Enbridge Inc. on Monday tried to sweeten the case for its proposed new pipeline across northern Minnesota, as state regulators began final deliberations on the controversial $2.6 billion project.

Enbridge said it would put a corporate guarantee behind its new Line 3 in case the pipeline leaked and damaged the environment — something the state has been pressing for. The Calgary, Alberta-based company also said it would work to establish a decommissioning fund for all pipelines in the state and would buy energy credits on the open market to offset any greenhouse gas emissions from Line 3.

The Minnesota Public Utilities Commission (PUC) on Monday had proponents and opponents of the project outline their positions. Commissioners expect by June 28 to make a final decision on the proposal, which has been winding through the regulatory process for more than three years.

Enbridge said the new pipeline is a necessary safety upgrade over its current Line 3, which is aging and corroding. The current Line 3 can operate at only 51 percent capacity due to safety issues, and it's in continual need of repair. The new pipeline would restore full oil flow to 760,000 barrels per day.

"Line 3 has some unique integrity issues … and they are best addressed with this replacement, and that's just common sense, commissioners," Eric Swanson, an attorney for Enbridge, told the PUC.

Opponents, environmental and tribal groups said a new Line 3 would pose a new threat to pristine waters in Minnesota and help spur climate change.

"This is not just a replacement of an old pipeline. This is a long-term, 50-year commitment to fossil fuels," Scott Strand, an attorney for Minnesota environmental group Friends of the Headwaters, told the PUC.

Enbridge operates six lines in Minnesota — including Line 3 — that together transport around 2.5 million barrels of Canadian oil per day to Enbridge's terminal in Superior, Wis. Much of that oil moves to markets beyond Minnesota, though Enbridge supplies most of the crude used by Minnesota's two refineries.

The new Line 3 would follow the current route to Clearbrook, Minn., where it would jog south to Park Rapids before heading east to Superior. It would run parallel to a non-Enbridge pipeline to Park Rapids, but no farther.

"If a spill were to occur, there would be significant effects to water resources where there are currently no pipelines," said Bill Grant, deputy commissioner for energy and telecommunications for the Minnesota Department of Commerce, which represents the public interest in cases before the PUC.

Many of the PUC commissioners questions Monday for Enbridge concerned apportionment and long-term oil supply and demand forecasts.

The commerce department last fall concluded that a new Line 3 isn't needed, concluding the current pipeline corridor is enough to handle shippers' demands.

However, Administrative Law Judge Ann O'Reilly, who reviewed the case because it was contested, said despite the shortcomings of Enbridge's forecasts, a new pipeline is needed because the old one is in such bad shape, while Enbridge's customers are facing "apportionment." Essentially, Enbridge must ration pipeline capacity, a situation that will continue in the future, O'Reilly concluded.

The apportionment is "severe," said Mike Ahern, a shippers' group representative, who added shippers will end up financing much of the new pipeline through surcharges.

O'Reilly's conclusion on Line 3's need was coupled with a recommendation that a new pipeline run on its current path, not the new route proposed by Enbridge. She concluded that the potential costs to society of the new route outweighed the new pipeline's benefits.

However, her proposed solution has met strong opposition not only from Enbridge, but the Leech Lake Band of Ojibwe. Enbridge's six pipelines currently pass through the reservations of Leech Lake and the Fond du Lac Band of Lake Superior Chippewa.

"The band will not grant permission, and I cannot be clearer on this point," Ben Benoit, the Leech Lake Band's environmental director, told the PUC. In an interview, he said the Leech Lake band has no position on whether a new pipeline is generally needed. The rest of the state's major Ojibwe bands, including Fond du Lac, said a new Enbridge pipeline of any kind is not needed.

The Fond du Lac band's attorney, Seth Bichler, said Enbridge's new route is a "terrible idea." Big Sandy Lake, a historically and culturally important spot for the Ojibwe, is "immediately downstream" of the proposed pipeline.

Enbridge's new commitments came on top of other offers earlier this month, including paying to remove the old Line 3 from the land of owners who request it.

Line 3 is owned by an affiliate of Enbridge Energy Partners, which could come more fully under the corporate umbrella of Enbridge Inc. due to recent tax-law changes, Enbridge attorney Christy Brusven said.

The commerce department's Grant said the state first heard of Enbridge's guarantee Monday, and it has received no specifics. "The devil is in the details," he said.

Enbridge also did not announce a financial commitment to a decommissioning fund for pipelines and said, although it is giving the guarantee to buy the renewable energy credits, the new Line 3 would emit fewer greenhouse gases, since it would use electricity at its pumping stations more efficiently.

The renewable credits offer does not address Commerce's concern that the greenhouse gas emissions would come, not from the pipeline itself, but through increased production and consumption of Canadian oil.

Mike Hughlett • 612-673-7003