July 2019, Vol. 246, No. 7


Potential Permitting Delays Could Raise Line 3 Costs

Enbridge said there is a risk its Line 3 replacement project could exceed its previous cost estimate of $6.71 billion (C$9 billion) because of delays to permits in the United States.

Once complete, Line 3 will carry 760,000 bpd of western Canadian crude to U.S. markets. In March, Enbridge said the in-service date would be delayed by almost a year until the second half of 2020 because of slower-than-expected permitting in the U.S. state of Minnesota.

Enbridge told analysts during quarterly earnings call as long as permits are in hand by year-end the project will start running in the latter part of next year.

“The late schedule likely means higher costs on the U.S. side although we are running under budget in Canada,” Enbridge chief executive Al Monaco said, adding that returns remained “very robust” and the company did not expect any cost overruns to be material to its financial outlook.

Enbridge is also in talks with shippers about introducing long-term, set volume contracts on its 2.85 MMbpd Mainline system, moving away from the current monthly allocation system.

Enbridge plans to launch an open season in mid-July. P&GJ

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