Oil shortages could follow key pipeline shutdown in Michigan, Enbridge warns
CALGARY (Bloomberg) --Enbridge Inc. warned that refiners in central Canada and the U.S. Midwest would see crude supplies cut in half and propane costs surge for some homeowners if Michigan’s governor succeeds in shutting a key oil pipeline that crosses the state.
Refineries in Michigan, Ohio, Indiana, Pennsylvania as well as those in Ontario and Quebec would have to find alternative means for securing crude oil should Line 5 be shut, requiring the building of new rail terminals and rail cars, Vern Yu, the company’s president of liquid pipelines, told Canadian lawmakers Tuesday. Michigan homeowners that rely on propane to warm their homes would see prices increase by 38 cents a gallon and airports in Detroit and Toronto would face jet fuel shortages.
Michigan Gov. Gretchen Whitmer announced in November that she is revoking an easement that permitted the pipeline to cross the lake beds in the Straits of Mackinac, a move that could force the systems to shutdown by May. The pipeline is a key conduit for the state’s fuel and a critical source of oil for refineries in both the U.S. and Canada. The move has drawn protests from Canada’s government, which has vowed to fight to keep the pipeline operating.
“A shutdown of Line 5 would cause an immediate shortage of energy in the region,” he said. “It would drive up prices significantly, and the replacement would be years away.”
The governor’s office didn’t immediately respond to an emailed request for comment.
The case is currently in U.S. federal court and Yu said he doesn’t expect the line to be shut in May, but the risk remains that a court could eventually take such action. Yu said that the Canadian government needs to make the U.S. state and federal officials understand that the pipeline is a very important bi-national issue.
The Line 5 dispute has highlighted Canada’s dependence on the U.S. for its energy needs. The only pipeline system that connects the oil fields of Alberta to Canada’s refineries in the east is Enbridge’s Mainline system, which transits through the U.S. before reentering Canada at Sarnia, Ontario.
A total of 15,000 daily truck trips and 800 rail cars would be needed to supply fuel and oil to those reliant on the pipeline, Yu said.
“We believe the pipeline is critical for the entire Great Lakes region,” he said.
