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UPDATE 2-Enbridge Line 3 oil pipeline replacement faces new delay over water concerns

(Adds comments from activist group, union, analyst)

WINNIPEG, Manitoba, June 3 (Reuters) - A Minnesota pollution regulator said on Wednesday it will hold a public hearing this summer on Enbridge Inc’s plan to replace its Line 3 oil pipeline, adding a potential three-month delay and pushing the bulk of construction to next year.

The Minnesota Pollution Control Agency (MPCA) said the hearing will focus on how Enbridge intends to protect streams and wetlands that the pipeline crosses.

Replacing Line 3, a 1960s-era branch of Enbridge’s Mainline network, would allow the company to boost flow from a Canadian oil hub in Edmonton, Alberta, to Midwest refiners. A shortage of transport space has weakened Canadian oil prices in recent years, but pipeline capacity became ample this year after deep oil production cuts during the COVID-19 pandemic.

MPCA granted Enbridge a draft water quality certificate in February. But during a public comment period, activist groups and indigenous bands raised concerns, leading the MPCA to schedule the hearing.

One of the groups, Honor the Earth, welcomed the decision, but said it was disappointed the MPCA did not also decide to analyze potential spills.

The deadline for MPCA to issue the certificate is now Nov. 14, instead of Aug. 15.

In a statement, Calgary, Alberta-based Enbridge said it would work in the meantime to secure remaining permits, in order to start construction this year. Most work will now happen in 2021, it said.

The Line 3 replacement may now begin service in mid to late 2021, Stifel FirstEnergy analyst Ian Gillies said.

The Canadian portion is complete, but Enbridge has run into repeated obstacles in Minnesota, where review has lasted nearly five years.

The hearing will needlessly delay the project at a time when Minnesota’s economy badly needs the construction jobs, said Joel Smith, an official with Laborers’International Union of North America.

“This decision wastes more months rehashing the same tired arguments,” he said. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Tom Brown)

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