Minnesota court rules environmental assessment for Enbridge pipeline inadequate

[CALGARY, Alberta] A Minnesota court ruled on Monday that Enbridge Inc's final environmental impact statement for its Line 3 replacement project is inadequate, raising the possibility the Canadian crude oil pipeline could face further delays.

The Line 3 replacement project would ship 760,000 barrels per day of Canadian crude from Alberta to Wisconsin, doubling current capacity and providing much-needed relief from congestion on existing Canadian pipelines.

In a written decision posted online, the Minnesota Court of Appeals ruled that the Minnesota Public Utilities Commission, a state regulator that approved the Line 3 expansion last year, acted in a manner that was unsupported by "substantial evidence" when it determined the impact statement was adequate.

The impact statement specifically failed to address how an oil spill from the line would affect Lake Superior and its watershed, the court said.

Enbridge shares fell 3.5 per cent on the Toronto Stock Exchange to C$48.02. (S$48.88)

Enbridge spokesman Jesse Semko confirmed the company had received the court decision and said Enbridge would release a statement later on Monday.

"We believe that the market will negatively view the court decision that casts uncertainty with respect to the timeline for the Line 3 Replacement (L3R) project and specifically the ability to bring L3R into service in H2/20," RBC Capital Markets analyst Robert Kwan said in a note.

In March Enbridge said Line 3 would be delayed until the second half of 2020 because of permitting delays in Minnesota, and the prospect of further holdups is another blow to the beleaguered Canadian energy industry.

The Alberta government imposed mandatory production curtailments on producers effective Jan. 1 this year because of congestion on export pipelines.

RBC's Kwan said at this stage it was not clear whether the environmental impact statement could be amended or if a new one would be required.

REUTERS