4 Min Read
By Julie Gordon
VANCOUVER, March 6 (Reuters) - Canadian regulators on Thursday approved Enbridge Inc's Line 9 oil pipeline reversal and expansion, conditional on the country's largest pipeline company undertaking additional work on consultation and safety.
Enbridge plans to reverse its Line 9B pipeline, which extends from southern Ontario to Quebec, and boost capacity of the entire Line 9 line by 25 percent to 300,000 barrels per day (bpd), in order to ship western oil to refineries in Eastern Canada. The oil would enter Ontario through Michigan on its Mainline system.
The approval by the National Energy Board (NEB) was widely expected, as the plan uses existing infrastructure, requires no new pipeline and much of the work will take place on Enbridge property or right-of-ways.
"Repurposing pipeline is always what people want to do first, versus building new pipeline," said Steven Paget, an analyst with FirstEnergy Capital. "I think there's demonstrated need and it really doesn't change what's already existing."
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 the tar sands are contributing to climate change.
"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 NEB said in its report.
The approval of the 639-km (400-mile) pipeline reversal and expansion is contingent on the company meeting 30 conditions related to emergency response, continued consultation and pipeline integrity.
The agency also turned down Enbridge's request for exemption from "leave to open" requirements, meaning the company must ask for permission to start up the line after all work is finished.
Enbridge, which has operated Line 9 since 1976, said it is reviewing the requirements outlined in the agency's report and will continue to work to meet its conditions.
"The approval of this project is not the end of the process for us," said Chief Executive Officer Al Monaco in a statement. "We look forward to continuing our efforts to build trust in these communities and continue the discussion of how to make a safe and well performing pipeline even safer."
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.
Enbridge said the project will help protect thousands of jobs and open new markets for Canadian oil producers, but pipeline opponents were quick to condemn the approval, saying the NEB had failed to respond to their concerns on safety and the environment.
"Enbridge's Line 9 pipeline project is a recipe for disaster," said Adam Scott of Environmental Defence in a statement. "The 39-year-old pipeline runs directly through the most densely populated parts of Canada, threatening the health, safety and environment of Canadians."
Line 9B runs underneath the Greater Toronto Area, which is home to about 6 million people. A smaller portion of pipeline, known as Line 9A, was previously approved for reversal.
Enbridge has a year to meet the NEB's conditions for the Line 9 approval.