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No pipeline wars letup
Canadian government joins Line 5 battle, Line 3 starts shipments, TC Energy sues
Gary Park for Petroleum News
Line 3 and Line 5 - Enbridge’s two troubled pipeline projects that have wrestled with opponents in the United States - have posted one significant gain but embarked on an uncertain path to protect rights to deliver crude bitumen into and through the U.S, Midwest.
At the same time, rival TC Energy has launched a US$15 billion claim against the U.S. government to cover its losses from President Joe Biden’s decision to scuttle the Keystone XL.
On the upside, Enbridge said its replacement of an aging Line 3 started shipments on Oct. 1 by almost doubling capacity to 760,000 barrels per day from 390,000 bpd, making it the first new transportation link since Enbridge’s Alberta Clipper project was finished in 2015.
The US$8.2 billion project carries the crude from Edmonton to refineries in the U.S. Midwest, ending years of operating below capacity because of the existing line’s age and corrosion.
Leo Golden, Enbridge’s vice president of Line 3, said the project points to the future of oil and gas pipelines.
He said the challenges faced by new energy infrastructure is reflected in Line 3 - a view echoed by Phillip Wallace, business representative for Pipeliners Union 798.
“The maintenance industry is our future. It’s the lifeline of the (pipeline sector). Line 3 was the big boy that needed replacing badly,” Wallace said.
The finished project ensures Canadian producers of oil sands crude will have access to U.S. markets and global exports through shipping terminals on the U.S. Gulf Coast.
Line 5 Attention now turns to a bare-knuckles brawl between Michigan Governor Gretchen Whitmer and a formidable joint force of the Canadian, Ontario and Alberta governments, Alberta crude producers and Michigan customers who rely for their survival on crude by-products, notably propane.
The Canadian government has invoked its 1977 Transit Pipelines Treaty with the U.S. to trigger formal negotiations between the two countries over the fate of Line 5.
That in turn cranks up a dispute in which Biden has avoided playing a role, five months after his Energy Secretary Jennifer Granholm told reporters that the White House had no plans to get involved so long as there was a chance the courts could settle the matter.
Canada’s Foreign Affairs Minister Marc Garneau said his government is “firmly committed to ensuring our energy and economic security.”
“The Biden administration will not be able to duck this issue any longer,” said Toronto international trade lawyer Lawrence Herman.
Gordon Giffin, a former U.S. ambassador to Canada now acting as legal counsel for the Canadian government, asked Janet Neff, the U.S. district judge presiding over the Enbridge-Michigan dispute, to suspend court proceedings while formal negotiations between Canada and the U.S. take place.
“It is neither necessary nor proper for this court, or any other domestic court, to make any determination that could undermine, conflict or interfere with the obligations and processes established by the treaty,” he wrote to Neff.
Treaty The treaty is designed to ensure uninterrupted transmission of petroleum between the two countries.
It says the only justifications for impeding the flow are natural disasters or emergencies - and even then only temporarily.
Derek Burney, a former Canadian ambassador to Washington, said it was a “very sad commentary on the state of the (Canada-U.S.) relationship if we have to invoke a treaty in order to assert our rights.”
But Whitmer takes every opportunity to stir the pot by referring to Canada as a “foreign power,” ignoring decades of cross-border trade in oil and natural gas, especially at times when the U.S. was faced with OPEC embargoes.
The Coalition of Building Trades Unions, representing unions in Canada (notably Ontario and Quebec), Michigan and Ohio was formed in response to Michigan’s notice of termination of Line 5’s 1953 easement to cross the Straits of Mackinac in the Great Lakes over concerns about a potential spill.
Member unions of the coalition have estimated that shutting down Line 5 would endanger 3,600 jobs in Montreal’s petrochemical industry, 4,900 jobs at Ontario’s Sarnia refinery complex and 23,500 indirect jobs in the Sarnia area, 500 jobs at Ohio’s Toledo refinery and the potential loss of another 1,000 jobs in northwest Ohio - all facilities that depend on crude carried by Line 5.
“We can’t let this vital (pipeline) that we have relied on for nearly 70 years be shut down,” said Steve Calywell, president of the Michigan Building and Construction Trades Council.
Pipelines bailing But, just as they need all of the strong voices they can muster, Canada’s leading pipelines have been bailing out of the lobbying organization they formed 28 years ago.
The Canadian Energy Pipeline Association has announced it will cease operations by Dec. 31, having seen three of its dozen member companies - TC Energy, Enbridge and Pembina Pipeline - quit the ranks since 2016.
CEPA President Chris Bloomer said it had become increasingly difficult to lobby for changes to government policy over the past decade, especially as fossil-fuel companies started pivoting to renewables or incorporating green technologies into their operations under pressure from investors.
The association at its peak spoke for companies that transported on an annual basis 4.5 trillion cubic feet of natural gas and 1.3 billion barrels of crude oil, often more than half of those volumes destined for the U.S.
Bloomer said the “big guys represented a critical mass (for CEPA). When you have them you’re speaking for the whole industry. When you lose that constituency, it’s tough.”
But that doesn’t mean “this industry is throwing in the towel by any means,” he said, suggesting companies want to tell their own stories when it comes to lowering carbon emissions or incorporating more renewables into their energy mix.
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