The cost of Enbridge's new oil pipeline from northern Alberta to Superior, Wis., has increased by $1.1 billion, largely due to construction delays on its Minnesota stretch.
Minnesota construction delay contributes to $1.1B price increase for Enbridge pipeline
Onset of winter and extension of the permitting process contributed to $1.1B increase.
February 12, 2021 at 5:40PM
Calgary, Alberta-based Enbridge said Friday that it expects the project, a replacement for the aging and corroding Line 3, to cost $9.3 billion, up 13% from previous estimates.
The U.S. section, most of which is in Minnesota, will now cost $4.1 billion, a rise from $2.9 billion.
Almost all of that additional cost is for the 337-mile stretch across Minnesota. The pipeline also crosses a swatch of both North Dakota and Wisconsin.
Enbridge began building the pipeline in Minnesota in December, following six tumultuous years in the regulatory process. The company reiterated Friday that it expects the Minnesota section of Line 3 to start transporting oil during the fourth quarter.
"I think construction is progressing really well," Vern Yu, Enbridge's president for liquid pipelines, told stock analysts in a conference call. "So far things are going better than we had hoped for."
Minnesota's relatively mild winter has helped quicken the pace of construction, "though that's changing now," Yu said, referring to the recent deep freeze.
The pipeline is one of the largest construction projects in Minnesota in recent years, directly employing more than 4,000 workers. Protesters who call themselves water protectors have at times temporarily disrupted construction.
Environmental groups and Ojibwe tribes said the Line 3 replacement — which follows a new route — will open a new region of pristine waters to oil spills, as well as exacerbate climate change by allowing for more oil production.
Enbridge said the new pipeline is a critical safety enhancement. The current Line 3 is so corroded it's running at only half capacity. The new pipeline would restore full oil flow of 760,000 barrels per day.
Enbridge said Friday that Line 3's winter construction commencement has added $400 million in costs. Shorter workdays — due to less daylight — and tougher winter construction conditions hurt productivity, company executives said.
The delayed winter start was prompted by extensions of the Line 3 permitting process in 2020.
Regulatory and financial carrying costs — due to delays — added $200 million to Line 3 costs, while extending COVID protections to the pipeline worksite cost $100 million, Enbridge said.
The company also said it spent $400 million more than originally budgeted on increased environmental measures, including wetlands protection.
The Minnesota Public Utilities Commission (PUC) originally approved the new Line 3 in June 2018, but that decision was mooted when an appellate court shot down the PUC's blessing of the project's environmental impact statement.
The environmental study was partly retooled, and the PUC re-approved Line 3 in February 2020. State and federal construction permits for water crossings were issued in November.
Line 3 opponents then petitioned the Minnesota Court of Appeals and the U.S. District Court in Washington, D.C., to halt construction pending appeals. The federal court ruled against a stoppage Sunday; the state court did the same last week.
Mike Hughlett • 612-673-7003
Correction: An earlier version of this story had an incorrect total for the revised cost of Enbridge's replacement for Line 3.
St. Paul Regional Water Services is testing water from the reservoir to make sure it is safe.
