Fears of oil spills in the Great Lakes from two old US pipelines intensified, raising doubts about their future and creating new headaches for operator Enbridge Inc. and the Canadian energy sector.
Canada has faced years of delay in getting new oil pipelines built due to environmental opposition, resulting in severe congestion in Alberta, the country's main crude oil production province, which forced the provincial government to impose production cuts this year. The pipelines are increasingly controlled by environmental groups concerned about losses, and the United States of the Great Lakes is carefully examining the risks.
The Minnesota Appeal Court ruled on June 3 that the environmental impact statement for Enbridge Line 3 did not adequately address the risk of spillage in Lake Superior, imposing a new challenge to the construction program of the company. Also last week, Michigan governor Gretchen Whitmer repeated a threat to shut down line 5 unless Enbridge accelerated its chronology to replace it.
"This is a real-time problem because (Line 3) was the most imminent possibility for Canadian production to see a pressure release on the system," said Rafi Tahmazian, senior portfolio manager of Canoe Financial, owner of natural resource stocks. Canadians and other oil producers. "It's disappointing and disturbing."
Enbridge shares fell 5% in Toronto last week, hovering near a minimum of three months.
Line 3 transports oil from Alberta to US refineries in Minnesota and Wisconsin. Line 5 brings oil from Wisconsin to the Sarnia refineries in Ontario, passing through the Mackinac Strait that connects Lake Michigan and Lake Huron. Both were built in the 60's.
In a statement on Friday, Enbridge said he was still analyzing the court's decision on line 3.
Without a valid environmental statement, the certificate of necessity and Enbridge's route permit, which he received from the Minnesota Public Utilities Commission (PUC) a year ago for a noisy opposition, are null.
The Department of Commerce and Enbridge of Minnesota must now redesign the PUC satisfaction statement, a process that will probably take at least six months, said Alexandra Klass, a law professor at the University of Minnesota.
Previously, Enbridge planned to have the remaining Minnesota permits for Line 3 by November and will put it into service in the second half of 2020. It did not say how the ruling of the appeal court can now influence that plan.
"As of now they have no valid state permission," Klass said. "I don't know their construction program, but it seems ambitious."
PUC officials declined to comment.
Without a valid environmental statement, the Minnesota Department of Natural Resources and the Pollution Control Agency cannot release the required state permits, said Scott Strand, lawyer for the environmental group Friends of the Headwaters.
"It does not seem likely that the calendar can remain in place," he said.
The Minnesota Pollution Control Agency must issue water quality certification of Line 3 by October 30 or Enbridge should reapply the application, restarting a year-long process, said the spokesman Darin Broton.
The Minnesota Department of Natural Resources stated in a statement that it was determining its next steps.
In Michigan, Enbridge said it is taking legal action regarding Line 5 to enforce agreements with a previous Michigan administration that allowed it to build a tunnel under the Straits to replace a section of water pipe . The governor said he fears the anchors from the boats could break the existing pipe.
Whitmer's insistence on the shutdown of line 5 in two years, in view of the completion date of the tunnel by 2024, led to the legal action of Enbridge, the company said.
Whitmer wrote to Enbridge Al Monaco's CEO on Monday saying that she wants a fixed date to close the submarine part of the pipeline and that the state could otherwise close line 5. It has no further comment on Friday.
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