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Since replacement of Enbridge’s Line 3 pipeline began in 2017, a significant increase in economic activity has been experienced across the region, a recent economic-impact study found.
The study was commissioned by Area Partnership for Economic Expansion, a private-sector-led business development engine for northeast Minnesota and northwest Wisconsin. The study did not consider the social or environmental impacts of the project; its purpose was to solely estimate the economic impacts of replacing three segments of Line 3.
This included the mainline, which runs through Kittson, Marshall, Pennington, Red Lake, Polk, Clearwater, Beltrami, Hubbard, Wadena, Cass, Crow Wing, Itasca, Aitkin, Carlton and St. Louis counties in Minnesota; Segment 18 in Douglas County in Wisconsin; and the Superior terminal building in Superior, Wis.
“Large-scale industrial projects are critical to continued growth and success throughout not just the APEX region, but also the entire state of Minnesota,” APEX board chair Lisa Bodine said during a Zoom news conference. “The project surpassed all economic-impact projections and created family-sustaining jobs for many Minnesotans. APEX is proud to advocate for these types of projects in our region because we understand the economic, environmental and social benefits will be felt for decades to come.”
The Line 3 project had a larger impact than originally expected, compared to the 2017 pre-construction study, Bodine said. Originally, the project was anticipated to take two years, cost about $1.9 billion and create 8,600 jobs total. However, the Line 3 project supported an average of 4,157 jobs per year from 2017-23 in the region, according to the recent study performed by the Bureau of Business and Economic Research at the University of Minnesota-Duluth’s Labovitz School of Business and Economics.
During peak Line 3 construction in 2021, employment reached over 14,400 jobs. For every job directly supported by Line 3, another 0.86 jobs were added in related industries, the study stated. Enbridge reportedly contributed more than $1.7 billion in employee wages and benefits, over $2.2 billion in value-added spending, and generated more than $5 billion in new spending over the project’s life.
Thief River Falls, Minn., Mayor Brian Holmer said he has supported the Line 3 project from the beginning. While businesses across the state shut down as a result of the pandemic, his community located along the replacement route saw jobs during construction. Restaurants reforming practices to provide bagged lunches and suppers for Line 3 employees was just one example, he said.
Clearbrook, Minn., Mayor Dylan Goudge added that prior to Line 3, the local economy was bleak with many companies having to make tough decisions.
“Now, we’re still seeing the positive impacts of Line 3. Many people were able to get back to work. Others came from around the country and discovered our community and lifted it up,” Goudge said.
Nearly half of the project’s construction laborers were residents of the 16-county project area. In addition to the construction laborers themselves, Enbridge employed engineers, right-of-way agents, environmental monitors, project managers and construction supervisors.
Due to a lack of local skilled workforce in rural areas, 54 percent of those employed for the construction project were sourced from outside of the study area. While much of their income will leave the study area, it is estimated that non-local workers employed on the Line 3 replacement project spent $132.1 million of their per diem allowances on lodging, meals and incidentals to benefit the retail and hospitality industries of those areas.
According to the study, roughly one-third of the per diem was spent on lodging ($46.4 million), and another third on meals ($44.3 million). Automotive expenses, such as gas and repairs, represented about 21 percent of the per diem budget ($28.2 million). Other significant expenses included incidentals such as retail purchases (7 percent of spending, or $9.6 million) and health care (3 percent, or $3.6 million).
Throughout the project, increased demand for equipment, labor and transportation led to increased economic activity in the affected counties, the study stated. However, after the project’s completion, this additional activity will cease and the economic impacts of construction will no longer be felt in the region.
Jason George, business manager and financial secretary at the International Union of Operating Engineers Local 49, said he spent years advocating for the Line 3 replacement. “It is gratifying to see the facts come out about the project,” George said. “More than 50 percent of the operating engineers were local to my community and will continue working their trades in the community. This project was a big part of their career.”
Enbridge’s Line 3 crude oil pipeline was originally installed in the 1960s to transport crude oil from Edmonton, Alberta, in Canada to Superior, Wis. It was put into service in 1968. In 2015, it was estimated Line 3 was in need of 7,000 excavations over 15 years to operate safely at a reduced capacity.
Enbridge decided replacement of the over 50-year-old infrastructure was the best route. The first three years of the project focused primarily on pre-construction activities, including material procurement, land acquisition, engineering and environmental monitoring. In the United States, the replacement project involved installing a 36-inch diameter pipe in place of the 34-inch pipe segments through 14 miles of Wisconsin in August 2017; 13 miles in North Dakota from August to September 2020; and finally 337 miles in Minnesota in December 2020.
The pipeline was put in service on Oct. 1, 2021. Restoration and monitoring activities will continue through 2023. Once monitoring and restoration work concludes, Enbridge will have invested more than $4 billion over the seven-year project, including more than $2.9 billion spent in the 16-county project area. Enbridge will pay $35 million more annually in Minnesota property taxes, in addition to the $43 million annual property taxes the company currently pays.
Opponents of the pipeline have long said it violates Indigenous treaty rights, threatens to contaminate water with risk of oil spills, contributes to climate change as it strengthens reliance on fossil fuels and exposes communities next to the construction projects to human trafficking.
The full study and an overview can be found at APEXgetsbusiness.com.
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