Major pipeline reaches milestone as Line 3's Canadian section goes into service

A major pipeline project — long anticipated by the Canadian oilpatch — reached a significant milestone Sunday as Enbridge's Line 3 pipeline from Alberta to Manitoba is now up and running.

Calgary-based Enbridge sees commercial operation of the Canadian portion as important progress, even as the U.S. portion of the pipeline replacement project is still navigating Minnesota regulators.

"It has been a long road," said Leo Golden, the vice president in charge of the Line 3 replacement project.

"It has been, I would say, a challenging road at times for sure, but ... we have achieved something that we are all very proud of in terms of putting this in service."

The Line 3 replacement is the largest project in Enbridge history, with a total cost expected to top $9 billion, of which the Canadian portion is about $5.3 billion.

The company has operated Line 3 since 1968, shipping oil from Hardisty, Alta., to Superior, Wis. The Canadian portion of the line runs from Hardisty to Gretna, Man., a distance of 1,067 kilometres.

Plans to replace the aging pipeline — using pipe made from thicker, stronger steel and protected by an improved exterior coating — began to be discussed in 2013.

Following regulatory filings, the federal government signed off on the multi-billion dollar project in 2016, while on the same day rejecting Northern Gateway, another Enbridge pipeline.  

On the U.S. side of the border, the Line 3 project is still working its way through regulators.

The American part of the project could still be in service in 2020. Timing is unclear, though, after state utility regulators in Minnesota in October ordered further study on the potential effects of oil spills in the Lake Superior watershed.

The failure of pipeline expansions to keep up with growth in oilsands production has been blamed for steep oil price discounts in Alberta. 

Upon full completion of Line 3, the pipe will have oil export capacity of 760,000 barrels per day (bpd).

Until the U.S. side of the project is finished, it will operate at about 400,000 bpd. Still, that will help the company boost the oil-moving capability of its current system across western Canada.

Finishing the Canadian portion of the pipeline is a case for "cautious optimism," said Kevin Birn, an analyst with IHS Markit in Calgary.

"Despite [pipeline projects] taking multitudes longer than anybody anticipated, they're slowly inching toward completion," Birn said.

"You're kind of seeing a potential pathway out of [the] current ... constraints in western Canada."

Birn said the U.S. portion of the project appears to be on track.

Of the other two major oil pipelines for Canadian crude, construction is proceeding on the Trans Mountain pipeline expansion to the B.C. coast. The Keystone XL pipeline has been delayed by court challenges in the U.S.

All three major pipeline projects have faced opposition over concerns about their environmental impact, including climate change, should Alberta's oilsands continue to grow and add to industry's carbon emissions.

Golden said the new line will be safer and more reliable, while also requiring less maintenance.

"It is incredibly important," he said of the project. "It is bringing into service over 1,000 kilometres of new pipeline that is improving the safety of our operating facilities across the Prairies."

Golden said work on the Canadian portion of Line 3 came in ahead of schedule. The project included over 1,100 Indigenous workers, representing more than 20 per cent of the total workforce, he said.

Golden said work has started on decommissioning the old pipeline, which will take a number of years to complete.