UPDATE 1-Canadian regulators urge approval of Enbridge's Line 9

Thu Mar 6, 2014 5:54pm EST

By Julie Gordon

March 6 (Reuters) - Canadian regulators recommended on Thursday that the federal government approve Enbridge Inc's Line 9 oil pipeline reversal and expansion, conditional on the company undertaking additional work on consultation and safety, among other things.

The National Energy Board also said it had denied Enbridge's request for exemption from "leave to open" requirements, meaning the company must ask the board for permission to start up the line after all work is finished.

"The board's decision enables Enbridge to react to market forces and provide benefits to Canadians, while at the same time implementing the project in a safe and environmentally sensitive manner," the agency said in its report.

The approval is contingent on the company meeting 30 conditions related to emergency response, continued consultation and pipeline integrity, among others.

Enbridge plans to reverse its Line 9B pipeline, which extends from southern Ontario to Quebec, and boost capacity of the entire Line 9 pipeline by 25 percent to 300,000 barrels-per-day (bpd), in order to ship western oil to refineries in Eastern Canada.

The project is one of several major pipeline investments proposed for North America, fueled by the rapid growth of Canada's oil industry. Efforts to boost pipeline capacity have been met with fierce opposition from environmentalists who argue that Canada's oil sands are contributing to climate change.

Line 9 originally moved oil from Sarnia, Ontario to Montreal, but was reversed in the late 1990s to pump cheap imported crude west. Enbridge applied in November 2012 to reverse the flow again, to pump oil eastwards to Quebec.

That would benefit refineries in the eastern Canadian province, including Suncor Energy Inc's 130,000 bpd Montreal refinery and Valero Energy Corp's 265,000 bpd Jean Gaulin refinery in Levis, Quebec.

Canada's federal government now has 180 days to decide whether to accept the board's recommendations on the company's plans for the 639-km (400-mile) pipeline.