Enbridge eyes third oil pipeline project through northern Minnesota

Enbridge Energy is proposing its largest pipeline project ever to transport more Canadian tar sands heavy crude to the U.S., the third major oil pipeline expansion or replacement it's planning across northern Minnesota.

The Calgary-based company this week proposed spending $7 billion to replace its 46-year-old Line 3 pipeline, which runs from near Edmonton to Clearbrook, Minn., on to Superior, Wis.

The thousand-mile pipeline was originally built to move 760,000 barrels of heavy crude a day. But it now requires regular maintenance, and because of reduced pressure currently transports only 390,000 barrels a day. The replacement line would restore the pipe's original capacity.

"You can think of this project as providing a needed buffer to deal with unplanned disruptions, maintenance, and additional scheduling flexibility that our shippers require," said Enbridge Energy Partners President Mark Maki in a conference call with analysts Tuesday.

The company says without the replacement pipeline, it would need to spend $1.1 billion on maintenance by 2017, including $100 million on the U.S. side.

Environmental groups quickly objected to the expansion plan.

"Will this new pipeline 'significantly exacerbate' carbon pollution? Of course it will," Sierra Club staff attorney Doug Hayes said in a statement. "Doubling the size of a pipeline that carries toxic, corrosive tar sands crude will require a full environmental review and will meet the same level of scrutiny and opposition as the other proposed tar sands pipeline projects."

Hayes said Enbridge will need to apply to the U.S. State Department for a so called "presidential permit" for the Line 3 improvement, because it crosses the U.S.-Canadian border.

Enbridge spokeswoman Lorraine Little said the company does not believe it needs an amended permit. She said their existing permit allows for maintenance of the line to restore it to its original capacity.

But this is more than a maintenance project because it will nearly double the amount of oil the pipeline can currently carry, said Beth Wallace with the National Wildlife Federation. "This pipeline was put in place in the 60s, so the environmental review that it went under is nowhere near as good as it is today," Wallace said.

"For them to try to bypass the presidential permit process is only a benefit to them," she added. "It excludes the public from engaging in whether we want this pipeline or not."

Enbridge is also planning to expand its Alberta Clipper pipeline that also runs to its hub in Superior, Wis. That line currently carries 450,000 barrels a day. Enbridge proposes expanding that to 800,000 barrels per day.

Little said the company is experiencing delays in acquiring the needed State Department permit for the Alberta Clipper line.

The company initially expected that permit to be approved in mid-2014, but that now could take longer because of increased environmental scrutiny of projects like the Keystone XL pipeline that carry heavy crude from the Canadian tar sands region into the U.S.

The company has also proposed a new pipeline called Sandpiper to carry oil from the booming Bakken fields in North Dakota across northern Minnesota. That project requires approval from the Minnesota Public Utilities Commission.

Enbridge said it hoped to complete the Line 3 expansion by the second half of 2017.

With oil sands production expected to nearly triple to more than 5 million barrels per day by 2030, Enbridge is eager to build now for the future, said Sandy Fielden, a consultant with RBN Energy in Austin, Texas.

"That's why they're looking into these pipeline systems, making changes, looking at repairing and replacing pipelines," Fielden said.

Legal delays, however, may give rail companies more time to move in on the business, said David McColl, an analyst with the investment research firm Morningstar.

For the past several years, he noted, trains have only moved about 25,000 barrels of oil per day from Alberta, but last year that surged to 175,000 barrels. That could rise to more than 500,000 barrels daily, he added, if pipeline building slows.