Enbridge says Line 3 pipeline project in Minnesota to be delayed a year

The controversial replacement and expansion of Enbridge's Line 3 crude oil pipeline will be delayed about a year because the Minnesota permitting process will take longer than expected, the Alberta company announced this weekend.

The project, previously slated to start shipping crude by the end of 2019, is now expected to enter service in the second half of 2020, Enbridge said in a news release late Friday. Construction is being pushed back because the Minnesota permitting process won't be complete until November, and the ensuing federal permits won't be received until as long as 60 days after that.

"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 the news release. "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."

Last June, the Minnesota Public Utilities Commission unanimously approved the $2.6 billion pipeline, a replacement for Enbridge's aging and corroding Line 3. But Enbridge still needs the other, more technical state permits, primarily from the Minnesota Pollution Control Agency and the Department of Natural Resources. It also needs a key water-crossing permit from the Army Corps of Engineers.

Meanwhile, environmental groups, two Indian tribes and the state Department of Commerce have all filed appeals in court to overturn the PUC's decision. Gov. Tim Walz has said he will continue the state's appeal, which was started last year under his predecessor, Mark Dayton.

Enbridge has said the new 330-mile pipeline will be a much-needed safety upgrade over the current Line 3, which is corroding and operating at only 51 percent capacity due to safety concerns. The new pipeline would restore the full flow of oil to 760,000 barrels per day.

Opponents of a new Line 3 said it would exacerbate climate change, and — since the pipeline would partly follow a new route — would open a new region of lakes, rivers and wild-rice waters to degradation from oil spills.

The Line 3 replacement would be one of the largest construction projects in Minnesota in recent years, employing at least 4,000 building-trades workers, according to the company.

According to Bloomberg News, the delay is a crushing setback for Canadian oil producers, who have suffered from a lack of pipeline space that has made it difficult to ship their crude to refineries, hammering prices. Enbridge's Line 3 is particularly important because the government of oil-rich Alberta was counting on its startup this year to let it end mandated production cuts that were implemented to cope with a glut of crude.

The postponement of the Line 3 expansion, which would add 370,000 barrels of daily shipping capacity, is the latest in a string of canceled or stalled projects that have plagued the Canadian energy industry. TransCanada Corp.'s Keystone XL has been on the drawing board for more than a decade amid environmental and landowner opposition. The Trans Mountain expansion, which Canada's government bought from Kinder Morgan Inc. to save it from cancellation, has been stalled amid legal challenges.

The industry also 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.

Bloomberg News and staff writer Mike Hughlett contributed to this report.