By November 7, 2017 0 Comments Read More →

Line 3 pipeline in jeopardy as Minnesota Department of Commerce argues project ‘not necessary’

enbridge

Alberta politicians at Enbridge Line 3 pipeline construction site in August, 2017 Photo:Alberta Govt.

Project will involve $2 billion investment in Minnesota, $8.4 billion total

Enbridge submitted rebuttal testimony in support of the Line 3 Replacement Project before the Minnesota Public Utilities Commission (MPUC) in response to the Minnesota Department of Commerce(MDC) testimony that Line 3 pipeline is not needed, according to an Enbridge press release.

Enbridge’s Line 3 pipeline construction began in Alberta in Aug. after getting Canadian provincial and federal approval, even though it has yet to receive regulatory approval in the U.S.

Enbridge built the existing Line 3 in the 1960s, a part of its Mainline system, which consists of 4,100 miles of pipeline that currently ships an estimated 2.4 million barrels of crude oil a day from the Alberta oil sands.

After over 50 years in operation, it has severely eroded and crack, causing many failures and necessitating more than 950 excavations in the last 16 years, according to MPRNews.

Enbridge’s submission includes additional independent expert testimony that addresses the conclusions drawn by London Economics International, whose testimony on behalf of the Department of Commerce (DOC) was narrow in scope according to Enbridge.

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“In light of the serious risks and effects on the natural and socioeconomic environments of the existing Line 3 and the limited benefit that the existing Line 3 provides to Minnesota refineries, it is reasonable to conclude that Minnesota would be better off if Enbridge proposed to cease operations of the existing Line 3, without any new pipeline being built,” the MDC wrote in testimony submitted to the Public Utilities Commission, according to Duluth News Tribune.

Enbridge is countering saying the Department of Commerce was relying on a flawed analysis that does not address all the factors in the decision to replace Line 3 and fails to take into account the immediate negative economic and supply consequences to Minnesota were Line 3 to be shut down.

As a state with no source of local supply, the Enbridge system is the exclusive pipeline source of crude supply for Minnesota refineries.

There is no excess capacity on Enbridge’s system and demand for capacity is expected to grow even under the most conservative forecasts, according to Enbridge.

The incremental capacity restored by replacing Line 3 will address that growth, help regional refineries remain competitive and meet the energy needs of Minnesotans for decades to come.

Enbridge’s rebuttal testimony addresses a number of key topics:

  • Shutting Down Line 3: The suggestion that Line 3 can be shut down without any impact on Minnesota is simply not true. Apportionment and property tax reductions would have an immediate effect on Minnesota. Reduced pipeline capacity would increase rail shipments, with as many as 32 additional mile-long trains every day crossing Minnesota. Additional rail facilities would also be required for refineries to utilize rail shipments. The impact on Minnesota’s agricultural economy would be costly and disruptive as evidenced by the agricultural commerce curtailed in 2013-2014 due to increased crude by rail movements.
  • Apportionment: Contrary to the DOC testimony, the Enbridge system, which includes Line 3, is currently full and in apportionment. This means demand for capacity exceeds what’s available, and refineries in Minnesota and the Midwest cannot obtain all the crude supply they request. When refiners can’t get the supply they need, they are either forced to produce less or source it through other more costly modes of transportation, like rail, which drives up costs and impacts their competitiveness. Line 3 will ensure an adequate supply for refiners and enable them to continue to provide the energy Minnesotans need.
  • Crude production forecast: Additional independent analysis using multiple crude oil supply forecasts was submitted as part of the rebuttal testimony and shows that even under the most conservative forecasts, Enbridge’s system will remain fully utilized after replacement.
  • Alternative pipeline scenarios: None of the pipeline systems identified by the DOC as possible alternatives to a new Line 3 are commercially viable. More importantly, none of the alternatives serve Minnesota or would even supply significant crude oil to refineries in the upper Midwest. Regardless, further analysis included in Enbridge’s rebuttal testimony demonstrates that incremental capacity provided by the Line 3 replacement will be needed even if alternative pipelines are built or expanded.
  • Refined product demand: The DOC expert testimony wrongly suggests that reduced demand for gasoline due to increased electric vehicle (EV) utilization will reduce the need for further pipeline capacity. The DOC did not take into account demand for refined products like diesel, jet fuel and asphalt – all products that are important to Minnesota and require refining.

Line 3 has the support of communities, landowners, labour and elected officials and is essential to helping ensure Minnesota families and businesses have reliable access to affordable energy now and in the years ahead, said Enbridge in closing.

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