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Erratic times for Enbridge pipelines
Minnesota regulators approve Line 3 replacement project permits; Michigan leaders seek court approval for May shutdown of Line 5 Gary Park for Petroleum News
On back-to-back days, new and old Enbridge oil pipelines either being installed or operating in northern U.S. states experienced a dose of wild rides.
The high point occurred when Minnesota regulators approved a stack of key permits for the company’s Line 3 replacement project that would allow Enbridge to double capacity to 760,000 barrels per day, opening the way for construction work to start on the US$2.6 billion.
Line 3 was built in the 1960s to deliver crude from an oil hub in the Edmonton area of Alberta to U.S. Midwest refineries, though it carries less oil than its 380,000 bpd capacity because of pipeline corrosion.
Legal action on Line 5 No sooner had the Calgary-based company celebrated what it called a “big day” for Line 3 than Michigan Gov. Gretchen Whitmer and the state’s Department of Natural Resources launched legal action to cancel a 4-mile easement granted in 1953 for Line 5 to cross a waterway connecting Lake Michigan and Lake Huron.
If the state wins its legal action to shut down Line 5 by May 12, 2021, it will cut off 540,000 bpd of light crude, light synthetic crude and natural gas liquids, delivering a major blow to refineries in Michigan, Ohio, Pennsylvania and Ontario that process 840,000 bpd.
Those refineries are operated by Michigan’s Suncor Energy, Imperial Oil, Husky Energy, BP, United Refining, PBF Energy and Marathon Petroleum.
Analysts suggest that a shutdown would lead to higher gasoline prices in several U.S. Midwest states by forcing refiners to seek short-term rail agreements.
Line 5 also supplies about 65% of the propane used for winter heating in Michigan’s Upper Peninsula and 55% of the state’s total propane, according to Phil Skolnick, an analyst with New York-based Eight Capital.
“It’s kind of political suicide,” he told the Financial Post, noting that Whitmer, who has engaged in a long battle with Enbridge two earlier court battles over Line 5. “But I give (the latest suit) a low chance.”
Alberta Premier Jason Kenney called Whitmer and Michigan’s Attorney General Dana Nessel “brain dead” for their efforts to overturn the plans for Line 5.
Nessel claimed in his legal notice that Enbridge had violated a “public trust doctrine” and had failed to comply with easement conditions, to which Enbridge fired back accusing Nessel’s department of conducting assessments “in a non-public manner” and not allowing technical experts to discuss any questions or clarifications related to the review.
Enbridge said Line 5 “is an essential source of energy” for five states and two Canadian provinces, meaning any disruption to the flow of refinery feedstock “would have devastating consequences.”
Line 3 approvals The approvals for Line 3 came from the Minnesota Pollution Control Agency and the state’s Department of Natural Resources, clearing the way for the U.S. Army Corps of Engineers to issue the remaining federal permits.
MPCA Commissioner Laura Bishop said in a statement that her agency’s approval still “requires Enbridge to meet Minnesota’s extensive water quality standards instead of lower federal standards.”
Environmental and Indigenous groups have been challenging Line 3 for years, arguing it threatens waters where wild rice is harvested, while the oil sands bitumen carried in the pipeline would aggravate climate change.
Enbridge said it recognizes that the permits conditions required by the two state agencies are “essential for protecting Minnesota’s sensitive streams and wild rice waters.”
The updated sections of Line 3 in Canada, North Dakota and Wisconsin are already operating. Enbridge said the remaining sections will create 4,200 construction jobs and generate millions of dollars in local spending and tax revenues.
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