Wednesday, August 5, 2020
Since 2017, there has been intense focus on Enbridge Energy’s Line 5 pipeline, originally constructed in 1953, which according to Enbridge is a 645-mile, 30-in.-diameter pipeline that begins in Superior, Wis., travels through Michigan’s Upper and Lower Peninsulas, and terminates in Sarnia, Ont., Canada. As it travels under the Straits of Mackinac, Line 5 splits into two 20-in.-diameter, parallel pipelines that are buried onshore and taper off deep underwater, crossing the Straits west of the Mackinac Bridge for a distance of 4.5 miles. The concern of a pipeline leak in the Straits has had many Michigan government officials, environmental groups, and Native Americans pushing for permanent closure of Enbridge Line 5. A plan is in the works for a tunnel for the pipeline underneath the lake bed which could be completed by 2024. Much study and approval are still needed. 
For the propane gas industry, closure of Enbridge Line 5 would cut off 55% of the propane that reaches Michigan, always one of the top three propane-consuming states in the U.S. In addition, all surrounding states would be impacted as well due to the tremendous amount of propane that ultimately lands in those states. “We all know there are simply not enough trucks and drivers to supply Michigan with propane in the event Line 5 were closed,” Derek Dalling, executive director of the Michigan Propane Gas Association (MPGA) told BPN. “Rail lines are not where they need to be to meet demand either, especially in the high demand winter months.” Dalling is also executive director of the Ohio Propane Gas Association and deputy executive director of the Indiana Propane Gas Association, two more states that would be severely impacted by a loss of supply from Line 5.
“We have been watching this issue with great interest especially due to its impact on New York as well as the many other states where it could affect pricing and availability of product,” said Bruce Whitney, executive director of the New York Propane Gas Association (NYPGA). “With potential interruptions to Sarnia, Ont., and other distribution points, we have great interest in product availability in Western and Central New York. As always, we advise our members to keep in close contact with their trusted suppliers and transporters and make the best decisions for their companies. If there ever was a time to consider adding more storage, this may be it.”
SHUTDOWNS OF LINE 5 IN JUNE
“This has been our biggest focus for the past several weeks,” Jeff Petrash, vice-president and general counsel of the National Propane Gas Association (NPGA), told BPN. “The latest concerns stem from a report by Enbridge that something pulled one of the pipeline support anchors of the east leg out of position. It was also discovered that mussels on the west leg had been dislodged, indicating an impact of some sort.” Enbridge shut down both legs initially on June 18 but then reopened the west leg two days later after consultation with the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA). Both determined damage was limited to the east leg, and, as a result the west leg remained open.
On June 25, a complete shutdown of Line 5 was ordered by Circuit Court Judge James Jamo after Michigan’s Attorney General Dana Nessel requested a temporary restraining order. Four hours of oral argument took place from the state and Enbridge with regard to the Attorney General’s request asking the court to stop Enbridge from operating Line 5 while Michigan regulators review information provided by the pipeline. “The judge ruled July 1 the east leg needed to remain shut down until PHMSA could complete its investigation of damage,” Petrash said. “The west leg could restart to conduct an ‘in-line investigation’ (ILI) and ‘may continue to operate thereafter subject to the results of the ILI and further Order of the Court.’” At the time of the ruling, Vern Yu, Enbridge’s executive vice president and president of Liquids Pipelines, said, “Inspections have determined that the west segment of Line 5 crossing the Straits is safe for operations and which PHMSA did not object to restarting; we had shut down the east segment of the pipeline pending review of a disturbance that was discovered on one of the screw anchors and an assessment of the east leg’s fitness for service.”
On July 8, an Enbridge press release stated, “Enbridge has now submitted to the Michigan Circuit court and to the State the results of our inspection of the area of interest on the west segment of Line 5. The inspection, using an inline inspection tool, found no internal or external metal loss or dents. This test reconfirms that the west leg of the pipeline is safe to operate.”
“If there’s good news, it is that this didn’t happen in December or January,” said MPGA’s Dalling. “Also, the quick reopening of the west leg means the judge felt the west line was safe.” As of July 15, the east leg remained closed and the cause of damage to it some 220 to 240 feet under water remains a mystery. “There will be a review of ships that have come through the Straits in the past year,” Petrash said. “It is not clear what vessel would have come through dragging something that low that could have caused that level of damage.”
