Enbridge on Thursday disputed the lack of need to replace its Line 3 – a conclusion drawn by the Minnesota Public Utilities Commission (MPUC).
The final environmental impact statement was issued in August without recommendation.
A certificate of need, however, must also be obtained before the project can advance in Minnesota. In September, the MPUC said Enbridge failed to prove that a need for the new line exists. The commission based its findings on an oil market analysis prepared by London Economics International. The consulting firm said Enbridge did not provide a sufficient analysis of future demand, and that Minnesota’s demand for refined products appears unlikely to increase in the long term.
London Economics, Enbridge countered, presented testimony for the MPUC that “was narrow in scope, based on flawed analysis that does not address all the factors in the decision to replace Line 3, and fails to take into account the immediate negative economic and supply consequences to Minnesota were Line 3 to be shut down.”
In a prepared statement, Enbridge said there is no excess capacity on its system, adding that demand for capacity is expected to grow even under the most conservative forecasts.
“The incremental capacity restored by replacing Line 3 will address that growth, help regional refineries remain competitive and meet the energy needs of Minnesotans for decades to come,” the company added.
Enbridge addressed several aspects of the project in its statement:
• Shutting Down Line 3: The suggestion that Line 3 can be shut down without any impact on Minnesota is simply not true. Apportionment and property tax reductions would have an immediate effect on Minnesota. Reduced pipeline capacity would increase rail shipments, with as many as 32 additional mile-long trains every day crossing Minnesota. Additional rail facilities would also be required for refineries to utilize rail shipments. The impact on Minnesota’s agricultural economy would be costly and disruptive as evidenced by the agricultural commerce curtailed in 2013-2014 due to increased crude by rail movements.
• Apportionment: Contrary to the DOC testimony, the Enbridge system, which includes Line 3, is currently full and in apportionment. This means demand for capacity exceeds what’s available, and refineries in Minnesota and the Midwest cannot obtain all the crude supply they request. When refiners can’t get the supply they need, they are either forced to produce less or source it through other more costly modes of transportation, like rail, which drives up costs and impacts their competitiveness. Line 3 will ensure an adequate supply for refiners and enable them to continue to provide the energy Minnesotans need.
• Crude production forecast: Additional independent analysis using multiple crude oil supply forecasts was submitted as part of the rebuttal testimony and shows that even under the most conservative forecasts, Enbridge’s system will remain fully utilized after replacement.
• Alternative pipeline scenarios: None of the pipeline systems identified by the DOC as possible alternatives to a new Line 3 are commercially viable. More importantly, none of the alternatives serve Minnesota or would even supply significant crude oil to refineries in the upper Midwest. Regardless, further analysis included in Enbridge’s rebuttal testimony demonstrates that incremental capacity provided by the Line 3 replacement will be needed even if alternative pipelines are built or expanded.
• Refined product demand: The DOC expert testimony wrongly suggests that reduced demand for gasoline due to increased electric vehicle (EV) utilization will reduce the need for further pipeline capacity. The DOC did not take into account demand for refined products like diesel, jet fuel and asphalt – all products that are important to Minnesota and require refining.
Some environmentalists have based their opposition on the fear that fossil fuels are harmful. Last month, the Minnesota Environmental Partnership said “We don’t need increased fossil fuel capacity.” Instead, “We need to get about the business of abandoning and cleaning up the existing Line 3.”
Enbridge plans to invest $2 billion on Line 3 in Minnesota. That will significantly improve safety and economic benefits to Minnesota and neighboring states, the firm said.
A public hearing was held Tuesday in Grand Rapids. Another hearing will be held from 1 p.m. until 4 p.m. and 6 p.m. to 9 p.m. on Oct. 18 at the Duluth Entertainment and Convention Center.