The Daley Note: June 30, 2023
No stranger to controversy, Enbridge’s (ENB) Line 5 pipeline is facing new legal issues. A federal judge has ruled in favor of a complaint by a Chippewa tribe and ordered the pipeline to relocate off tribal land in Wisconsin.
On June 16, a US district judge ordered ENB to move a 12-mile segment of Line 5 near Ashland, WI that crosses into lands of the Bad River Band of the Lake Superior Chippewa (see map). The tribe alleges Line 5 is at immediate risk of exposure and rupturing after erosion from heavy spring rains.
In his ruling, the judge gave ENB three years to relocate the pipeline. He also ordered the company to pay $5MM to the tribe for trespassing, as its easement was never renewed on tribal lands. Earlier this week, the judge clarified Line 5 can remain in operation until the three-year window terminates on July 16, 2016.
Enbridge has experienced its share of legal battles on Line 5. In November 2020, Michigan Governor Whitmer revoked the pipeline’s easement through the Straits of Mackinac. ENB has defied the order, stating it would only shutter Line 5 when ordered by federal regulators or a judge. Michigan’s attorney general has since filed a lawsuit to return the matter to a state court; ENB has filed a countersuit.
In the latest case, ENB has a plan to reroute the pipeline 41 miles around the Bad River Band reservation. However, ENB has expressed concerns that permits for the project won’t arrive in a timely fashion. Once permits are in hand, ENB said it would take about one year to build the alternate Line 5 route.
Line 5 transports up to 540 Mb/d of light crude oil, synthetic crude and propane from Superior, WI to Sarnia, ON. The pipeline supplies 55% of Michigan’s propane demand and 45% of refinery supply in Michigan, Ohio and Ontario.
East Daley Analytics’ Crude Hub Model tracks all pipelines carrying crude oil into the Patoka, IL refinery and storage hub (see figure). Using the Crude Hub Model, we can envision a market scenario without Line 5. Without the pipeline, we would expect a larger demand pull from the Patoka/Midwest region and fewer crude oil barrels to make it to the Gulf Coast via Marathon Oil’s (MRO) Capline Pipeline, and to Houston via the Energy Transfer Crude Oil Pipeline (ETCOP).
Shutdown of Line 5 would significantly raise transportation costs for refiners and propane suppliers in Michigan’s Upper Peninsula. Most likely, operators would need to rail or truck replacement crude oil to the refinery, adding transportation costs. The Mid-Valley pipeline could possibly deliver more crude northbound, according to the Crude Hub Model, but additional trucking cost would be required to most destinations. - Kristine Oleszek
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