Canada’s Enbridge Inc said on Monday it received federal permits for its Line 3 crude pipeline replacement project from the U.S. Army Corps of Engineers, moving closer to building the pipeline in the United States after years of delay.

U.S. Army Corps hands federal permits to Enbridge's Line 3 oil pipeline project- oil and gas 360

Source: Reuters

Line 3, which ships crude from Canadian oil hub Alberta to U.S. Midwest refiners, currently carries less oil than was designed for because of age and corrosion. Replacing the line, built in the 1960s, would allow Calgary-based Enbridge to roughly double its capacity to 760,000 barrels per day.

Line 3 is among the three major Canadian export pipelines, along with government-owned Trans Mountain and TC Energy Corp’s Keystone XL oil pipeline.

Final state permits and authorizations are still needed before Line 3 work can begin, Enbridge said, adding it hopes to start construction before the end of the year.

While the Canadian portion is complete, Enbridge has run into repeated obstacles in Minnesota, where reviews have lasted about five years.

Earlier this month, Minnesota regulators approved key permits for Line 3, including the contested 401 Water Quality Certification, and the Minnesota Department of Natural Resources released the final eight permits.

IA Securities analysts said the latest approvals continue to reinforce their assumption that the Line 3 replacement project will begin contributing financially to the company by the fourth quarter of 2021.

Enbridge still requires Minnesota Pollution Control Agency to issue a final construction stormwater permit and the Minnesota Public Utilities Commission to issue the authorization to construct before it can begin work.

A shortage of pipelines has hurt prices for Canadian crude oil and pushed it to trade at deep discounts compared to benchmark futures in recent years. However, steep production cuts during the COVID-19 pandemic helped free up some space this year.

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