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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Canada Is Battling Another Pipeline Cancelation By The U.S.

President Biden is coming under fire for his attack on oil and gas once again as Canada pleads to keep the cross-border Great Lakes oil pipeline open.  Canada is battling against the state of Michigan to keep the cross-border pipeline open as calls to enhance the joint response to climate change seem to be at odds with the two countries’ oil industries. To create meaningful policy change towards clean energy the U.S. and Canada must work together to support their oil and gas sectors while establishing a clear strategy for the eventual movement away from fossil fuels. 

It is important to remember that the U.S. relies heavily on Canada for much of its crude oil imports, consuming around 3.7 million barrels per day, or about 80 percent of Canada's crude output.

Line 5 is supposed to close by May 13, according to Michigan’s governor, to eliminate the risk of a major leak. As much as 540,000-bpd oil and natural gas liquids pass through this line, making it essential for oil transportation between the two countries. However, the 70-year-old pipeline presents an extreme environmental risk due to its age. 

The pipeline currently provides energy to Michigan, Ontario and Quebec, to an area of around 40 million people, meaning the disruption caused by this closure would be significant.

This is the second major pipeline that has prompted a dispute between the U.S. and Canada since President Biden came to office earlier this year. The first was the cancellation of the Keystone XL pipeline project in January. The pipeline was expected to transport 800,000 bpd of crude between Alberta and refineries in the U.S.

Related: Three Things That Will Drive Oil Prices In May

Prime Minister Justin Trudeau expressed disappointment in this decision and Alberta Premier Jason Kenney called the decision a “gut punch” and an “insult”; threatening legal action to recover the $1.5 billion investment by Alberta for the project.

A significant proportion of jobs were lost in relation to the cancellation of Keystone, and the closing of line 5 threatens Canada’s oil and gas industry further. 

Officials from both sides have been formally discussing the potential decommissioning of the pipeline for months, mostly in joint conversations over climate change and policy cohesion. Yet Canada seems to have received little response on the matter from the White House to date. 

If deemed necessary, Ottawa could go so far as to invoke the 1977 Transit Pipelines Treaty to stop the closure that would hinder the transit of Canadian oil. This would be the first case of this treaty being enacted.

Canadian Natural Resources Minister Seamus O’Regan stated, “We have signaled very clearly that this is nonnegotiable,” In addition, “Line 5 is very different from Keystone XL and we fully support it, and we will defend it,” he said. “We made our case with Republicans as well as Democrats.”

Canadian Enbridge Inc. is instead suggesting that the infrastructure be updated to mitigate the potential for an oil spill by building a tunnel under Lake Michigan. The tunnel, Enbridge claims, would make vital oil transportation infrastructure safer, in line with Biden’s energy policy idea of ‘Build Back Better’. Enbridge is also criticising Michigan’s move as it will imply the need for thousands of long-haul vehicles to transport the oil that currently flows through the pipeline.

If the pipeline closure goes ahead it will have a detrimental effect on Canada’s oil and gas industry, which has already taken a hit from the cancellation of Keystone. It will also imply the halting of vital oil and gas imports to the American market. The question is whether Biden will respond to Enbridge’s counter proposal to invest in the existing infrastructure to mitigate the risk of a spill without hindering oil transportation between the two countries.

By Felicity Bradstock for Oilprice.com 

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  • Mamdouh Salameh on May 02 2021 said:
    The late Canadian Prime Minister Pierre Trudeau, the father of the current Prime Minister Justin Trudeau, was once quoted saying about the United States that “living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt”.

    Nothing has changed since then. With a scratch of a pen, President Biden arbitrarily cancelled in January the Keystone XL pipeline project which was expected to transport 800,000 barrels a day (b/d) of Canadian crude oil from Alberta to refineries in the U.S without a second thought about Canadian investments in the pipeline, the loss of jobs or the damage he would inflict on the Canadian oil industry.

    Canada is now battling against the decision by the US State of Michigan to close Line 5 pipeline by May 13 in order to eliminate what is being described as a risk of a major leak. Line 5 pipeline is essential for oil transporting between the two countries as some 540,000 b/d of oil and natural gas liquids pass through it daily. If the pipeline closure goes ahead it will have a detrimental effect on Canada’s oil and gas industry, which has already taken a hit from the cancellation of Keystone.

    What is more important than the damage to Canada’s oil industry is the flippant way the United States ignores Canada when it takes decisions detrimental to Canadian oil industry. It tends to treat Canada disrespectfully as if it is a mouse next to an elephant exactly as the late Pierre Trudeau said in the early 1970s.

    This doesn’t bode well for Canada’s future. The Canadians should guard against future plans by the United States to absorb Canada into its territory whether peacefully through investments or militarily.

    This isn’t a pipe dream or a far-fetched plot. The United States is becoming overpopulated what with population growth and migration from Mexico and South America and its natural resources like water, crude oil and even agricultural production are declining fast. Moreover, the US can’t expand again into Mexico. Therefore, underpopulated Canada with huge water and oil resources and also huge expanses of agricultural land (aided by climate change) must be the ‘ultimate manna from heaven’ for the United States.

    The United States deliberately started the Mexican-American War of 1846-48 which ended with the Treaty of Guadalupe under which Mexico was forced to cede the states of California, Mexico, Nevada, Utah, most of Arizona, about half of New Mexico, about a quarter of Colorado, a small section of Wyoming and also the occupied state of Texas thus doubling its land area to what it is now.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Hugh Williams on May 02 2021 said:
    A 70 year old pipeline took 70 years to age. Is long range planning dead?

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