A worst-case oil spill on Enbridge's planned new oil pipeline across northern Minnesota would cost an estimated $1.4 billion, a little more than the price of the company's mammoth spill in Michigan eight years ago.
Enbridge was required to come up with the worst-case scenario by the Minnesota Public Utilities Commission (PUC), which conditionally approved the company's new Line 3 pipeline in June.
Calgary, Alberta-based Enbridge filed the cost estimate Tuesday with the PUC, noting that the worst-case spill would involve pipeline ruptures near the Red, Mississippi or Red Lake rivers. The PUC will use the information in determining Enbridge's financial liabilities for a major spill.
Before the PUC signs off completely on the controversial $2.6 billion Line 3 project, Enbridge has to meet several conditions, and the most critical involves its corporate guarantee and insurance coverage for spills.
To calculate the worst case, Enbridge assumed a "full-bore rupture scenario where the pipeline is shut down and isolated after 13 minutes from the release occurring," the company said in a PUC filing. In that 13 minutes, "a conservative response time," the break would be detected, pumps would be shut down and valves closed, the filing said.
The largest costs would involve mopping up environmental damage, including spill containment site cleanup and remediation. The damage costs incurred by businesses located near a pipeline break also would be significant, as would costs to Enbridge's reputation, the filing said.
"The report confirms Enbridge has the ongoing financial ability to cover cleanup costs in the unlikely event of a worst-case pipeline release in a high consequence area," the company said in a statement. "This engineering analysis, by design, did not take into account timely response or mitigation efforts."
The company's disaster analysis did not pinpoint specific locations on the pipeline's 340-mile route from Kittson County in far northeastern Minnesota to Enbridge's terminal in Superior, Wis. But it said the worst spills would be at water crossings, particularly at the three rivers that the pipeline would cross.
An Enbridge pipeline rupture in southwestern Michigan in 2010 spilled 834,000 gallons of oil into a tributary of the Kalamazoo River. It was one of the worst onshore U.S. oil spills and cost the company $1.2 billion to clean up. The National Transportation Safety Board concluded that Enbridge did not adhere to its own safety procedures.
The company's last major oil spill in Minnesota was in 2002, when the current Line 3 ruptured and spilled 252,000 gallons.
Line 3 is aging and corroding and operating at only 51 percent capacity. Enbridge wants to replace it, and the PUC agreed that the old pipeline's condition merited the construction of a new one.
The new pipeline, which would transport Canadian oil, has been fiercely opposed by environmental groups and some Indian tribes who fear it will open a new region of Minnesota' lakes and rivers to threat of oil spills.