Ottawa to decide this week on Enbridge's biggest pipeline project

Canada's oil and gas industry could get a much needed shot in the arm this week if the federal cabinet gives the green light to two massive pipeline projects — infrastructure that would help deliver close to a million more barrels of oil a day.

$7.5B pipeline would transport 760,000 barrels of oil a day from Alberta to Wisconsin

The federal cabinet will make decisions on two massive pipeline projects proposed by energy infrastructure giant Enbridge, including a replacement to Line 3 running from Alberta to Wisconsin. (Jeff McIntosh/The Canadian Press)

Canada's federal cabinet has a number of major pipeline decisions on its plate, but this week it will have to rule on two projects, including the renewal of a massive $7.5-billion pipeline to the U.S.

One project, which has already attracted a great deal of public scrutiny, is Enbridge's Northern Gateway, a pipeline that would bring diluted bitumen from Alberta's oilsands through northern B.C. to the coast for export.

The Federal Court overturned the former Harper government's acceptance of that project earlier this year, and Prime Minister Justin Trudeau and his cabinet colleagues must now decide whether to push ahead with further Indigenous consultations or drop approval for the project.

But another proposed project from the same energy giant, Line 3, has attracted considerably less attention, with fewer activists setting their sights on stopping the 1,659-kilometre pipeline project, despite it being the largest in the company's history.

Enbridge hopes to replace the entire span of the aging pipe that carries oil from a terminal near Hardisty, Alta., through northern Minnesota to Superior, Wis., where it travels farther to refineries in the U.S. for upgrading.

The National Energy Board (NEB), the federal regulator, signed off on a new Line 3 in April, but with 89 conditions for the segment that runs from eastern Alberta to Gretna, Man., near the Canada-U.S. border.

The federal cabinet will announce its decisions on both projects by Friday, CBC News has confirmed.

The $7.5-billion Line 3 project would nearly double the existing pipeline's volume to 760,000 barrels a day. It would funnel oil into Enbridge's crown jewel, the mainline system that collectively carries three million barrels a day into the U.S.

The existing line, constructed in the 1960s, has been a source of spills in the past, and the company has voluntarily dialled back capacity to address mounting maintenance issues while it pushes ahead with a replacement.

Enbridge hopes to replace the entire span of the aging Line 3 pipeline, which pumps oil from a terminal near Hardisty, Alta., pictured above, to Superior, Wis. (Jeff McIntosh/Canadian Press)

Enbridge maintains that the new Line 3 will be safer and adhere to modern technical standards.

"All segments of the line will be replaced with new pipe using the latest available high-strength steel and coating technology, while the existing segments will be removed from operation," the company said in a statement sent to CBC News.

The company is staring down the clock, as the U.S. Justice Department ordered Enbridge in July to replace the entire pipeline by December 2017 or commit to substantial safety upgrades to the existing line. That decree is part of a settlement the company reached after a massive 2010 spill of 3.8 million litres of oil into Michigan's Kalamazoo River.

Opposition in Minnesota

The project could face serious headwinds in Minnesota, as the company will have to secure two key permits from the state to proceed with the 542-kilometre leg through that northern state.

Unlike in Canada, in the U.S. approval of crude oil pipelines falls to the individual states, so president-elect Donald Trump's warm embrace of the oil and gas sector will do little to streamline the process in the short term.

Kevin Lee, an attorney with the Minnesota Centre for Environmental Advocacy, said that if Canada's federal cabinet approves this line it will be thumbing its nose at the Paris climate agreement.

Al Monaco is the president and CEO of Enbridge. His company's proposed Line 3 project will be largest in its history, with a price tag of more than $7 billion. (Jeff McIntosh/Canadian Press)

"When you build fossil fuel infrastructure that lasts for 50 or 60 years, which will ship higher and higher volumes of the most carbon-intensive resource that exists, you're basically saying, 'We don't care about climate change,'" he said in an interview with CBC News.

Lee said it is disingenuous to call Line 3 a "replacement" of existing infrastructure, because it carries so much more oil and it will travel on an entirely different route through his state.

The new route also travels through a rich water environment and over some of the state's most pristine land, he said.

"Our position is that they should undertake those safety measures and continue to use the existing Line 3 until the transformation to clean energy happens."

Indigenous and environmental groups are fighting Enbridge's proposed Line 3 pipeline, which would cross lake-dotted country in northern Minnesota. (Brian Mark Peterson/Minneapolis Star-Tribune/Associated Press)

Enbridge said that it "continues to work hard to help ensure communities along the right of way realize economic benefits that will come with construction of the project."

'If not Canada, U.S. will turn to Venezuela'

Lee said activists are opposed to the project not just because of local concerns, but because more pipeline capacity will spur further development of what he calls the "tarsands," because producers in the high-cost region depend on cheap transportation options.

Line 3 currently carries "light" crude oil — a substance that is largely drawn from Western Canada's conventional oilfields rather than the oilsands — but the proposed upgrade would allow Enbridge to carry a mix of heavier oil across the border, including diluted bitumen, a boon for producers operating near Fort McMurray.

The Canadian Association of Petroleum Producers (CAPP) said Canada's network of pipelines is at capacity, and the construction of Line 3 and other projects is essential to get one of the country's most valuable exports to market.

"Not only is the system unable to handle day-to-day changes in global demand, but supply continues to grow. More than 850,000 barrels a day of oilsands supply will come on stream by 2021, and without energy-transportation infrastructure, Canada will be constrained," Tim McMillan, the president and CEO of CAPP, wrote recently.

Supply from Western Canada will grow to 5.5 million barrels of oil a day by 2030, CAPP forecasts, while current pipelines can only carry four million barrels.

Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, expects supply from Western Canada will grow to 5.5 million barrels of oil a day by 2030. (Amber Bracken/The Canadian Press)

The Canadian Environmental Assessment Agency, the department tasked with studying the pipeline's environmental impact, said in its interim report that Line 3 will likely absorb existing volume that is transported by rail.

And yet it estimates the project will account for 19 to 26 megatonnes of greenhouse gas upstream emissions each year.

However, transporting the oil by pipeline — rather than rail — would be less emissions-intensive, the report said.

It also noted that if Canada does not supply the U.S., a market that still sources only half of its oil from domestic operations, then refiners will turn to other countries such as Venezuela.

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John Paul Tasker

Senior writer

J.P. Tasker is a journalist in CBC's parliamentary bureau who reports for digital, radio and television. He is also a regular panellist on CBC News Network's Power & Politics. He covers the Conservative Party, Canada-U.S. relations, Crown-Indigenous affairs, climate change, health policy and the Senate. You can send story ideas and tips to J.P. at john.tasker@cbc.ca.