Enbridge (ENB) stock closed 4.5% higher on June 28 after the Minnesota Public Utilities Commission approved its Line 3 Replacement project. The Commission approved Enbridge’s preferred route for the project. The approval of Enbridge’s preferred route means that there won’t be any material change in the project’s cost. In April, a Minnesota Administrative Law Judge suggested a different route for the project from the route that Enbridge proposed.
The Line 3 Replacement project’s expected cost is ~$7 billion. Nearly $4 billion of the cost is expected to be spent in Canada and ~$3 billion in the United States. So far, nearly $2.7 billion has been spent on the project. The project is expected to be complete in the second half of 2019. The project’s route approval has removed some of the key uncertainties related to the expected cost.
About the project
The Line 3 Replacement project involves replacing of all of the remaining segments of Enbridge’s Line 3 Pipeline. The pipeline runs between Hardisty, Alberta, and Superior, Wisconsin. The Line 3 Pipeline was first placed in-service in 1968. Since 2010, the pipeline has been operating at 390,000 barrels per day—nearly half of its capacity. In 2010, Enbridge reduced the pressure on the pipeline to ensure its safe operation. The replacement will allow Enbridge to restore the pipeline’s original capacity.
Enbridge stock has fallen nearly 18% YTD (year-to-date). In comparison, TransCanada (TRP) has fallen 14%, while the Energy Select Sector SPDR ETF (XLE) has risen nearly 3%. Kinder Morgan (KMI) has fallen nearly 7% YTD.
To learn more about the Line 3 Replacement project and other projects planned to move oil out of Alberta, read Alberta’s Oil Sands: Key Challenges and Opportunities.