Crude Oil Pipelines or Quality Water? You Can Have Input on October 25th in Crosslake
Letter to the Editor:
The Minnesota Public Utilities Commission (PUC) will be holding two hearings on Wednesday, October 25th, at the Crosslake Community Center regarding Enbridge Energy’s application for a (1) certificate of need, and (2) routing permit if the certificate is approved. The hearings, conducted by Administrative Law Judge Ann O’Reilly, will hear reports by Enbridge (the applicant), the Minnesota Department of Commerce, and the intervening parties. There will be an opportunity for local organizations and units of government, local residents, and members of the public to provide testimony about the project and the pending decisions.
Enbridge Energy Project Manager Paul Eberth made a presentation December 18, 2014 to the Brainerd Lakes Chamber of Commerce members. As reported in the December 31, 2014 Brainerd Daily Dispatch and Echo Journal papers, Eberth said, "We've employed many engineers and scientists to study the route. Barr Engineering did some studies on the route and studied which watersheds we would cross, and which lakes we would potentially impact, should there be an impact, and the results were that we do cross about 14 different watersheds, but really, we only have the connectivity to about 3 percent of lakes in those watersheds."
Eberth also reported that Barr Engineering, a contract engineering firm to Enbridge Energy, identified Norway Lake, the Whitefish Chain and Roosevelt Lake as three lakes within the lakes area that are all hydrologically connected and at risk along the Sandpiper (which is also the proposed Line 3 route).
What is a Certificate of Need (CN)? Minnesota law and regulations provide the basis for the Certificate of Need decision by the PUC while addressing four (4) primary criteria:
“A certificate of need shall be granted to the applicant if it is determined that:
A. the probable result of denial would adversely affect the future adequacy, reliability, or efficiency of energy supply to the applicant, to the applicant's customers, or to the people of Minnesota and neighboring states, including (1) accuracy of the applicant's forecast of demand,
B. a more reasonable and prudent alternative to the proposed facility has not been demonstrated by a preponderance of the evidence onthe record by parties or persons other than the applicant;
C. the consequences to society of granting the certificate of need are more favorable than the consequences of denying the certificate, considering (1) the relationship of the proposed facility to overall state energy needs, and (2) the effect of the proposed facility upon the natural and socioeconomic environments compared to the effect of not building the facility; and
D. it has not been demonstrated . . . that the design, construction, or operation of the proposed facility will fail to comply with . . . relevant policies, rules, and regulations of other state and federal agencies and local governments.” Statutory Authority:MS s 216B.08; 216B.2421; 216B.243; 216C.10
Is There a Need? Minnesota Department of Commerce (DOC), Energy Regulation and Planning and Dr. Marie Fagan, an economist with London Economics International LLC (LEI), reported in early September 2017 that Enbridge has not demonstrated that the “minimal” benefits to Minnesota exceed the “high” socioeconomic and environmental costs. In a press release September 11, 2017 the DOC stated “in light of the serious risks and effects on the natural and socioeconomic environments of the existing Line 3 and the limited benefit that the existing Line 3 provides to Minnesota refineries, it is reasonable to conclude that Minnesota would be better off if Enbridge proposed to cease operations of the existing Line 3, without any new pipeline being built.” [emphasis added]
The facts about Need are:
1. Enbridge Mainline Corridor capacity (6 lines); western Canada thru Minnesota to Superior to Joliet, IL - present capacity of 2,850,000 barrels per day (barrel = 42 gallons)
2. The MinnCan line from Clearbrook to the Twin Cities (and not routed to Superior)
a. design capacity is 465,000 barrels per day; major supplier to Minnesota
b. transports crude from Clearbrook to Flint Hills (Pine Bend) and St. Paul Park refineries, which reportedly operate at 70-80% of design capacity
3. Superior refinery (formerly Murphy Oil)
a. design capacity of 50,000 barrel per day; operating close to 100% of capacity
b. provides product (e.g. gasoline, diesel fuel, etc) to northern Minnesota
4. 85% of Western Canada crude oil “passes through” MN; 15% serves Minnesota needs
5. Need to consider the energy conservation activities and lesser demand for refined crude oil products in next years (DOC/Enbridge used 2019 – 2035)
Are there natural and socioeconomic environments impacts with approving and constructing the proposed Line 3 expansion and replacement pipeline? Water quality is and remains among the highest priorities for the area. Whitefish Area Property Owners Association (WAPOA), Pine River Watershed Alliance, and Crosslake Design Team planning this past year affirmed that water quality is among the highest priorities for this area.
Travel, tourism, visitors, second homeowners, seasonal residents, and local businesses benefit from the attraction to water and waterbased activities, as well as seasonal interests for snowmobiling, four wheeling, hunting, fishing and boating. As shown in the following table with data from the University of Minnesota, the local economy benefits from these activities:
2007-08 Crow Wing
Traveler Exp $294,295,204
State Revenue $135,953,389
FTE Jobs 7,218
Direct Jobs 5,029
Indirect Jobs 2,189
Traveler Exp 245,867,979
State Revenue 113,581,822
FTE Jobs 6,033
Direct Jobs 4,202
Indirect Jobs 1,831
Traveler Exp $540,163,183
State Revenue $249,535,211
FTE Jobs 13,251
Direct Jobs 9,231
Indirect Jobs 4,020
(Source: Univ of MN, Extension Service, June 2007-May 2008, Davidson-Peterson Associates)
Extending this economic analysis to include Aitkin and Hubbard (Park Rapids area), the annual spending is closer to $725 million and tax revenue is $325 million annually.
As noted, Enbridge and Barr Engineering, its subcontractor, three lakes are at risk -- Norway Lake, the Whitefish Chain and Roosevelt Lake -- with the Enbridge preferred route. Barr Engineering also identified water wells within 200 feet of the proposed route, saying studies over the last 20 or 30 years have shown that the effects of a spill spread up to 400-600 feet.
