Canadian regulator approves Enbridge Line 3 with conditions

By Nia Williams

CALGARY, Alberta (Reuters) - Canadian regulators on Monday recommended the federal government approve Enbridge Inc's plan to replace one of its major crude oil export pipelines, but also imposed 89 conditions on the project to enhance safety and environmental protection.

Calgary-based Enbridge plans to replace all segments of pipe on the 1,031 mile (1,659km) Line 3 between Hardisty, Alberta, and Superior, Wisconsin, by 2019, in what will be the company's largest-ever project. The cross-border endeavor will cost more than C$7.5 billion ($5.91 billion).

Monday's recommendation only applies to the Canadian section of the line. U.S. regulators are in the process of dealing with the southern leg.

In a statement Enbridge said it was pleased with the regulator's announcement and was in the process of reviewing the 89 conditions.

Despite being a cross-border project, Line 3 will not require a U.S. presidential permit, which ultimately scuppered TransCanada Corp's Keystone XL, because Enbridge is restoring the pipeline to its original capacity.

President Barack Obama rejected Keystone XL last November after a seven-year delay, and other proposed export pipelines from Alberta's oil sands to the Canadian east and west coasts are also facing additional regulatory scrutiny.

The Line 3 project will allow Enbridge to run the pipeline at maximum capacity of 760,000 barrels per day. Currently capacity is 390,000 bpd because of voluntary pressure restrictions.

Dr Robert Steedman, chief environmental officer at the National Energy Board, said a regulatory panel had concluded the project was in the public interest and unlikely to cause significant adverse environmental affects.

"The new pipeline will be built to modern standards and will operate with improved safety and reliability," he said.

The NEB's conditions also required Enbridge to continue consultation with landowners and aboriginal groups who live along the pipeline's route. Steedman said the NEB always imposed conditions when recommending projects and the 89 required of Line 3 were not unusually high.

Federal Natural Resources Minister Jim Carr said in a statement he would study the report and seek additional public input before making a decision "in fall 2016."

Enbridge ships more than 2 million bpd of crude exports to the United States, the bulk of Canada's total exports.

Chief Executive Al Monaco has previously said the project, which involves replacing existing 34-inch diameter pipe which 36-inch diameter high-strength steel pipe, would not boost total exports as the Enbridge system is in balance, meaning efforts to lift crude flow could cause bottlenecks.

(Additional reporting by David Ljunggren in Ottawa; Editing by Alan Crosby and Andrew Hay)