Line 3 replacement pipeline to boost oil flow to U.S. gets conditional approval

CALGARY – A National Energy Board panel has decided it’s in the national interest for Enbridge Inc. to proceed with the largest project in the company’s history, which could enable hundreds of thousands more barrels of Canadian crude to flow into the U.S. a day.

The federal watchdog is recommending Ottawa approve the Canadian portion of the Line 3 Replacement project, saying it is not expected to cause significant environmental harm. However, it has attached 89 conditions.

The whole $7.5-billion undertaking involves removing a half-century-old, 1,660-kilometre stretch of pipe from service between Hardisty, Alta., and Superior, Wisc., and building a new pipeline along the same route.

Enbridge (TSX:ENB) aims to ship 760,000 barrels a day through the newer pipe — about double what the aging Line 3 currently is able to move, due to pressure restrictions.

“The hearing panel is of the view that replacing the existing Line 3 pipeline is an important step in the life cycle of the pipeline,” NEB chief environment officer Robert Steedman said Monday.

“The new pipeline will be built to modern standards and will operate with improved safety and reliability, which is a significant benefit of the project.”

Many of the conditions have to do with ensuring the 1960s-era pipeline is taken out of service safely and does not pose any environmental issues in its dormant state.

Line 3 is one of six arteries that make up Enbridge’s Canadian mainline, which moves Alberta crude east. The NEB has decided it’s better to keep the old, emptied out pipeline in the ground once the new one starts up, rather than remove it, to avoid any potential damage to other nearby infrastructure.

Several other conditions are centred around ongoing aboriginal and landowner consultation.

Federal Natural Resources Minister Jim Carr said new pipeline review rules, announced by the Liberal government in January, apply to the Line 3 project. A 30-day comment period on a draft analysis of the project’s greenhouse gas emissions is now open. A final decision is expected in the fall.

“Project reviews and consultation must be thorough to carry the public’s trust. Now that the NEB has completed its review, the government will take additional steps to determine if the project is in the national interest,” Carr said in a statement.

Conservative natural resources critic Candice Bergen urged the government to approve the pipeline as quickly as possible.

“The NEB is the strongest regulatory body in the world, and the board’s experts have concluded that the Line 3 replacement can be completed safely and responsibly,” she said in a statement.

“It is time for the Liberal government and the minister to step up and take action by approving this pipeline.”

There are separate U.S. permitting processes that the project must undergo before construction can begin. Regulatory wrangling in Minnesota has already delayed its planned startup by two years to 2019.

Environmental groups and Ojibwe communities in northern Minnesota have sought to stymie Line 3 — along with other Enbridge pipelines — through a variety of legal and regulatory means.

A higher-profile cross-border project — TransCanada’s Keystone XL proposal — was rejected by the Obama administration in November on the grounds it would undermine U.S. efforts to combat climate change without delivering significant economic benefits.

The existing Line 3 already has a presidential permit, the approval TransCanada (TSX:TRP) painstakingly sought for eight years.

Critics have argued that because the replacement project would significantly increase the amount of Canadian crude crossing the border, it should be subject to the same process as Keystone XL.

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