CALGARY – 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 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.
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.
Mike McKinnon, a spokesman for Alberta’s energy minister, acknowledged in an email that the delay in Line 3 was a “setback” but said the government is confident the pipeline will be completed.
McKinnon also defended the NDP government’s decision last month to lease tanker cars to ship its oil by rail — a move criticized by Opposition Leader Jason Kenney of the United Conservatives as being too risky.
“As we lead the charge for pipelines, this kind of uncertainty is exactly why we have a plan to move more oil by rail until new pipelines are built, and we call on Jason Kenney to stop his reckless attempt to sabotage this plan for his own political self-interest,” McKinnon wrote.
“We need to move more of our product, not produce less.”
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)