(Bloomberg) -- An Enbridge Inc. pipeline that will help ship more Canadian crude to the U.S. Midwest received final approval on Monday, paving the way for construction to start soon on a third key export project for the oil sands after years of delays.
Minnesota approved the stormwater pollution plan for Enbridge’s Line 3 pipeline replacement and expansion, the project’s last pending permit, the company said on Monday. Construction is expected to take six-to-nine months on a line that will add 370,000 barrels a day of capacity.
Producers in Alberta, which holds the world’s third-largest crude reserves, have seen growth ground to a halt in recent years as a lack of enough export pipelines caused local crude prices to plummet in value. Now, three projects could allow them to ship an extra 1.8 million barrels a day when built.
Work is underway on TC Energy Corp.’s Keystone XL after a decade-long saga for approval, though it’s still unclear if U.S. President Elect Joe Biden will maintain an authorization from the Trump administration for the pipeline to cross the border. Meanwhile, the Trans Mountain pipeline expansion to the Vancouver coast is proceeding in Alberta and British Columbia.
“Until the barrels are freely flowing, we should take nothing for granted,” Tim McMillan, chief executive officer of the Canadian Association of Petroleum Producers, said by phone.
Line 3 could still encounter state and federal legal hurdles, as well as the prospect of protests that slow construction, delaying the start of service until 2022, Height Commentary said in a note last week. Trans Mountain faces fierce opposition in British Columbia, including from indigenous-led protesters.
Two years ago, Canadian export pipelines became so congested that heavy Western Canadian Select crude’s discount to benchmark U.S. prices widened to about $50 a barrel, prompting Alberta’s government to impose mandatory output limits. Those curbs were only lifted recently as the Covid-19 pandemic crippled demand for Canada’s oil, temporarily leaving extra space on some pipelines.
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