Minnesota regulators on Thursday gave the go-ahead for a $160 million upgrade to a Canadian energy company's crude oil pipeline across northern Minnesota, disappointing anti-pipeline activists who oppose development of that nation's oil-sands deposits.
The Minnesota Public Utilities Commission approved the project on a 4-1 vote after six hours of testimony and discussion. The outcome was a victory for Enbridge Energy, the Calgary-based pipeline company that finished building the 1,000-mile Alberta Clipper pipeline four years ago and proposed to add pumping stations to increase its capacity from 570,000 to 800,000 barrels per day.
"We can now move forward with helping Minnesota improve its economy by supplying jobs and the economic spillover from that, as well as move our nation toward energy security," said Enbridge spokeswoman Becky Haase.
New pumping stations, but no new pipe, would be added in Kittson, Red Lake, Cass and St. Louis counties, and other equipment would be upgraded at existing sites in Marshall, Clearwater and Itasca counties.
Environmental activists led by the climate-change group MN350 and the Sierra Club opposed the project, arguing that it isn't needed and will result in increased greenhouse gas emissions through expanded extraction of oil from the Canadian tar sands of northern Alberta.
MN350 tar sands leader Kathy Hollander said that extracting, transporting and burning more fossil fuels will only make climate change worse, and that it's already an urgent problem that will "barrel down upon us." However, Hollander was encouraged by the number of public comments against the project that she said "indicates that very clearly people are starting to realize that this is an important issue that we must deal with in our lifetimes."
The 36-inch diameter pipeline transports diluted, heavy crude oil from Hardesty, Alberta, to an Enbridge terminal and tank farm in Superior, Wis. Its route crosses 285 miles of northern Minnesota on a path through Clearbrook, Bemidji and Grand Rapids. From Superior it links to other Midwest pipelines.
The line, also known as Line 67, can now carry 450,000 barrels per day, but was designed to handle greater flows by adding pumping stations. Last year, the Minnesota Public Utilities Commission approveda Phase I $40 million upgrade to increase capacity to 570,000 barrels per day, an upgrade Enbridge expects to finish next month. In the Phase II upgrade, Enbridge proposed to boost the line's capacity to its maximum flow.
The main issue Thursday was whether or not the additional pipeline capacity was needed. More than 150 people attended the meeting, but about half drifted away as the day wore on.
Union pipe fitters, engineering and construction groups, electric utilities and the Minnesota Chamber testified that the expansion would create more jobs, increase taxes, and provide a safer, more reliable and less expensive method of shipping oil than using trains.
Opponents raised concerns about the risk of pipeline ruptures in water-rich northern Minnesota, and the continued escalation of climate change because of oil consumption.
MN350 attorney Paul Blackburn said that Minnesotans don't need more petroleum fuels and that sales have dropped almost 20 percent during the past decade.
A state administrative judge who reviewed the evidence ruled in June that the project is needed to supply U.S. refineries. "If the proposed project is approved, Minnesota consumers will likely pay less for petroleum products than they otherwise would without the added pipeline capacity," Judge Eric Lipman wrote in a 37-page order.
Commissioner Dan Lipschultz, the sole vote against the project Thursday, said he was troubled that Enbridge waited until relatively late in the regulatory process to submit large volumes of evidence, making it more difficult for state staff and opponents to analyze the information and critique it.
Company officials said after the approval that construction of Phase II can begin in about a month, with a target completion date in late 2015. But before anyone can flip the switch on the extra oil, the U.S. State Department must complete an environmental review, a requirement because Enbridge applied for a Presidential Permit to ship more crude oil across the Canadian-U.S. border.
That's the same permit TransCanada's controversial Keystone XL pipeline needs — and hasn't obtained from the Obama administration — before it can be built. It also would deliver Canadian oil-sands crude to the United States through Montana, South Dakota and Nebraska.
Canada's oil industry wants more pipeline capacity because it projects that today's daily oil production of 3.5 million barrels will grow to 6.4 million barrels by 2030. Awaiting pipelines, the industry has increased oil exports to the United States via rail tank cars using rail lines crossing the border into northern Minnesota.