A major risk as defined by Enbridge is pipeline line oil spills. The lakes of and about the Whitefish Chain of Lakes and the Pine River Watershed are some of the clearest and cleanest in Minnesota. Our water resources, both surface and ground water with shallow aquifers, are extremely vulnerable to these adverse impacts and threats from construction, spills and leaks.
Actual incidents are highly predictable and can be devastating to these public waters. In fact, Enbridge’s reported 804 crude oil spills from 1999 to 2010 involving 161,475 barrels of “uncontrolled releases”, or 1.3 spill per week, and 200 barrels and 8400 gallons per spill on the Enbridge system. Since 1968, Minnesota experienced a total of 118 crude oil pipeline spills of one barrel or more with a total of 184,332 barrels spilled in Minnesota, or 1,562 barrels per spill with the last reported in 2009 at Staples.
Enbridge touts property tax revenue as a benefit from taxing easement property with utilities located there. They have provided many varied amounts of property tax revenue. However, Enbridge presently has a property tax refund case before the Minnesota Tax Court, which they have done twice previously, objecting to the property valuation for tax purposes and the amount of property tax paid in a number of counties in northwestern Minnesota. Time will tell whether this property tax revenue is actually the benefit presented in their Line 3 application.
Crude Oil Pipelines or Quality Water? That is the question and issue. This matter is really a “benefit/ cost” decision for Minnesota and the residents of our area. Water quality is our priority, water and oil don’t mix, and WAPOA found the Minnesota Department of Commerce testimony to be accurate at this time – “Enbridge has not demonstrated that the minimal benefits to Minnesota of the proposed project outweigh the high socioeconomic and environmental costs”. Plan to attend the public hearing in Crosslake on October 25 to listen, learn and participate to protect our water and our local economy.
Submitted by Tom Watson, President, Whitefish Area Property Owners Association (WAPOA).
Rebuttal Evidence Reaffirms Need for Line 3 Pipeline Replacement Project
Letter to the Editor:
Today, Oct. 11, 2017, Enbridge submitted rebuttal testimony in support of the Line 3 Replacement Project (Project) before the Minnesota Public Utilities Commission (MPUC) that clearly demonstrates the need for this project to ensure future adequacy, reliability and efficiency of energy supply in Minnesota and neighboring states.
Enbridge’s submission includes additional independent expert testimony that addresses the conclusions drawn by London Economics International, whose testimony on behalf of the Department of Commerce (DOC) was narrow in scope, based on flawed analysis that does not address all the factors in the decision to replace Line 3, and fails to take into account the immediate negative economic and supply consequences to Minnesota were Line 3 to be shut down.
As a state with no source of local supply, the Enbridge system is the exclusive pipeline source of crude supply for Minnesota refineries. There is no excess capacity on Enbridge’s system and demand for capacity is expected to grow even under the most conservative forecasts. The incremental capacity restored by replacing Line 3 will address that growth, help regional refineries remain competitive and meet the energy needs of Minnesotans for decades to come.
Enbridge’s rebuttal testimony addresses a number of key topics:
• Shutting Down Line 3: The suggestion that Line 3 can be shut down without any impact on Minnesota is simply not true. Apportionment and property tax reductions would have an immediate effect on Minnesota. Reduced pipeline capacity would increase rail shipments, with as many as 32 additional mile-long trains every day crossing Minnesota. Additional rail facilities would also be required for refineries to utilize rail shipments. The impact on Minnesota’s agricultural economy would be costly and disruptive as evidenced by the agricultural commerce curtailed in 2013-2014 due to increased crude by rail movements.
• Apportionment: Contrary to the DOC testimony, the Enbridge system, which includes Line 3, is currently full and in apportionment. This means demand for capacity exceeds what’s available, and refineries in Minnesota and the Midwest cannot obtain all the crude supply they request. When refiners can’t get the supply they need, they are either forced to produce less or source it through other more costly modes of transportation, like rail, which drives up costs and impacts their competitiveness. Line 3 will ensure an adequate supply for refiners and enable them to continue to provide the energy Minnesotans need.
• Crude production forecast: Additional independent analysis using multiple crude oil supply forecasts was submitted as part of the rebuttal testimony and shows that even under the most conservative forecasts, Enbridge’s system will remain fully utilized after replacement.
• Alternative pipeline scenarios: None of the pipeline systems identified by the DOC as possible alternatives to a new Line 3 are commercially viable. More importantly, none of the alternatives serve Minnesota or would even supply significant crude oil to refineries in the upper Midwest. Regardless, further analysis included in Enbridge’s rebuttal testimony demonstrates that incremental capacity provided by the Line 3 replacement will be needed even if alternative pipelines are built or expanded.
• Refined product demand: The DOC expert testimony wrongly suggests that reduced demand for gasoline due to increased electric vehicle (EV) utilization will reduce the need for further pipeline capacity. The DOC did not take into account demand for refined products like diesel, jet fuel and asphalt – all products that are important to Minnesota and require refining.
Enbridge’s rebuttal testimony clearly and unequivocally demonstrates that Line 3 is critical energy infrastructure required to meet the energy needs of Minnesota and the Midwest in the years ahead.
This project will involve a $2B investment in Minnesota and result in significant safety and economic benefits to Minnesota and neighboring states. It has the support of communities, landowners, labor and elected officials and is essential to helping ensure Minnesota families and businesses have reliable access to affordable energy now and in the years ahead.
Enbridge has built a robust case that meets the criteria for the Certificate of Need and we look forward to a full and fair hearing of all the evidence.
Communications Supervisor, U.S. Liquids Pipelines & Projects Enbridge