A 10-YEAR HISTORY OF CHALLENGES AND POTENTIAL SOLUTIONS
June 30 also brought a development regarding a tunnel that Enbridge and many stakeholders see as the most cost-effective and environmentally responsible resolution to Enbridge Line 5 concerns. The Michigan Public Service Commission rejected Enbridge’s request for a declaratory order that the commission’s original 1953 permit would allow Enbridge to construct a new $500-million tunneled pipeline beneath the Strait of Mackinac. The tunnel is projected to be completed in 2024. The commission ordered a hearing to be completed and briefed within 10 months. On July 7, a website was introduced by the State of Michigan, Michigan.gov/Line5, to keep the public informed about Enbridge Energy’s proposal to build the tunnel beneath the lake bed.
To fully understand the processes leading to the plan of building a tunnel for the pipeline, one must go back at least 10 years to an incident in Michigan in 2010. According to the new Line 5 website, an oil spill from Line 6B owned by Enbridge in a tributary of the Kalamazoo River near Marshall, Mich., was a key event that initially got public attention regarding the potential for severe damage from an oil leak or spill. On July 25, 2010, 843,000 gallons of oil flowed directly into the Talmadge Creek, a tributary that carried oil into the Kalamazoo River. This river is a Lake Michigan tributary and the oil was ultimately contained 80 miles from Lake Michigan. The State of Michigan and Enbridge entered into a $75-million Consent Judgment in May 2015. In July 2016, there was a Consent Decree between Enbridge and the federal government to resolve claims related to the Marshall spill. Enbridge agreed to pay $110 million on spill prevention and pipeline operations in the Great Lakes region and a $61-million fine. Cleanup efforts are ongoing and are estimated at more than $1 billion.
The Marshall pipeline spill led to the creation of the Michigan Petroleum Pipeline Task Force with the mandate to look closer at pipelines transporting petroleum products around the state, and especially Line 5. The creation of the Pipeline Safety Advisory Board (PSAB) led to oversight of two independent analyses of Line 5, an alternatives analysis looking at the feasibility of other forms of transportation to handle the same amount of product that moves through Line 5, and a risk analysis of the potential financial impact of a worst-case spill to determine the final assurance amount as required under the 1953 easement. The alternatives report was provided in June 2017 and the risk analysis was provided in August 2018.
In April 2018, Line 5 was damaged in the Straits by a boat anchor that was dragged along the lake bottom. Three dents were caused to the pipeline, two on the western segment and one on the eastern segment, raising concerns about just how vulnerable the pipeline was to future anchor strikes. The portion of the Straits with pipelines were declared “No Anchor” zones.
INITIAL AGREEMENT BETWEEN ENBRIDGE AND MICHIGAN
In November 2017, an agreement between the state of Michigan and Enbridge required that Enbridge fix gaps in Line 5’s protective coating and begin a study of three alternatives to replace the pipeline in the Straits: a tunnel, horizontal directional drilling, or a trench with secondary containments. By December 2018, Gov. Rick Snyder signed legislation to create the Mackinac Straits Corridor Authority and its Board voted to approve an agreement with Enbridge to build a utility tunnel in the Straits. “The propane industry was very active in lobbying with Enbridge for this legislation,” Dalling said.
A new administration took office in Michigan in January 2019. Both Gov. Gretchen Whitmer and Attorney General Dana Nessel had said publicly that they oppose the continued operation of Line 5 within the Straits of Mackinac. Two current lawsuits threaten the ability of Enbridge and the State to move forward with the tunnel project. One states that 2018 legislation creating the corridor authority was not properly enacted under Michigan’s constitution and should be considered void. The second suit seeks to void Enbridge’s use of the 1953 Line 5 easement and end its current use of the existing dual pipelines.
“We hope that Gov. Whitmer does not undo legislation previously signed by Gov. Snyder and works together to identify and resolve any issues long before heating season so not to impact consumers needing propane heat in Michigan and beyond,” New York’s Whitney said.
A statement from Enbridge in June 2019 responding to the lawsuits said, “Enbridge shares the Governor’s vision of protecting the Great Lakes and reducing the risk to the Straits of Mackinac. Enbridge remains fully committed to moving forward in a constructive manner with the Administration to reach our mutual objective of replacing the existing Line 5 crossing as soon as possible. We believe that the most effective path forward is to work expeditiously toward permitting and construction of the Tunnel, rather than through the courts. Evidence of our commitment to work collaboratively includes continuation of our $40-million 2019 engineering and geotechnical program, which will allow us to maintain the earliest possible in-service date for the crossing. In the meantime, Enbridge will continue to assert its rights in the courts to ensure we safely meet the critical energy needs of Michiganders.”
