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Enbridge: Line 3 replacement likely won't be in service until second half of 2020

Last Updated Mar 4, 2019 at 7:19 am MDT

FILE - In this June 8, 2017, file photo, fresh nuts, bolts and fittings are ready to be added to the east leg of the pipeline near St. Ignace as Enbridge prepares to test the east and west sides of the Line 5 pipeline under the Straits of Mackinac in Mackinaw City, Mich. Legislation that would facilitate the replacement the Line 5 pipeline in the Great Lakes is headed to Michigan Gov. Rick Snyder's desk. The Republican-led Legislature approved the bill Tuesday, Dec. 11, 2018. (Dale G Young/Detroit News via AP, File)
Summary

A lack of export pipeline space was blamed for steep discounts in western Canadian oil prices last year.

Two weeks ago, the Calgary-based company expressed confidence the project would be in service at the end of the year.

The project will transport crude from Alberta to Wisconsin, where it will connect with pipelines to the U.S. Gulf Coast.

A pipeline that Alberta has been counting on to ease the bottleneck in moving its crude oil to foreign markets won’t be in service for at least another year, according to its owners.

Enbridge Inc. says in a news release that the timeline for construction of the Line 3 replacement likely won’t see the pipeline operational until the second half of 2020.

Just two weeks ago, the Calgary-based company expressed confidence that the project would be in service by the end of this year.

But Enbridge now says it is revising its construction schedule, following information provided by the State of Minnesota on Friday about its timeline for granting remaining environmental permits.

Enbridge says the state indicates the permits should be available by November, and the company anticipates the remaining federal permits it needs will be finalized approximately 30 to 60 days later.

The project will transport crude from Alberta to Wisconsin, where it will connect with pipelines to the U.S. Gulf Coast. It’s designed to replace an aging pipeline and restore its original capacity of 760,000 barrels per day, an increase of about 370,000 bpd.

“We now have a firm schedule from the state on the timing of the remaining permits for our Line 3 Replacement project,” Enbridge CEO Al Monaco said in a statement.

“We support a robust and transparent permitting process that includes an opportunity for public input. We’ll continue to work closely with state officials during this process.”

The company says more specific timing on the in-service date, as well as any potential impacts on its 2020 financial outlook, will be provided once the revised construction schedule is finalized.

A lack of export pipeline space was blamed for steep discounts in western Canadian oil prices last year, leading to production curtailments by the Alberta government that began Jan. 1.

READ MORE: B.C. First Nation affected by pipeline explosion files lawsuit against Enbridge

Premier Rachel Notley said when she announced the cuts that they would last until Dec. 31, 2019 — when Line 3 was expected to be up and running.

Two other pipelines, the Trans Mountain expansion and the Keystone XL project, are both in limbo after being stalled by court decisions in Canada and the U.S.

Last month, Minnesota Gov. Tim Walz announced that his commerce department would petition the state Public Utility Commission to reconsider its approval of Line 3 through Minnesota, prolonging a process begun by his predecessor.

Previous challenges by the former governor were set aside by the commission.

Companies in this article: (TSX:ENB)

The Canadian Press