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Enbridge to start multibillion-dollar pipeline project in August

Workers unload a 36-inch pipe from a rail car to a semi Saturday east of Bemidji in preparation to start a $3.4 billion Enbridge Inc. crude oil pipeline project in mid-August. Bemidji is one of six staging points for the 1,000-mile project, with 326 miles in the United States. Pioneer Photo/ Brad Swenson

A 1,000-mile crude oil pipeline project costing $3.4 billion begins in mid-August, say Enbridge Inc. officials.

"We've got pipe coming in and yards are filling up, equipment is rolling in," Lorraine Grymala, Enbridge manager of community affairs/major projects, said last week. "We're just waiting on a few remaining permits and then we'll set a firm kick-off date, but August ... we should be ready to go."

Locally, it will mean up to 500 jobs.

Enbridge is burying 36-inch pipe from northern Canada to Superior, Wis., called the Alberta Clipper. It involves 1,000 miles of new pipeline, with 326 miles in the United States.

Running parallel to that is another 20-inch pipeline, called Southern Lights, with 188 miles constructed in 2009.

"It's a significant increase in capacity," she said of the 36-inch line, which will carry an additional 450,000 barrels of crude oil daily, with a U.S. route from Neche, N.D., to Superior.

Four existing pipelines ship about 1.6 million barrels per day of crude oil and liquid natural gas, Grymala said.

"This area will actually be constructing two pipelines," she said of the Alberta Clipper crude oil line and the Southern Lights diluents pipeline which originates in Chicago and flows north.

"It carries a product called diluents which is still in the petroleum spectrum, but on the lighter end," Grymala said. "It's a product that's produced by the refining process ... It goes up north to the Alberta oil sands and is used in the crude to use it better."

Diluents are a thinning agent that allows the crude oil to flow easier through the pipeline, she said.

The line is being built in segments, with the line now completed from Chicago to Superior, she said. This year's 188-mile segment will take it to the Canadian border, where it is done to the north. In all, Southern Lights is a $2.2 billion project with a capacity of 180,000 barrels a day.

The Alberta Clipper project's 326 miles in the United States is a $1.2 billion project, Grymala said.

"Up and down the line, for the 326-mile segment, we expect to employ about 3,000 workers," she said. "We're doing the construction in six spreads and each spread has its own crew, which is 350 to 500 people per crew."

Two crews, or spreads, will operate out of Bemidji for the two pipelines, she said. "You will see a pretty significant number of people here."

The contractor for the Bemidji area is U.S. Pipeline of Houston, Texas. The contractor north of Clearbrook is Michaels of Wisconsin, and from Deer River to Superior is Precision Pipeline of Wisconsin.

"Each of those contractors brings with them a core crew of people who go all over with their respective companies and build pipelines all over the United States, so they're construction experts," Grymala said. "They are about 50 percent of the workforce. The other 50 percent is hired through the local union halls."

Pre-job meetings have been held with the unions, she said, so the unions are aware of the workforce needs and types of skills needed. "The purpose of the core crew is to train people."

Union crews will be hired locally at prevailing wage standards, she said. "The laborers will be the bulk of the workforce, and operating engineers are another significant chunk; the Teamsters and the plumbers and pipe fitters and the welders will be the rest."

There will be 23 miles of pipeline constructed in Beltrami County, or 46 miles with the two separate but parallel pipelines, said Sheila Dunn of Natural Resource Group, an Enbridge consultant.

"That will generate $1.9 million in additional tax revenue for the county, and that's above and beyond what Enbridge is already paying," Dunn said.

That additionally revenue would nearly replace the $2.1 million the county now faces losing through state aid reductions this legislative session.

The state assesses the value of the pipe once it is in the ground, and informs the county of the tax value, Dunn said. "That value will change over time, but right now it will be $1.9 million (in taxes)."

"Spending up and down the line in terms of wages paid is $276 million," Grymala said. "In terms of extra construction-related spending, there's another $110 million, for things like fuel, tires or replacement parts for equipment that breaks down.

"The workers themselves need lodging and food, groceries, those kinds of things," she added. "That's another $60 million. It's a pretty good economic shot in the arm with people spending their money and the project spending money."

Contractors are encouraged to spend locally when practical to do so, Dunn said. "A lot of the communities along the route have the potential to see a real economic boost from this project, because the workers need places to stay and restaurants to eat in and laundry facilities to wash their clothes in, and those types of things."

An area near Bemidji High School will serve as a staging area, Grymala said. Workers will arrive each morning and bet taken by bus to the work site. They will typically work six days a week, 10 hours a day.

"They need that to get as much done as possible, between August and December," she said. The project is to be completed in December, and the land restored early next year. Work in wetlands will take place in January and February.

The line is scheduled to be in service by this time next year, Grymala said.

A full Environmental Impact Statement has been prepared for the project, involving the U.S. State Department as the line crosses an international border, and permits secured or in the process of being secured. Rights-of-way have been secured, although a petition filed last week on the Leech Lake Reservation seeks a tribal court decision to stop construction.

"First and foremost, we have agreements with both of the tribal councils (Leech Lake and Fond du Lac) signed and ready to go," Dunn said. "We have good relationships with the councils. Our understanding up until now is that any opposition was limited to a few band members, and mainly only Leech Lake."

More than 30 public meetings were held to gain publid input, she said.

The group also sought to stop the project through the Minnesota Public Utilities Commission, Grymala said, but the PUC granted Enbridge its certificate of need for the project and a route permit.

"We're ready to go," she said.