Purpose

This bill adds new requirements to the certificate of need process for petroleum pipelines. It requires the Public Utilities Commission (PUC) to review and require detailed energy demand forecasts for pipelines that transport crude oil, motor fuel, or other refined petroleum products. The goal is to ensure project proposals are justified by long-term demand and consider future energy trends, prices, and changes in transportation infrastructure.

Main Provisions

• Applicability

  • Applies to applicants seeking a certificate of need (CN) for pipelines that transport crude oil, motor fuel, or other refined petroleum products.

• Demand forecasts for motor fuel

  • Applicants must include separate annual demand forecasts for motor fuel for Minnesota and for contiguous states (Iowa, North Dakota, South Dakota, Wisconsin) for each year of a 15-year forecast period.
  • The forecast period starts in the year the CN application is filed and lasts 15 consecutive years.
  • Forecast factors to be used (for each year, separately for Minnesota and contiguous states) include:
  • Population
  • Vehicle miles traveled (VMT), including trends in remote work and mass transit ridership, and any VMT reduction targets in the statewide multimodal transportation plan
  • Fuel intensity and efficiency of motor vehicles using motor fuel
  • Penetration rates of electric vehicles, considering incentives for vehicles and charging stations
  • Capacity expansion plans proposed by a refinery to receive crude oil from the proposed pipeline
  • World crude oil prices and pipeline supply sources
  • The impact of price changes on demand
  • The applicant must specify underlying assumptions and provide a narrative describing how changes in these assumptions could affect the forecast results, including:
  • Crude oil prices in the United States, Canada, and globally
  • Changes in crude oil transportation infrastructure out of Western Canada and into or out of Minnesota and contiguous states

• Demand forecasts for other refined petroleum products

  • Applicants must also include separate annual forecasts for other refined petroleum products for Minnesota and contiguous states, for each year of the forecast period.
  • These forecasts must be derived from forecasts of the factors that influence consumer demand for each product.

• Definitions (key terms used in the forecast requirements)

  • Application: an application for a CN filed under the relevant statute to construct a pipeline that transports crude oil, motor fuel, or other refined petroleum products.
  • Calendar day: a measure of daily refinery capacity that accounts for downtime for maintenance.
  • Contiguous states: Iowa, North Dakota, South Dakota, and Wisconsin.
  • Demand: the quantity of motor fuel or other refined petroleum products from the applicant’s facilities that Minnesota and contiguous-state consumers are willing and able to purchase, including any quantities placed in interim storage.
  • Electric vehicle: as defined in applicable law.
  • Forecast period: the 15 consecutive years following the year the CN application is filed.
  • Fuel efficiency: the distance a motor vehicle can travel on one gallon of motor fuel.
  • Motor fuel: a liquid fuel derived from petroleum used to propel a motor vehicle; excludes certain forms of natural gasoline as defined by existing law.
  • Motor vehicle: as defined in applicable law.
  • Other refined petroleum product: a product other than motor fuel produced from crude oil at a refinery.
  • Refinery: a facility that processes crude oil into motor fuel and other refined petroleum products.
  • Remote work: work performed from a location other than the usual place of employment one or more days per week.

Impact and Significance

• Enhanced due diligence: The PUC will require more thorough, long-range demand analysis for pipeline projects, tying project viability to modeled future demand.
• Focus on trends and policy goals: The forecasts must consider remote work, transit use, EV adoption, and statewide transportation planning targets.
• Price and infrastructure sensitivity: Projections must include how changes in crude oil prices and transportation infrastructure could affect demand.
• Burden on applicants: Pipeline project sponsors will need to collect and present detailed data, assumptions, and narrative descriptions to support CN requests.

What It Would Change in Law

• The bill adds a formal set of required elements and methods for forecasting oil and refined petroleum product demand in CN applications.
• It explicitly ties energy demand to broader energy and transportation trends, including EVs, transit, and policy targets.
• It broadens the information the PUC can rely on when evaluating whether a pipeline project is needed.

Practical Considerations

• Data complexity: Applicants must assemble long-term, year-by-year forecasts (15 years) for two geographic regions with multiple contributing factors.
• Policy alignment: Forecasts must reflect current and anticipated policies, incentives, and infrastructure developments related to energy and transportation.

Relevant Terms - certificate of need - Public Utilities Commission - pipeline - crude oil - motor fuel - other refined petroleum products - demand forecasts - forecast period - calendar day - contiguous states - population - vehicle miles traveled - remote work - mass transit ridership - statewide multimodal transportation plan - fuel efficiency - electric vehicle - refinery - capacity expansion plans - world crude oil prices - supply sources - underlying assumptions - application - consumer - refinery downtime - interim storage facilities