A Minnesota judge has agreed that the Enbridge Line 3 replacement project is necessary, but has rejected the Calgary-based company’s preferred route. Enbridge graphic.
Enbridge Line 3 project valued at $8.2 billion
On Monday, a Minnesota judge ruled that the Enbridge Line 3 pipeline replacement project was necessary, but she also ruled that the company would have to use the existing right of way, instead of its preferred route.
Judge Ann O’Reilly of the Minnesota Office of Administrative Hearings for the Public Utilities Commission ruled in favour of the project. Under her recommended route, the existing pipeline would need to be removed and a new one put in its place.
The current pipeline which was built in the 1960s, transports Alberta crude oil into Wisconsin where it is then shipped to US Gulf Coast refineries.
The replacement and expansion of the pipeline that begins in Hardisty, Alberta and ends at Superior, Wisconsin is valued at $8.2 billion. The new pipeline would double the capacity of the existing line to 760,000 barrels per day (b/d).
Concerning Enbridge’s decision to replace and expand the pipeline, the Minnesota Public Utilities Commission wrote that “Line 3 … is old, needs significant repair, and poses significant integrity concerns for the state.”
“Accordingly, the judge finds that replacement of the line is a reasonable and prudent action.”
Enbridge initially asked it be allowed to leave the current Line 3 pipeline in the ground while it lays new pipe and that it be permitted to follow a new route.
Judge O’Reilly argued that keeping the existing pipeline corridor would cut down the risk of a spill. As well, sticking with the original route would mean a new pipeline would not be built in an environmentally sensitive part of the state and it would also “prevent the abandonment of nearly 300 miles of steel pipeline.”
After the ruling, Enbridge said in a statement that it was “pleased” that Judge O’Reilly saw the need for “this safety-driven maintenance project.” Enbridge did not comment on the route recommendation.
“We will be taking time to review, in more detail, the recommendation that we use the existing right-of-way, and will have additional comments to follow,” said Enbridge’s statement.
The project has faced opposition from the state, Native American tribes and environmentalists who question whether the pipeline replacement is necessary.
Following the decision, shares in the Calgary-based company fell by over four per cent.
Enbridge’s obstacles come soon after Kinder Morgan stopped work on its Trans Mountain expansion project, pending a May 31 decision on whether the project will go ahead. The company shut down construction due to prolonged opposition from various levels of government in British Columbia, despite having gained federal approval of the project.
Canadian oil producers are desperate for more pipeline capacity as Alberta oil sands output continues to rise and a lack of access to rail transportation has resulted in bottlenecks and a wider discount to US WTI benchmark.
Following the ruling, shares of Enbridge were down 4.55 per cent.