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> Enbridge has estimated that properly deactivating its aging Line 3 pipeline and taking it out of the ground would cost more than $1.2 billion dollars. The com
by pllbnk 6y ago
> Enbridge has estimated that properly deactivating its aging Line 3 pipeline and taking it out of the ground would cost more than $1.2 billion dollars. The company is currently considering simply abandoning it and paying off the landowners involved, which it says would cost a relatively paltry $85 million, but leave corrosive pipes littered underneath the landscape.
How is it possible that even in this day and age such huge infrastructure projects do not account for decommissioning costs and build everything as if it will last forever. It seems that the calculations are made by only incorporating the building and maintenance costs, then subtracting them from revenue and putting everything that remains in the profit line. Then they act surprised when they see a huge amount of money that is required for decommissioning and are not willing to pay even though they have been profitting all along.
Since the projects are meant to last a long time, it's reasonable to include the rate of inflation into the calculations and then not be surprised that the costs are so large.
On a related note, software projects are done the same way. Very often thinking a few steps ahead is frowned upon and written off as "overengineering" although the costs of replacing an obsolete software product with a modern one are also very costly to the company and society.
- brutusborn 6y agoIn my experience with new projects of this kind, these costs are included in economic studies since legislation has changed to make companies pay for decommissioning. This does not solve the problem however, because larger companies can just sell aging assets to smaller companies who then bleed them dry and when the time comes to decommission, declaring bankruptcy. In my opinion the only way to prevent this is to introduce legislation which makes executives liable for cleanup costs in some way. E.g. (1) Force companies to buy "cleanup insurance" , or (2) make it illegal to trade "insolvently" where company assets < Cost(cleanup). Either the executives pay for cleanup or are imprisoned. This is probably a naive policy prescription, I'm sure someone in the field could easily come up with something better.