Vol. 25, No.50 Week of December 13, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Enbridge wasting no time

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Enbridge swings into action on construction of Line 3 after final regulatory approvals; observers edgy about prospect of showdown

Gary Park

for Petroleum News

Enbridge started work Dec. 2 on replacing the U.S. portion of its corroding Line 3 crude pipeline from the Alberta oil sands to Superior, Wisconsin, after gaining what proponents view as their final U.S. permits.

But it’s still too soon to close the book on a protracted battle for approval of plans to raise capacity on the system to 790,000 barrels per day from the existing 390,000 bpd.

“Until the barrels are freely flowing, we should take nothing for granted,” said Tim McMillan, chief executive officer of the Canadian Association of Petroleum Producers.

It’s still possible Line 3 will encounter state and federal legal hurdles, along with the prospect that Native and environmental protesters will delay the start of service from mid-2021 to 2022, according to a note by Height Commentary.

Latest green lights

The latest green lights came from Minnesota state agencies in mid-November and the U.S. Corps of Army Engineers at the end of November, followed on Dec. 3 by a 4-1 vote of a Minnesota Public Utilities Commission panel to deny a request from two tribes to prevent Enbridge from moving forward with construction.

The PUC regulators said further stalling work would hurt some of the 4,200 workers who are moving into northern Minnesota.

“I think it would be an unconscionable disregard for the irreparable harm to these workers if the commission grants a motion to stay,” said Commissioner Valerie Means. “I will not support … driving these workers into unemployment when work is available, can be done safely and there’s no credible evidence to the contrary.”

However, the PUC has warned Enbridge not to engage in “counterinsurgency tactics of misinformation campaigns designed to interfere with the public’s legal exercise of constitutional rights.”

Leaders of the activists anticipate strong police and private security responses to protests and fear a crackdown that would match the one near the Standing Rock Sioux Reservation in 2016 during resistance to the Dakota Access pipeline.

Commercial operations in Canada

The Canadian portion of Line 3 began full commercial operations Dec. 3 of its C$5.3 billion, 600-mile development across the Canadian Prairies. The U.S. section from North Dakota to Wisconsin is expected to cost US$2.9 billion. Final construction is expected to take another six to nine months.

Leo Golden, Enbridge’s vice president of major projects, said the regulatory progress is “proof of what can be achieved when people come together with an open mind and a willingness to talk and to build, rather than to take apart. It’s been a very long road and it certainly wasn’t easy.”

He said Line 3 will not be able to reach its full design capacity until Enbridge has replaced its existing line in Minnesota.

The new capacity is desperately needed by the oil sands industry that is relying on crude-by-rail shipments to move barrels into the U.S while producers face another year of government-mandated production cuts to offset low crude prices.

“Any incremental market is absolutely welcomed from an upstream producer perspective,” said Ben Brunnen, vice president of CAPP.

Mark Oberstoetter, with the energy consultant Wood Mackenzie, said progress on Line 3 is “permission (for the industry) to grow again” and attract new investment.

However, consultant IHS Markit observed that it has taken an average of seven and a-half years from when filings were made to obtain regulatory approvals, and more than 10 years for Keystone XL.

Kevin Birn with IHS said expanding the existing Keystone system, building the U.S. portion of Line 3 and adding 50,000 bpd to Enbridge’s Express system could potentially see an extra 400,000 bpd of pipeline space come on stream in 2021.

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