PROPANE INDUSTRY’S LETTERS OF SUPPORT
Both MPGA and NPGA have submitted letters to the Corps of Engineers. Describing the pipeline as a vital piece of the propane infrastructure serving consumers in Michigan, Ontario, and much of the Midwest, Dalling’s letter from MPGA said the propane industry does not condone leaking pipelines of any kind anywhere in the state and believes that the construction of the tunnel and the replacement of the segment of Line 5 ensures the safe transportation of the propane consumed throughout the state and region.
“Opponents of the existing Line 5 and the proposed new replacement segment of the line have consistently stated that the pipeline is not needed to deliver propane. I can definitely and unequivocally state that is not the case. There is unanimous agreement among all segments of the propane industry that Line 5 is critical for the safe and reliable distribution of propane throughout Michigan. Additionally, a shutdown of the line fails to recognize the interconnectedness of energy distribution not only in the State of Michigan but globally. A shutdown of the line would have ripple effects to the propane supply chain that would be felt throughout Michigan, the Midwest, and nationally,” the MPGA letter from Dalling states.
On behalf of NPGA, the letter from Petrash included: “Should the existing Line 5 go out of service for whatever reason and the proposed tunneled Line 5 not be constructed the effects on Michigan and regional propane consumers as well as others will be significant. During the proceedings of the Pipeline Safety Advisory Board convened by Governor Snyder extensive analyses were undertaken by Dynamic Risk and a consortium of advisors led by Michigan Technological University as to how Michigan might be supplied with propane in the absence of Line 5. Those analyses suggest that there is not sufficient capacity on other pipelines to replace Line 5 throughout; that the necessary investment in rail to replace Line 5 would be measured in the billions of dollars; and that replacing Line 5 with motor carriers might involve one truck per minute crossing the Mackinac Bridge twenty-four hours a day.”
He continued: “The bottom line is that any alternative to Line 5 would mean increased costs for consumers (measured in the millions of dollars), less safe means of transporting energy, less reliable energy supply, and increased emissions. Without question pipeline delivery is the most effective of all modalities. Moreover, it is unquestionably the safest and most reliable. Both motor transport and rail are less reliable in the winter, when propane is most needed in Michigan.”
RETAIL MARKETER PREPAREDNESS
As decisions are made in Michigan that may affect supply, which already has its challenges in the upper-Midwest, Dalling reminded marketer members in Michigan recently that Plains LP invoked force majeure for previous contracts and current operations for an unknown period of time: With that uncertainty in mind, he reminded members of steps that they can and should be taking to ensure their supply and delivery operations.
For the propane gas industry, closure of Enbridge Line 5 would cut off 55% of the propane that reaches Michigan, always one of the top three propane-consuming states in the U.S. In addition, all surrounding states would be impacted as well due to the tremendous amount of propane that ultimately lands in those states. “We all know there are simply not enough trucks and drivers to supply Michigan with propane in the event Line 5 were closed,” Derek Dalling, executive director of the Michigan Propane Gas Association (MPGA) told BPN. “Rail lines are not where they need to be to meet demand either, especially in the high demand winter months.” Dalling is also executive director of the Ohio Propane Gas Association and deputy executive director of the Indiana Propane Gas Association, two more states that would be severely impacted by a loss of supply from Line 5.
“We have been watching this issue with great interest especially due to its impact on New York as well as the many other states where it could affect pricing and availability of product,” said Bruce Whitney, executive director of the New York Propane Gas Association (NYPGA). “With potential interruptions to Sarnia, Ont., and other distribution points, we have great interest in product availability in Western and Central New York. As always, we advise our members to keep in close contact with their trusted suppliers and transporters and make the best decisions for their companies. If there ever was a time to consider adding more storage, this may be it.”
SHUTDOWNS OF LINE 5 IN JUNE
“This has been our biggest focus for the past several weeks,” Jeff Petrash, vice-president and general counsel of the National Propane Gas Association (NPGA), told BPN. “The latest concerns stem from a report by Enbridge that something pulled one of the pipeline support anchors of the east leg out of position. It was also discovered that mussels on the west leg had been dislodged, indicating an impact of some sort.” Enbridge shut down both legs initially on June 18 but then reopened the west leg two days later after consultation with the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA). Both determined damage was limited to the east leg, and, as a result the west leg remained open.
