compiling with Guide P and BB of the Board’s Filing Manual. Requests: (a) Confirm that with respect to Line 9, Enbridge can provide details and balances for each of the applicable accounts in the OPUAR if requested by the Board or intervenors. (b) If not, explain why the exemption should be granted. Responses: (a) Confirmed. The Board’s final report of the financial regulatory audit referenced at page 2 of Appendix A-8 can be found at the following link: https://www.neb-one.gc.ca/ll- eng/livelink.exe?func=ll&objId=587117&objAction=browse (b) Not applicable. RH-1-2010 Responses of Enbridge to Imperial IRs Page 10 of 323 IOL-Enbridge 7 Reference: Written evidence of Enbridge (Adobe Number A1R0V8), Appendix A-8, page 3, paragraph 4. Written evidence of Enbridge (Adobe Number A1R0Y0), Filing Manual Guide P.
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