Providing coverage of Alaska and northern Canada's oil and gas industry
July 2018

Vol. 23, No.27 Week of July 08, 2018

Line 3 gets regulator OK

Enbridge clears major hurdle, but faces threats from indigenous tribes, enviros

Gary Park

for Petroleum News

Calgary-based Enbridge has edged closer to final government approval in Minnesota of its US$7 billion plan to restore capacity to 760,000 barrels per day on its aging line and equally closer to a threatened showdown with indigenous tribes and environmentalists.

The state’s five-member Public Utilities Commission voted unanimously to approve plans to replace the corroded 50-year-old, 1,000-mile pipeline from Alberta to U.S. Midwest refineries in Minnesota and Wyoming, overriding concerns raised by Minnesota’s Commerce Department and others that Enbridge had failed to demonstrate need for the expansion.

However, commission chairwoman Nancy Lange said Enbridge’s rationing of demand from oil shippers for space on Line 3 was proof of the need to rebuild, although some commissioners voiced doubts that demand for crude oil and refined products would grow enough to warrant the project.

In a separate 3-2 decision the commission approved Enbridge’s preferred route for the new line south of the existing corridor, recommending only slight changes, meaning that the company could avoid further delays and added costs.

Prospect of clashes

Despite those gains, Enbridge faces the prospect of clashes with Native Americans, who oppose the project because of concerns about spills and the impact on tribal wild rice harvesting areas and interrupted the commission hearings with shouts of “Shame on you, you cowards.”

Winona Laduke, an Ojibwe and executive director of Honor the Earth, said the regulatory decision is “an act of aggression by the Minnesota government and we will do what we need to legally protect our land,” while the Fond du Lac tribe has vowed to appeal the commission’s decision.

In a change from its original plans, Enbridge has pledged to remove segments of the old pipeline if asked to do so by landowners, while stopping short of offering to dig up the entire system at a cost of US$1.28 billion.

The company had no immediate comment on the outcome of a regulatory process that has lasted four years, although Chief Executive Officer Al Monaco has made it clear that Line 3 is a vital part of Enbridge’s C$22 billion growth plan and its strategy for reducing a debt burden.

Flow could begin in 2019

Enbridge has indicated that crude could flow on the new line by late 2019 but warned that any further changes ordered by the state to the company’s preferred route could extend the completion over “multiple construction seasons.”

Public utilities commissioner Matt Schuerger said that regardless of Enbridge apportionment of space on the existing line refineries are “clearly” still getting oil and have “zero” idle capacity at their facilities.

Eric Swanson, a Minneapolis-St. Paul attorney for Enbridge, said railroads have been supplying crude to the region’s refineries because of rationing by Enbridge.

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