Minnesota Regulator Signals Support Of Enbridge Line 3 Oil Pipeline


ST. PAUL, Minn., June 28 (Reuters) - Three of five members of the Minnesota Public Utilities Commission said on Thursday they support issuing a certificate of need for Enbridge Inc to rebuild its Line 3 oil pipeline, angering environmentalists but offering hope to Western Canadian oil producers.

The two other commissioners did not explicitly say they would vote in favor of the certificate but approval appeared to be imminent. It was not yet clear what conditions would be placed on the approval or whether the commission would approve the pipeline route preferred by Enbridge.

"I think we have a certificate of need decision essentially made," said commissioner John Tuma.

Enbridge shares climbed 3 percent in Toronto.

The commission adjourned for a break and planned to discuss conditions to add to the certificate before holding a vote.

Enbridge wants to replace the aging 1,031-mile (1,660-km) pipeline that runs from Alberta in western Canada to Wisconsin. The commission, which represents Line 3's final regulatory hurdle, will decide whether the project is needed, and the route the pipeline should take.

Pipeline bottlenecks have steepened a price discount for Western Canadian heavy crude this year. Refiners in Minnesota and surrounding states say Line 3 is necessary to increase crude supplies.

Shouts from Native Americans and environmental activists interrupted the meeting.

"Shame on you, you cowards!" one woman shouted before breaking into tears.

Line 3, which began service in 1968, operates at half its capacity because of age and corrosion. Its replacement would allow it to return to approved capacity of 760,000 barrels per day.

"That pipeline is an accident waiting to happen," said commissioner Dan Lipschultz. "It feels like a gun to our head that compels us to approve a new line .. but the gun is real and it’s loaded."

Approving a certificate of need would be positive for Enbridge, but a subsequent decision on the pipeline route is also pivotal, said RBC analyst Robert Kwan, in a note.

Enbridge has proposed a route that follows the existing pipeline corridor partway through Minnesota, before veering south to avoid the Leech Lake reservation that the pipeline currently bisects. If the commission instead issues a permit for the pipeline to remain in its current corridor, Enbridge has said it would have to shut down the pipeline for nine to 12 months during construction.

(Reporting by Rod Nickel in St. Paul, Minnesota Editing by Chizu Nomiyama, Bill Trott and David Gregorio)


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