Work begins on Enbridge Line 3 pipeline project

Construction is finally beginning on the Alberta and Saskatchewan portions of Enbridge’s multibillion-dollar Line 3 pipeline replacement between Hardisty in southeastern Alberta and the state of Wisconsin.

Guy Jarvis, president of Enbridge Liquids Pipelines, said Thursday up to 1,600 workers will be involved in the initial phase of construction that will see three sections built across the Prairies.

As one pipeline company works on the first segment extending between Hardisty, about 200 km southeast of Edmonton, and Loreburn, Sask., another company will be responsible for two Saskatchewan sections between Rosetown to the western edge of Regina.

About 405 km of the total 1,600 km of pipeline will be built in this first phase, expected to continue until the spring or summer of 2018. Another round of construction will begin next summer.

The construction work is expected to provide a financial windfall for numerous small communities along the pipeline route, Jarvis said.

“In the areas where we are working, we would expect the local communities will see benefits in their grocery stores and their hotels and gas stations with this many people around,” he said.

“Launching construction is an important milestone and we’re grateful for the strong support along the route, including from Indigenous communities.”

As part of this summer’s construction, Enbridge is increasing its 12.9 million barrels of storage capacity at its Hardisty terminal by 350,000 barrels.

Hardisty chief administrative officer Sandy Otto expects the town will have about 300 temporary residents connected to the project by the end of August and up to 800 workers in the area at the peak, more than doubling the permanent population of 500.

“That’s exciting … They use your services, restaurants and recreation facilities,” she said.

“It gives our businesses a bit of a boost. We have been in a lull for about 31/2 years. It helps.”

While she doesn’t anticipate many new full-time Enbridge jobs to be created after construction ends, there should be extra work for service, maintenance, cleaning and other contractors.

She hopes that by the time construction is finished on Line 3, TransCanada’s $8-billion Keystone XL pipeline from Hardisty to Steele City, Neb., will be ready to go.

“In small communities like this, we’re all hurting, and trying to keep our arenas and community halls and swimming pools active … (This) makes them more viable,” she said.

“People are saying it’s great to see because it’s going to help Alberta out … of this little bit of a downturn.”

Mayor Anita Miller is also happy to see work begin, saying with three new hotels in the last few years — including one opening in September — and a larger campground, there should have plenty of accommodation for the visitors.

“People have been expanding in preparation, knowing that eventually one of these pipelines would get going.”

The commencement of work comes as the company reported the total cost of Enbridge’s largest pipeline project has risen by nine per cent from its original estimates in 2014.

When the project was originally announced, the Canadian portion of the project was pegged at $4.9 billion and US$2.6 billion for the portion in the United States.

Those new estimated costs are now $5.3 billion and US$2.9 billion respectively.

Delays in the regulatory process to get all the approvals required as well as route modifications were two reasons the company gave for the increase in costs.

“Of that capital cost increase, we believe just over half of it is due to (regulatory) delays. It stems from the fact we have already invested capital and that money is sitting there not earning anything, so there is a cost of carrying the money that has been spent to this point in time,” he said.

The project economics continue to look unchanged despite the cost increase.

“It boils down to the fact that we took a very conservative view of this project when we first launched it. We did have the risk of increased capital costs, but we also had risks and rewards under other commercial arrangements like operating costs and foreign exchange.

“Those factors have moved in our favour and pretty much offset the financial impact of the cost increase.”

The pipeline is expected to come online by the second half of 2019.