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Enbridge gears up for another pipeline fight as Michigan state looks to shut Line 5

CALGARY – Enbridge Inc., North America’s largest pipeline company, says Michigan state’s request for a restraining order and injunction against a pipeline connecting Alberta oil to Midwest refineries is “legally unsupportable” and “unnecessary.”

The company shut down the twin pipelines through a narrow waterway on the Great Lakes last week when one of the anchor supports at the bottom of the lake shifted. After inspecting the lines, Enbridge re-opened the west-bound pipe, which was not damaged, but requires an engineering report and work with the U.S. Pipeline and Hazardous Materials Safety Administration on the east-bound pipe.

However, the Michigan Attorney General Dana Nessel filed an injunction Monday asking a county judge in the state to suspend operation of Line 5, which carries 540,000 barrels of oil per day, until an investigation is conducted.

“To date, Enbridge has provided no explanation of what caused this damage and a woefully insufficient explanation of the current condition and safety of the pipeline as a result of this damage,” Nessel said in a release Monday. “We cannot rely on Enbridge to act in the best interests of the people of this state so I am compelled to ask the court to order them to do so.”

Michigan Governor Gretchen Whitmer also sharply criticized the company in a release over the weekend.

“Given the gravity of this matter, I was taken aback to learn the company has unilaterally resumed operation of the west leg without even opportunity for discussion,” Whitmer said, adding the company’s “disregard for the safety and well-being of our Great Lakes” was unacceptable.

Michigan Governor Gretchen Whitmer. Rebecca Cook/Reuters files

Enbridge fired back with a letter signed by chief executive Al Monaco to Whitmer on Monday, which described efforts by the Calgary-based pipeline company to inspect, repair and re-start a portion of its Line 5 pipeline through the Straits of Mackinac, the narrow waterway between the state’s lower and upper peninsulas. The strait connects Lake Michigan and Lake Huron and forms part of the Great Lakes.

“Enbridge understands the importance of the Great Lakes to the State and we share your concerns for their safety and well-being,” Monaco said in the letter dated June 21. “We have spared no effort or expense in putting safety first and exceeding regulatory requirements, while moving forward expeditiously with the replacement of the Line 5 Straits crossing.”

But the injunction was “legally unsupportable, unnecessary and will be vigorously opposed by Enbridge.”

We have spared no effort or expense in putting safety first and exceeding regulatory requirements

Al Monaco, Enbridge CEO

Monaco’s letter also pushes back against allegations that Enbridge unilaterally restarted the pipeline.

“In your letter yesterday you expressed your concern that Enbridge has unilaterally resumed operation of the west leg without any opportunity for discussion,” Monaco wrote. “To be clear, the west leg has shut down and inspected as a precaution: Enbridge will not resume operation on the east leg without any discussion with the State of Michigan and approval from PHMSA.”

The letter highlights rising tensions between the company and Governor Whitmer, who is pushing for a faster move away from carbon-based energy.

The company has been in a protracted fight over Line 5 and plans to replace the aging Line 5 with new pipes and a tunnel beneath the waterway, but the plan has been staunchly opposed by the Michigan state government.

“They’ve been trying to shut it down for a while now,” said Phil Skolnick, a New York-based analyst with Eight Capital, adding that last week’s incident provided pretext to try again with a legal challenge to the line.

Line 5 however delivers the majority of the propane needed for the state’s heating needs and shutting it down will likely hurt Michigan residents, he said.

A woman holds a protest sign against Enbridge's Line 5 in Michigan in 2017.A woman holds a protest sign against Enbridge’s Line 5 in Michigan in 2017. Cory Morse/The Grand Rapids Press via AP

“That’s a pretty dramatic call to make to just cut off 55 per cent of heating supplies across the whole state,” Skolnick said. In Michigan’s Upper Peninsula, he said, the pipeline provides 65 per cent of the propane demand.

Enbridge plans to begin work on a replacement project for Line 5 next year, which will include boring a tunnel beneath the Straits of Mackinac to house the new pipelines in an effort to prevent future slips and to prevent oil from spilling into the Great Lakes.

Company spokesperson Ryan Duffy said in an email Tuesday the injunction filed this week is “not connected” to the tunnel project and “not likely to impact the project schedule.”

We still plan to start next year and complete the project in 2024,” Duffy said.

However, the plan has been contested by the state government.

Skolnick said he’s surprised the state isn’t pushing for the tunnel to be built sooner given the Straits are an important waterway.

“They’re trying to build a tunnel to prevent any kind of rupture from happening from an anchor but the politicians have a different agenda and common sense doesn’t prevail,” he said.

Financial Post

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