In what has become a common refrain in the Canadian Oil Industry, Enbridge Energy is delaying the startup of its long planned Line 3 replacement crude oil pipeline through northern Minnesota. The delay means that the pipeline, which was expected to be operational this year in November, 2019, will have to wait until the second half of 2020, assuming all permits have been obtained and regulatory hurdles overcome.
Enbridge maintains that the existing Line 3 is subject to cracking and corrosion and thus needs to be replaced. Local opponents of the pipeline say that the project would increase the risk of spills and contaminate the pristine countryside considered sacred to native Indians. Moreover, the transported product would be tar sands oil, which is the dirtiest and most climate-destructive form of oil in the world. And when it spills, it is almost impossible to clean up.
The alternative to a new Line 3 is using rail cars for crude transport. Alberta announced a plan last month to invest $3.7 billion to lease 4,400 rail cars, buy crude from local producers and sell it to refiners across North America. The government expects to turn a $2.2 billion profit on the plan through service revenue and increased royalties. Yet over the long run using rail cars is much more expensive than pipelines. Thus the Enbridge focus on building a new Line 3.
As reported previously on these pages, the industry has been hit in recent years by the cancellation of TransCanada’s Energy East pipeline and the Canadian government’s rejection of Enbridge’s proposed Northern Gateway conduit.