Beleaguered Canadian exporters won a verdict Monday that favors new pipeline construction across Minnesota, as long as sponsor Enbridge Inc. confines the work to replacing a half-century-old conduit inside its original route.
An administrative law judge of the Minnesota Public Utilities Commission (PUC), Ann C. O’Reilly, recommended strictly limited approval of Enbridge’s Line 3 replacement program as “a reasonable and prudent action.”
So long as the project sticks to “in-trench replacement,” the judge said, “the benefits to Minnesota refiners, refiners in the [Midwest] region, and the people of Minnesota slightly outweigh the risks and impacts of a new crude oil pipeline.”
The recommendation rejected an Enbridge preference that would have created a new route for 47% of Line 3’s current 282-mile path across Minnesota, lengthening the state’s share of the export pipeline to 337 miles.
The Line 3 replacement stands out as the biggest project in Enbridge’s 69-year history, with a total budget of $7.5 billion for upgrading the entire 1,660-kilometer (1,031-mile) export conduit in Alberta, Saskatchewan and Manitoba as well as North Dakota, Minnesota and Wisconsin.
A final decision by the full Minnesota PUC is scheduled for June. The Minnesota Department of Commerce last fall had recommended the state shut down and not approve the pipeline replacement project.
The preliminary verdict keeps a door open for the replacement project to increase Line 3 exports by Canada’s biggest and most controversial natural gas consumer, Alberta thermal oilsands plants, by 370,000 b/d to 760,000 b/d.
In the industry capital of Calgary, the Minnesota ruling shined a ray of hope through gloom spread by suspension of construction on Kinder Morgan Canada Ltd.’s politically stalled tripling of capacity on Trans Mountain Pipeline to 890,000 b/d.
The Canadian legs in the Line 3 replacement and the Trans Mountain project both received approval from the federal cabinet in Ottawa in late November 2016, but they have faced persistent resistance.
American versions of environmental and native opposition to oilsands growth-enabling pipeline additions figured in the Minnesota recommendation. In turning down Enbridge’s request for a changed route, the judge emphasized that an improved Line 3 only suited the state if the project stopped short of intruding into areas where the industry has no well established role.
“The abandonment of the old Line 3 and the creation of a new corridor leaves open the possibility of thousands of miles of Enbridge pipelines someday being abandoned in-place when they are no longer economically useful,” wrote O’Reilly.
“This is particularly true in a carbon-conscious world moving away from fossil fuels; a move that Minnesota aspires to follow.”
The judge also pointed out that in addition to state approval Enbridge needs construction permits from two Indian reserves, and later would have to seek renewal of easements to cross native land that expire in 2029. The company’s Minnesota corridor holds a total of five pipes that make up its mainline export system.
Even the limited approval recommendation prompted an immediate outcry from groups that have fought the project for years such as the Sierra Club’s Minnesota chapter, Honor the Earth, and native rights factions. Enbridge was studying the ruling and made no immediate response.
The Minnesota crossing is about 90% of the $2.9 billion Line 3 program in the United States. The rest of the U.S. work would be on replacing short legs in North Dakota and Wisconsin that qualified as maintenance and do not require full-blown regulatory approval processes.