CALGARY, Alta., Sept. 29 (Reuters) – Enbridge Inc (ENB.TO) announced on Wednesday that its Line 3 pipeline replacement project will begin operation on Oct. 1, the first successful major expansion of export capacity from Canadian crude in six years, removing obstacles that other projects have not been able to overcome.
Its completion is good news for the Canadian energy sector after a number of proposed pipelines, including TC Energy’s Keystone XL (TRP.TO), were scrapped due to environmental opposition and regulatory delays.
The $ 8.2 billion project allows Enbridge to roughly double its capacity to 760,000 barrels per day on the 1,765 km (1,097 mile) pipeline.
Line 3, built in the 1960s, carries oil from Edmonton, Alta., To refineries in the Midwestern United States, but for years it has carried less than its capacity due to age and corrosion. . The project encountered opposition from environmental and Native American groups, especially in Minnesota, the last stage of the expansion.
Construction in the United States and Canada took over seven years to complete, but the project succeeded where other projects failed because it replaced an old line, rather than starting from scratch, Leo Golden, vice president of Enbridge Execution’s Line 3 project, told Reuters in an interview.
“This was a security-focused project to replace an existing and aging infrastructure, which sets it apart from some of these other projects,” Golden said.
The 542-kilometer Minnesota section of Line 3 is the last part of the pipeline to come into service, following previously completed segments in Canada, North Dakota and Wisconsin.
Golden said Enbridge will begin filling the line on October 1 and deliver a full capacity of 760,000 barrels per day in November. Earlier this month, the company told shippers it would offer 620,000 bpd of crude capacity in October. Read more
He said that in the future, increasing capacity by optimizing and expanding existing pipelines would likely be the way forward for the industry, given the challenges of building new infrastructure, a point of view echoed by union leaders in the United States.
“The maintenance industry is our future, the lifeline of the oil and gas (pipeline) industry,” said Phillip Wallace, sales representative for Pipeliners Union 798, who worked on the project in Minnesota. “Line 3 was the big boy that really needed to be replaced.”
The completed project assures Canadian producers that their growing production of oil sands crude will have access to US markets and global exports via the US Gulf of Mexico coast.
Line 3 is the first major Canadian pipeline expansion to be completed since Enbridge’s Alberta Clipper project, completed in 2015. However, since 2019, Enbridge has also optimized portions of its existing mainline, adding approximately 150,000 b / d of capacity.
The Line 3 replacement project was first announced in 2014, but has faced stiff opposition from environmental groups and Native American tribes, particularly in Minnesota. Read more
US President Joe Biden, who revoked a key permit for the Keystone XL pipeline earlier this year, has been criticized by some environmental groups for allowing the project to continue. They argue that the United States should reduce its dependence on fossil fuels to fight climate change. Read more
“President Biden and the other politicians who chose to do nothing because treaty rights were violated, waterways were polluted and peaceful protesters were brutalized have taken the wrong side of history. Sierra Club spokesperson Margaret Levin said in a statement.
However, the project was celebrated by unions, whose members benefited from thousands of jobs during construction, and the Canadian energy sector, which in the past has struggled with bottlenecks. pipelines that lowered the price of Canadian crude and contributed to an exodus of foreign capital.
“This is a huge boost for the industry,” said Martin King, analyst at RBN Energy. He said the projected growth of Canada’s tar sands suggests the industry will only need one more major pipeline expansion, which will be the Canadian government-owned Trans Mountain expansion on the west coast.
Robert Fitzmartyn, head of energy research at Stifel FirstEnergy, said he expected the completion of Line 3 to have a positive impact on stocks of Canadian oil companies over the long term.
Reporting by Nia Williams in Calgary and Arunima Kumar in Bengaluru; Editing by Shailesh Kuber and Anil D’Silva
Our Standards: Thomson Reuters Trust Principles.