Pipeline poses conflict with potential copper mine

Another resource squabble has flared in northern Minnesota. This time it's copper vs. crude oil.

Kennecott Exploration Co., a unit of one of world's biggest mining companies, said in a regulatory filing Thursday that Enbridge Energy's preferred route for the Sandpiper crude oil pipeline passes through 1,860 acres of land near Tamarack, Minn., that's being studied for a copper-nickel mine.

"The preferred route will intersect and limit Kennecott's access to mineral deposits critical to the exploration and potential development of copper nickel minerals," the company said in a filing with the state Public Utilities Commission.

Kennecott said it has spent tens of millions on the Tamarack Project to drill more than 200 test holes and conduct preliminary environmental and other studies on four mineral leases in Aitkin and Carlton counties, 50 miles west of Duluth.

But the mine leases would lie along the route of Enbridge's proposed $2.6 billion pipeline designed to carry crude oil from North Dakota to Superior, Wis. State regulators are reviewing the 299-mile segment through Minnesota.

"While still in an exploration stage, Kennecott believes there is significant potential at the Tamarack Project," company attorneys said in a request to intervene in the review.

Kennecott, a Utah subsidiary of Rio Tinto, the world's largest publicly traded iron mining company, said Enbridge hasn't addressed "the sizable economic impacts of limiting or precluding access to the mineral resources," including the implications for royalty payments to the state under 50-year mineral leases.

Enbridge says it's aware of the conflict and has discussed the matter with Kennecott. But Kennecott said the discussions haven't been fruitful yet.

Enbridge said Friday that the company is reviewing Kennecott's objections. "As always, we work with all our stakeholders as best we can," Enbridge spokeswoman Christine Davis said in an e-mail.

In November, Enbridge and the Carlton County Board agreed to change the Sandpiper route in an area east of Interstate 35 to avoid crossing organic and other farms. The modified route would follow other rights of way, but those changes don't affect the route near Tamarack, which is farther west.

Kennecott's filing offers more details about its exploration efforts, but doesn't say whether it's considering an open pit, like PolyMet is proposing near Hoyt Lakes, or an underground mine like one Twin Metals proposes south of Ely.

Both of those proposed mines have raised concerns about long-term water pollution, and by coincidence PolyMet's updated environmental review was released Friday.

Kennecott said some of its Tamarack lands are wild rice wetlands between the Savanna State Forest and the McGregor Wildlife Management Area. The company said it acquired the wetland with the thought of preserving it as a mitigation effort and to retain a natural area between the state lands. But the proposed Sandpiper line would create an "intrusive presence," the mining company said.

Kennecott officials were not immediately available to comment Friday.

Greg Bernu, Carlton County land commissioner, said about 20 percent of Kennecott's Tamarack leases are on county land, and the rest are on Aitkin County land. He said Kennecott has been renewing the leases, indicating "they obviously found something good" but whether the company will start mining is anyone's guess. "It could be another 25 years," he added.

He said mining companies often get their way in conflicts over pipelines or roads vs. minerals. "You can move a pipeline but you can't move a mineral deposit," Bernu added.

The pipeline, which would be buried, is designed to initially bring 225,000 barrels of oil per day into an expanded terminal at Clearbrook, Minn., and 375,000 barrels of oil per day from there to Superior. The Minnesota portion of the ­project will cost $1.2 billion, create 1,500 temporary pipeline jobs with work starting in the fourth quarter of 2014 and ending in early 2016.

Marathon Petroleum Corp. will be an anchor shipper on the line, and fund 37.5 percent of the construction cost. Enbridge is soliciting binding commitments from other shippers in an open season that ends in January.

David Shaffer • 612-673-7090 Twitter: @ShafferStrib