Home NEWS Imperial, Suncor make contingency plans regardless of ‘low likelihood’ of Line 5...

Imperial, Suncor make contingency plans regardless of ‘low likelihood’ of Line 5 shutdown

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CALGARY — Lower than a month after U.S. President Joe Biden nixed the Keystone XL pipeline as a part of a sweeping local weather plan, one other pipeline with implications for Canada is within the crosshairs of a U.S. politician.

Learn extra:
Most Canadians, including most Albertans, appear to be ready to give up on Keystone XL pipeline: poll

Nevertheless, as discuss surrounding the potential shutdown of Enbridge Inc.’s Line 5 intensifies on each side of the border, shippers are assured that the oil will proceed to stream, whilst they make contingency plans.

Enbridge Inc.’s Line 5 strikes about 87 million litres of oil and pure fuel liquids day by day from Wisconsin to Sarnia, Ont., passing by elements of Michigan’s higher and decrease peninsulas. Enbridge says it provides 53 per cent of Ontario’s crude oil wants and greater than half of Michigan’s propane for dwelling heating.

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Michigan Gov. Gretchen Whitmer final fall ordered a shutdown of Line 5 by Might, saying Enbridge repeatedly had violated an easement permitting pipeline operations within the straits. The corporate is difficult the order in Federal Court docket and says it gained’t comply.


Michigan Gov. Gretchen Whitmer addresses the state’s Electoral School on the state Capitol, Monday, Dec. 14, 2020, in Lansing, Mich.


AP Photograph/Carlos Osorio, Pool

Sarnia Mayor Mike Bradley final week stated 3,000 jobs at three native refineries shall be impacted if Line 5 is shut down, including to calls from the federal Conservatives and provincial politicians in Ontario and Alberta that Ottawa press the matter with U.S. President Joe Biden.

However on latest convention calls, the CEOs of oil refiners Imperial Oil Ltd. and Suncor Vitality Inc. stated they’re not overly nervous that the pipeline will cease deliveries, nor do they count on a shutdown to tremendously have an effect on operation of their refineries.

Learn extra:
Enbridge rejects Michigan’s demand to shut down oil pipeline

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“Whereas we expect a shutdown of that pipeline is a really low likelihood, we’re growing acceptable contingency plans that might enable us to provide our refineries in Ontario,” stated Imperial CEO Brad Corson, including these supply strategies might embody use of the St. Lawrence Seaway, different pipelines and rail.

“With Line 5, we imagine shutdown is a really low likelihood occasion,” chimed in Suncor CEO Mark Little on a name a number of days later, including any larger prices of crude transportation to its refineries at Sarnia, Ont., and Montreal may be recovered from robust native gasoline markets.


Imperial Oil president and CEO Brad Corson attends a information convention Wednesday, Dec. 4, 2019.


THE CANADIAN PRESS/Todd Korol

The businesses got a real-world check of their means to stay with out Line 5 final summer season when the pipeline was partly shut down for a number of days as a precaution after Enbridge observed a disturbance to an anchor supporting one among its two underwater pipeline legs.

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Little later reported larger transport prices however no disruption at Suncor’s refineries, however it’s unclear what would occur with an extended outage.

Learn extra:
Sarnia, Ont. workers worry about job loss after planned Enbridge Line 5 shut down

A 6.4-kilometre-long phase divides into two pipes that cross the underside of the Straits of Mackinac, which connects Nice Lakes Huron and Michigan. Opponents say that poses too nice a danger of a catastrophic oil spill into the lakes.

Enbridge says the pipeline is in good situation and has by no means leaked however it reached an settlement with then-governor Rick Snyder, a Republican, in 2018 to exchange the underwater phase with new pipe that might be housed in a tunnel to be drilled by bedrock.

The corporate is searching for a number of state and federal permits for the US$500 million tunnel undertaking. Two weeks in the past, Michigan’s environmental company issued its approval, noting the appliance glad state authorized necessities.

Whitmer’s shutdown order refers solely to the present pipeline.

Learn extra:
Canada didn’t start Keystone XL dispute — the president did, Kenney says in rebuke of Biden

In its termination discover, Whitmer’s workplace stated the 1953 easement was wrongly granted and violated the state’s public belief obligation to safeguard its waters. A report by the Michigan Division of Pure Assets stated Enbridge had failed to fulfill security requirements.

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Enbridge countered in a lawsuit now earlier than the U.S. Federal Court docket that the federal Pipeline and Hazardous Supplies Security Administration has “unique authority” over power pipelines, including that Michigan’s shutdown order violates the U.S. Structure by hampering interstate commerce.

Whether or not the state is legally empowered to shut the Line 5 pipeline is the important thing query earlier than the court docket, says Dennis McConaghy, an creator of two books about pipelines and a former government with TransCanada (now known as TC Vitality), the proprietor of the just lately cancelled Keystone XL pipeline.

“Whitmer’s order gave them till the center of Might to close it down they usually’re now principally going to court docket actually on a matter of jurisdiction,” he stated in an interview.

Learn extra:
Pressure builds for Biden to cancel other pipeline projects after Keystone XL

“My very own view is that Enbridge ought to win this case however it at all times is dependent upon what choose you get. There’s excessive uncertainty.”

Courts have been reluctant to close down working pipelines, identified Phil Skolnick, a New York-based analyst for Eight Capital who covers senior Canadian oil and refining firms.

For instance, he stated, when a choose ordered the three-year-old Dakota Entry Pipeline to be shut down final summer season because of a deficiency in its environmental affect evaluation, an enchantment court docket choose upheld the order to finish the evaluation however allowed continued operation of the pipeline.

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Learn extra:
Residents gather in South Dakota to lament loss of Keystone XL pipeline

Michael Blumm, a legislation professor at Lewis & Clark Regulation College in Oregon, agreed Enbridge would doubtless cite priority in an enchantment if the court docket resolution favours the state.

State legislation may very well be pre-empted if there’s a battle between it and federal legislation however often the federal and state legal guidelines can coexist, he added. He stated the Federal Court docket might additionally ask the Michigan Supreme Court docket to present an opinion on the applicability of the general public belief doctrine within the case.

Enbridge, in the meantime, is decided to defend itself in court docket, though it says dates haven’t but been set.

“We are going to vigorously defend the validity of the easement and our proper to function the pipeline,” stated spokeswoman Tracie Kenyon in an electronic mail on Tuesday.


© 2021 The Canadian Press

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