On June 25, a complete shutdown of Line 5 was ordered by Circuit Court Judge James Jamo after Michigan’s Attorney General Dana Nessel requested a temporary restraining order. Four hours of oral argument took place from the state and Enbridge with regard to the Attorney General’s request asking the court to stop Enbridge from operating Line 5 while Michigan regulators review information provided by the pipeline. “The judge ruled July 1 the east leg needed to remain shut down until PHMSA could complete its investigation of damage,” Petrash said. “The west leg could restart to conduct an ‘in-line investigation’ (ILI) and ‘may continue to operate thereafter subject to the results of the ILI and further Order of the Court.’” At the time of the ruling, Vern Yu, Enbridge’s executive vice president and president of Liquids Pipelines, said, “Inspections have determined that the west segment of Line 5 crossing the Straits is safe for operations and which PHMSA did not object to restarting; we had shut down the east segment of the pipeline pending review of a disturbance that was discovered on one of the screw anchors and an assessment of the east leg’s fitness for service.”
On July 8, an Enbridge press release stated, “Enbridge has now submitted to the Michigan Circuit court and to the State the results of our inspection of the area of interest on the west segment of Line 5. The inspection, using an inline inspection tool, found no internal or external metal loss or dents. This test reconfirms that the west leg of the pipeline is safe to operate.”
“If there’s good news, it is that this didn’t happen in December or January,” said MPGA’s Dalling. “Also, the quick reopening of the west leg means the judge felt the west line was safe.” As of July 15, the east leg remained closed and the cause of damage to it some 220 to 240 feet under water remains a mystery. “There will be a review of ships that have come through the Straits in the past year,” Petrash said. “It is not clear what vessel would have come through dragging something that low that could have caused that level of damage.”
A 10-YEAR HISTORY OF CHALLENGES AND POTENTIAL SOLUTIONS
June 30 also brought a development regarding a tunnel that Enbridge and many stakeholders see as the most cost-effective and environmentally responsible resolution to Enbridge Line 5 concerns. The Michigan Public Service Commission rejected Enbridge’s request for a declaratory order that the commission’s original 1953 permit would allow Enbridge to construct a new $500-million tunneled pipeline beneath the Strait of Mackinac. The tunnel is projected to be completed in 2024. The commission ordered a hearing to be completed and briefed within 10 months. On July 7, a website was introduced by the State of Michigan, Michigan.gov/Line5, to keep the public informed about Enbridge Energy’s proposal to build the tunnel beneath the lake bed.
To fully understand the processes leading to the plan of building a tunnel for the pipeline, one must go back at least 10 years to an incident in Michigan in 2010. According to the new Line 5 website, an oil spill from Line 6B owned by Enbridge in a tributary of the Kalamazoo River near Marshall, Mich., was a key event that initially got public attention regarding the potential for severe damage from an oil leak or spill. On July 25, 2010, 843,000 gallons of oil flowed directly into the Talmadge Creek, a tributary that carried oil into the Kalamazoo River. This river is a Lake Michigan tributary and the oil was ultimately contained 80 miles from Lake Michigan. The State of Michigan and Enbridge entered into a $75-million Consent Judgment in May 2015. In July 2016, there was a Consent Decree between Enbridge and the federal government to resolve claims related to the Marshall spill. Enbridge agreed to pay $110 million on spill prevention and pipeline operations in the Great Lakes region and a $61-million fine. Cleanup efforts are ongoing and are estimated at more than $1 billion.
The Marshall pipeline spill led to the creation of the Michigan Petroleum Pipeline Task Force with the mandate to look closer at pipelines transporting petroleum products around the state, and especially Line 5. The creation of the Pipeline Safety Advisory Board (PSAB) led to oversight of two independent analyses of Line 5, an alternatives analysis looking at the feasibility of other forms of transportation to handle the same amount of product that moves through Line 5, and a risk analysis of the potential financial impact of a worst-case spill to determine the final assurance amount as required under the 1953 easement. The alternatives report was provided in June 2017 and the risk analysis was provided in August 2018.
In April 2018, Line 5 was damaged in the Straits by a boat anchor that was dragged along the lake bottom. Three dents were caused to the pipeline, two on the western segment and one on the eastern segment, raising concerns about just how vulnerable the pipeline was to future anchor strikes. The portion of the Straits with pipelines were declared “No Anchor” zones.
