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Report on Business Michigan Governor presses Enbridge to halt flow of oil on Line 5 pipeline

Enbridge Inc. has been warned by the state of Michigan to set a date for shutting down a major crude oil pipeline, or face legal action.

In a letter to the Calgary pipeline company this week, Michigan Governor Gretchen Whitmer said she will work with the company to “identify a firm date for shutdown” of the dual pipeline section that passes underwater across the Straits of Mackinac, and agree on “a reasonable path forward” for the possible construction of a tunnel and replacement pipeline. Enbridge has proposed a new, underground pipeline to be built by 2024, but Michigan officials warn the project is vulnerable to delays.

Ms. Whitmer’s letter suggests the state wants Enbridge to close the Line 5 pipeline well before 2024, but it didn’t include a particular closing date.

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The 66-year-old Line 5 is a key conduit for Western Canadian oil producers as well as refiners in Southern Ontario, which in turn process the oil into gasoline and other products that supply much of the province’s market. At 540,000 barrels a day, it ships more than half of the crude oil that arrives in the Sarnia, Ont., region, site of three refineries and a hub that supplies others in Ontario, Quebec and Ohio.

A shutdown would worsen an already tight situation for shipping Canadian crude. A shortage of pipeline capacity out of Western Canada has weighed on prices for Canadian crude, while political and popular opposition to new pipelines has delayed or killed their development.

The concern for Michigan’s state government and environmentalists is a set of two pipelines carrying crude and propane that rest on the lake bed in a narrow waterway separating Lake Michigan from Lake Huron.

“Until their removal, the dual pipelines remain vulnerable to anchor strikes and other operational mishaps that could result in an oil spill with devastating consequences for the Great Lakes,” Ms. Whitmer wrote in a letter to Enbridge chief executive Al Monaco on Monday.

She said she’s committed to continuing discussions to lock down a mutually agreed upon shutdown date for the existing Line 5 pipelines, and identify a path forward that could include Enbridge constructing an underground tunnel beneath the lake to house a replacement pipeline.

But if negotiations don’t come to fruition by the end of the month, the state’s Attorney-General, Dana Nessel, is prepared to take legal action to halt the flow of crude.

“The goal is to get Line 5 and the oil out of the water,” said Kelly Rossman-McKinney, communications director for Ms. Nessel.

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Enbridge spokesperson Ryan Duffy, who is based in Michigan, said the company is optimistic about reaching an agreement.

“We believe the tunnel remains the most effective and timely way to reducing the risk to the Straits of Mackinac to near zero while ensuring the critical energy needs of Michigan are met,” he said.

The $500-million tunnel project was approved by the previous state governor, and construction was set to take seven to 10 years.

But Michigan’s new administration found the old deal unacceptable because it allowed Enbridge to operate the existing Line 5 indefinitely pending completion of the replacement tunnel.

Ms. Nessel wrote a legal opinion in March that said the previous administration’s approval of the project was unconstitutional, and Ms. Whitmer used that opinion to halt work on the tunnel.

Enbridge has responded by saying it can expedite construction to have the tunnel ready by 2024, and that it’s willing to shut down the existing Line 5 as soon as the replacement is brought into service. Ms. Whitmer, however, wrote the project could face construction delays and litigation, putting off completion by several years.

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It’s not clear how much time Michigan will give Enbridge to remove the existing pipe in the Straits, or whether the company will be able to complete its replacement tunnel before shutting off the existing line.

Canadian refiners are monitoring the battle between Enbridge and the state government, said Lisa Stilborn, vice-president for public affairs at the Canadian Fuels Association, which represents companies such as Royal Dutch Shell PLC and Imperial Oil Ltd. that have plants in Sarnia.

“This is critical energy infrastructure for Canada and the whole Great Lakes region,” Ms. Stilborn said. “We’re watching this very closely.”

She noted Line 5 not only delivers oil to Ontario, but takes petroleum products such as diesel and propane back into Michigan. “It’s an important piece of infrastructure for Michiganites, too,” she said.

Suncor Energy Inc. said a pipeline outage would complicate its crude supply requirements, but would not present a crisis at its Sarnia and Montreal refineries, which both source crude from the Enbridge network. Bringing oil in by rail is one option if needed.

“We’re not concerned. We have decades of experience moving products around the globe and a sophisticated supply trading team who’ll manage it should it occur,” Suncor spokesperson Sneh Seetal said.

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Robin Davidson-Arnott, professor emeritus at the University of Guelph with expertise in coastal processes and management of the Great Lakes, said he’d rather see a properly monitored pipeline with a strong spill response plan transporting crude oil than less safe methods such as rail or tankers.

“Somebody has to do the comparison between the probabilities of an oil spill … versus the economic advantages of having the oil there,” he said. “Ultimately the only truly safe thing is to not have oil going anywhere. So, where along that continuum do you make your bet?”

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