Enbridge's Line 3 construction begins, emergency stay denied

Houston — Enbridge said Dec. 7 that early construction on the Line 3 pipeline replacement project has begun and will continue, now that the Minnesota utility commission denied an emergency stay request to halt work on the crude oil system.

Although some litigation remains ongoing, the Minnesota Public Utilities Commission voted 4-1 to reject the stay request from the Red Lake White Earth Bands of Chippewa after the northern Minnesota tribes argued it was unsafe to proceed with construction near their communities during the ongoing coronavirus pandemic.

"The decision was a reconfirmation of the Minnesota Public Utilities Commission's previous approvals for the replacement of Line 3," said Enbridge spokeswoman Juli Kellner in a statement. "We hope all parties will now accept the outcome of this thorough, science-based review of Line 3."

The pipeline is one of the key pending projects that would serve as a larger artery to move more heavy crude oil from Canada to the Midwestern US and, ultimately, to the major refining corridor along the US Gulf Coast.

Kellner noted that construction work is already underway in northern Minnesota and will ramp up in the weeks ahead with a goal towards completing the project within nine months.

The $6.75 billion Line 3 replacement project would increase crude pipeline capacity from 370,000 b/d now up to 760,000 b/d as it moves Canadian crude from Alberta to Superior, Wisconsin. The pipeline runs more than 1,000 miles, including its largest 337-mile segment in Minnesota.

Political timing

When Enbridge CEO Al Monaco was asked recently whether President-elect Joe Biden could slow or halt the Line 3 developments, Monaco said he was confident the project would proceed with all of the permitting completed by the end of 2020.

Biden has publicly opposed the competing and more famous Keystone XL Pipeline project by TC Energy, but he has not weighed in on Line 3.

Some energy analysts have contended Keystone XL is unnecessary if both Line 3 and Canada's Trans Mountain pipeline expansion projects are completed as planned.

Enbridge completed the $3.75 billion Canadian portion of Line 3 last year and the remaining construction is expected to last six to nine months. Keystone construction also is finished on the Canadian side of the border.

Despite the coronavirus pandemic, Monaco has contended there is plenty of crude oil pipeline demand that will return as soon as the pipeline is in service. He said the oil sands region of Alberta was facing significant pipeline shortages before the pandemic took hold.

Indeed, Canada's crude-by-rail exports fell from an all-time high of 411,991 b/d in February to an eight-year low of 38,867 b/d in July. Exports have since rebounded to nearly 95,000 b/d in September, according to the Canada Energy Regulator.