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Oil Markets Optimistic As Brent Flirts With $70

Oil Markets Optimistic As Brent Flirts With $70

There was a slight pullback…

Oil Rally Stalls As India's COVID Crisis Worsens

Oil Rally Stalls As India's COVID Crisis Worsens

Oil prices dropped on Thursday…

Enbridge: Line 5 Shutdown Will Lead To Immediate Oil Shortages

If Michigan shuts down the Line 5 crude oil pipeline, refiners in central Canada and the U.S. Midwest will face a shortage of feedstocks, and propane prices will shoot up, the operator of the pipeline, Enbridge, has warned.

“A shutdown of Line 5 would cause an immediate shortage of energy in the region,” Vern Yu, Enbridge president of liquid pipelines, said. “It would drive up prices significantly, and the replacement would be years away.”

Michigan’s Governor Gretchen Whitmer and the director of the state’s Department of Natural Resources last November revoked Enbridge’s easement for the operation of the twin Line 5 pipeline, citing repeated violations of the easement and the need to protect the Great Lakes.

“The state is revoking the easement for violation of the public trust doctrine, given the unreasonable risk that continued operation of the dual pipelines poses to the Great Lakes,” an official statement said. “Moreover, the state is terminating the easement based on Enbridge’s persistent and incurable violations of the easement’s terms and conditions.”

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That happened a couple of months after Enbridge won the approval of the Pipeline and Hazardous Materials Safety Administration. It also won a case at the Michigan Circuit Court that greenlit the restart of work on the pipeline.

The Canadian pipeline operator proposed the replacement of a section of the Line 5 pipes with new ones a few years ago, and the Michigan Legislature approved it in late 2018. Enbridge’s proposal was motivated by safety concerns: the pipes in that section were 65 years old. Yet, it is again safety concerns that Gov. Whitmer is citing in her attempts to kill the replacement project.

The case is currently being looked into at a federal court after Enbridge filed an injunction to stop Michigan’s move to suspend the pipeline. Meanwhile, according to Yu, if Line 5 is shut down, this will necessitate some 15,000 oil trucks daily to move the oil from Canada to the U.S., as well as 800 rail cars.

By Irina Slav for Oilprice.com

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