CALGARY, Alberta, June 18 (Reuters) - Enbridge Inc said on Wednesday its plan to replace the Line 3 oil pipeline carrying Alberta crude oil to the United States will be more expensive than originally estimated, pegging the cost of the 790,000 barrel per day project at C$7.5 billion ($6.9 billion), C$500 million more than its initial estimate.
The company, the backer of the controversial Northern Gateway pipeline that received final approval on Tuesday, also said it would issue 7.86 million shares to underwriters for gross proceeds of C$400 million to raise the additional capital for the replacement program.
Enbridge, whose pipelines carry the bulk of Canada’s crude exports to the United States, said in March it intends to replace all segments of pipeline on Line 3 between Hardisty, Alberta, and Superior, Wisconsin, by the second half of 2017.
By replacing the existing 34-inch diameter pipeline with 36-inch high-strength steel pipe, Enbridge said the line will be able to run at a maximum capacity of 760,000 barrels per day. It currently runs at 390,000 bpd because of pressure restrictions imposed on the line by regulator.
“The Line 3 Replacement Program is Enbridge’s largest ever capital program,” Guy Jarvis, president of the company’s liquids pipeline division, said in a statement. “It will improve the reliability of our system for the benefit of our shippers and Enbridge.”
The new estimate comes a day after the company’s proposed C$7.9 billion Northern Gateway pipeline, which will carry crude oil from Alberta’s oil sands to an export port on British Columbia’s Pacific coast, was approved by the Canadian government despite opposition from environmental and aboriginal groups.
The underwriters for the share issue, led by RBC Capital Markets and Credit Suisse, have an option to boost the size of the share issue by 15 percent within 30 days.
Enbridge shares fell 58 Canadian cents to C$51.38 on the Toronto Stock Exchange on Wednesday. ($1 = 1.0853 Canadian Dollars) (Reporting by Scott Haggett; Editing by Grant McCool)