A Minnesota regulator has confirmed its approval of Enbridge Inc’s Line 3 crude oil pipeline replacement, allowing the $7 billion project that will ship more barrels out of western Canada to move forward, the company said on Wednesday.
The Minnesota Public Utilities Commission initially approved Enbridge’s plan to rebuild the aging 1,031-mile (1,660-km) pipeline that runs from Alberta to the U.S. state of Wisconsin in June, but that decision was challenged by Minnesota’s governor in February.
On Tuesday, the PUC denied all petitions asking for its decision to be reconsidered, according to minutes of the meeting. Minnesota PUC spokesman Dan Wolf said a formal order will be issued soon.
“The PUC confirmed its decision to approve the conditions placed on L3R’s (Line 3 Replacement) Certificate of Need – conditions meant to protect Minnesotans – allowing this critical energy infrastructure modernization project to move forward,” Enbridge said in a statement.
The decision clears a hurdle for the pipeline and is welcome news for Canadian oil producers struggling with congestion on export pipelines as crude production increases. The discount last year on Canadian heavy crude versus U.S. barrels widened to record levels, prompting the Alberta government to impose production curtailments to draw down crude storage inventories and help shore up prices.
In a blow to Alberta’s oil and gas sector, Line 3 hit a snag earlier this month when Enbridge said its replacement will be delayed by almost a year until the second half of 2020 while the project awaits state and federal permits.
“It (the PUC decision) is good news for Enbridge undoubtedly, but they still have the issue of local permits that are delayed,” Wood Mackenzie analyst Mark Oberstoetter said.
In its statement, Enbridge said it is hopeful the remaining permitting schedule stays on track.
Line 3, which began service in 1968, currently operates at half its capacity. Its replacement would allow it to return to approved capacity of 760,000 barrels per day.
Enbridge shares were down 0.1 percent at C$48.96 on Wednesday afternoon on the Toronto Stock Exchange.