Enbridge Line 3 construction costs increase by $1.1 billion
Regulatory delays, COVID-19, winter and additional environmental measures add up, mostly on the Minnesota segment.
The cost to build Enbridge's Line 3 oil pipeline, currently under construction across northern Minnesota, has increased by $1.1 billion, the company told investors Friday.
In a call announcing 2020 financial results, Enbridge President and CEO Al Monaco said regulatory delays, winter construction, additional environmental measures and COVID-19 protocols forced costs to build the U.S. segment — 93% of which is in Minnesota — to jump from $2.9 billion to $4 billion.
"This increase really stems mainly from our revised execution plan related to regulatory and permitting processes in Minnesota," Monaco said.
Once complete, the pipeline will replace the existing, aging Line 3 and ferry 760,000 barrels of oil (31.92 million gallons) per day from Alberta, Canada, to Enbridge's terminal in Superior, following a partially new 334-mile route through much of northern Minnesota.
Just 13 and 14 miles of Line 3 pass through North Dakota and Wisconsin, respectively. Work on those segments, and the 665-mile Canadian segment, is complete.
The cost increase will force total project costs to jump 13% — from $8.2 billion to $9.3 billion, the company said.
Opponents of Line 3 say the pipeline violates Indigenous treaty rights, risks the chance of an oil spill and deepens reliance on fossil fuels. Numerous regulatory and legal challenges had pushed work on the project back until the final permit the company needed for construction was issued in late November.
Construction officially began Dec. 1 and the company has said it could take six to nine months.
Company officials said on Friday they expect the new Line 3 will be put into service during the fourth quarter of 2021.
"I think construction’s been progressing really well. Obviously, the warm weather has helped us so far, but that’s changing now," Vern Yu, Enbridge's executive vice president of liquids pipelines, told investors.
"Still early days but I think so far, things are going better than we had hoped for," Yu said.
Earlier this month, two courts denied separate challenges from opponents that sought to halt construction in Minnesota. Protesters at several sites along the route have mounted direct action against Enbridge, seeking to delay construction themselves.