Does Minnesota really need and use the oil from Line 3? What do Minnesota’s refineries say?
Minnesota has and will continue to need and use oil that comes to our state through the Line 3 pipeline. It is an integral component in delivering the energy demand for Minnesota and the surrounding region. Minnesota’s two refineries, Flint Hills in Rosemount and Marathon in St. Paul Park, produce fuels for cars, trucks, and planes that Minnesotans use every day. The refineries also produce other petroleum products such as asphalt that is used in road construction projects. If the refineries struggle to get enough oil, it will make road construction projects across Minnesota more expensive.
Today, Line 3 is only operating at approximately half capacity, and Enbridge has provided multiple detailed forecasts showing that there is and will be demand in Minnesota by local refineries for the restored capacity on the Line 3 replacement for years to come.
Minnesotans use more than 12.8 million gallons of petroleum products every day provided by our two refineries that are dependent on oil from Line 3. One hundred percent of pipeline-delivered Canadian crude oil supplied to Minnesota refineries comes from the Enbridge system. Minnesota House of Representatives Research Department has noted:
- “Minnesota has no indigenous sources of petroleum, so it must import both crude oil and refined oil products for use by its residents.”
- “Minnesota has two petroleum refineries, which produce more than two-thirds of the state’s petroleum products. Seventy percent of these products are refined from Canadian crude oil, supplemented by supplies from North Dakota’s Bakken field.”
- “The Flint Hills Resources refinery supplies about half of Minnesota’s motor fuel and 40 percent of Wisconsin’s, as well as the bulk of jet fuel for the Minneapolis-St. Paul International Airport.”
The Minnesota Department of Commerce was wrong when it said that Flint Hills and Marathon refineries are adequately supplied for their needs. Flint Hills Resources, the owner and operator of the Pine Bend Refinery in Rosemount, MN, noted that no one from Flint Hills was interviewed by anyone from DOC for information about their refinery, its capacity, or its needs for a reliable source of oil. In May of 2018, Flint Hills Resources sent a letter to the Minnesota Public Utilities Commission with multiple statements in support of the Line 3 replacement project:
- The Pine Bend refinery “produces most of the transportation fuels used in Minnesota, including nearly all the jet fuel, and a significant portion of the fuels used in the surrounding states.”
- “The Pine Bend refinery relies exclusively on the Enbridge pipeline system to provide the crude oil it needs to help meet demand for all these products.”
- “The importance of the Enbridge pipeline system to Minnesota, including the proposed replacement of Line 3, cannot be overstated. Flint Hills Resources has submitted multiple letters attesting to this fact and underscoring why replacing Line 3 is necessary.”
- “Flint Hills Resources strongly disagrees with the ALJ’s assertions that Minnesota shippers such as Flint Hills Resources have sufficient crude oil supplies to meet their needs.”
- “Neither the ALJ or the Minnesota Department of Commerce has properly assessed the harm chronic apportionment on the Enbridge system poses to Minnesota shippers. Contrary to the ALJ’s opinion, apportionment is already adversely affecting Minnesota refineries. Last year, apportionment averaged nearly 20 percent on Enbridge’s heavy crude oil pipelines. Since January 2018, apportionment on these pipelines has averaged 45 percent, surging as high as 51 percent, which means during this time only a fraction of the crude oil refineries such as Pine Bend sought to purchase was able to be delivered. It also means apportionment is getting worse. These pipeline constraints force refineries to either slash production, draw down crude oil inventories (at a risk to operational reliability; this also assumes apportionment eases quickly enough to allow supplies to be replenished), or purchase crude oil already in the pipeline from other shippers at a higher price than that shipper’s alternative crude oil source, which would inflate the cost of crude oil for shippers that don’t have competitive alternatives. This is especially harmful to Minnesota’s land-locked and pipeline-dependent refineries where apportionment or the lack of adequate pipeline capacity, if left unremedied, will add unnecessary costs and create greater business risk, stymieing future refinery investments, costing jobs, and potentially leading to less reliable fuel supplies and less competitive prices for Minnesotans at the pump.”
- “The replacement of Enbridge Line 3 is critical to maintaining proper crude oil supplies and addressing apportionment, which will continue to worsen to the detriment of Minnesota refineries, if left unresolved.”
Energy consultant Neil Earnest, president of Muse, Stencil & Company has also filed testimony on behalf of Enbridge. Earnest stated, “My analysis indicates that this situation will get worse as we move through time, and that the Minnesota refiners will experience more difficulty over time getting the crude oil via Enbridge, unless Line 3 is replaced.”