INITIAL AGREEMENT BETWEEN ENBRIDGE AND MICHIGAN
In November 2017, an agreement between the state of Michigan and Enbridge required that Enbridge fix gaps in Line 5’s protective coating and begin a study of three alternatives to replace the pipeline in the Straits: a tunnel, horizontal directional drilling, or a trench with secondary containments. By December 2018, Gov. Rick Snyder signed legislation to create the Mackinac Straits Corridor Authority and its Board voted to approve an agreement with Enbridge to build a utility tunnel in the Straits. “The propane industry was very active in lobbying with Enbridge for this legislation,” Dalling said.
A new administration took office in Michigan in January 2019. Both Gov. Gretchen Whitmer and Attorney General Dana Nessel had said publicly that they oppose the continued operation of Line 5 within the Straits of Mackinac. Two current lawsuits threaten the ability of Enbridge and the State to move forward with the tunnel project. One states that 2018 legislation creating the corridor authority was not properly enacted under Michigan’s constitution and should be considered void. The second suit seeks to void Enbridge’s use of the 1953 Line 5 easement and end its current use of the existing dual pipelines.
“We hope that Gov. Whitmer does not undo legislation previously signed by Gov. Snyder and works together to identify and resolve any issues long before heating season so not to impact consumers needing propane heat in Michigan and beyond,” New York’s Whitney said.
A statement from Enbridge in June 2019 responding to the lawsuits said, “Enbridge shares the Governor’s vision of protecting the Great Lakes and reducing the risk to the Straits of Mackinac. Enbridge remains fully committed to moving forward in a constructive manner with the Administration to reach our mutual objective of replacing the existing Line 5 crossing as soon as possible. We believe that the most effective path forward is to work expeditiously toward permitting and construction of the Tunnel, rather than through the courts. Evidence of our commitment to work collaboratively includes continuation of our $40-million 2019 engineering and geotechnical program, which will allow us to maintain the earliest possible in-service date for the crossing. In the meantime, Enbridge will continue to assert its rights in the courts to ensure we safely meet the critical energy needs of Michiganders.”
PROPANE INDUSTRY’S LETTERS OF SUPPORT
Both MPGA and NPGA have submitted letters to the Corps of Engineers. Describing the pipeline as a vital piece of the propane infrastructure serving consumers in Michigan, Ontario, and much of the Midwest, Dalling’s letter from MPGA said the propane industry does not condone leaking pipelines of any kind anywhere in the state and believes that the construction of the tunnel and the replacement of the segment of Line 5 ensures the safe transportation of the propane consumed throughout the state and region.
“Opponents of the existing Line 5 and the proposed new replacement segment of the line have consistently stated that the pipeline is not needed to deliver propane. I can definitely and unequivocally state that is not the case. There is unanimous agreement among all segments of the propane industry that Line 5 is critical for the safe and reliable distribution of propane throughout Michigan. Additionally, a shutdown of the line fails to recognize the interconnectedness of energy distribution not only in the State of Michigan but globally. A shutdown of the line would have ripple effects to the propane supply chain that would be felt throughout Michigan, the Midwest, and nationally,” the MPGA letter from Dalling states.
On behalf of NPGA, the letter from Petrash included: “Should the existing Line 5 go out of service for whatever reason and the proposed tunneled Line 5 not be constructed the effects on Michigan and regional propane consumers as well as others will be significant. During the proceedings of the Pipeline Safety Advisory Board convened by Governor Snyder extensive analyses were undertaken by Dynamic Risk and a consortium of advisors led by Michigan Technological University as to how Michigan might be supplied with propane in the absence of Line 5. Those analyses suggest that there is not sufficient capacity on other pipelines to replace Line 5 throughout; that the necessary investment in rail to replace Line 5 would be measured in the billions of dollars; and that replacing Line 5 with motor carriers might involve one truck per minute crossing the Mackinac Bridge twenty-four hours a day.”
He continued: “The bottom line is that any alternative to Line 5 would mean increased costs for consumers (measured in the millions of dollars), less safe means of transporting energy, less reliable energy supply, and increased emissions. Without question pipeline delivery is the most effective of all modalities. Moreover, it is unquestionably the safest and most reliable. Both motor transport and rail are less reliable in the winter, when propane is most needed in Michigan.”
RETAIL MARKETER PREPAREDNESS
As decisions are made in Michigan that may affect supply, which already has its challenges in the upper-Midwest, Dalling reminded marketer members in Michigan recently that Plains LP invoked force majeure for previous contracts and current operations for an unknown period of time: With that uncertainty in mind, he reminded members of steps that they can and should be taking to ensure their supply and delivery operations.
- Make sure you have a solid supply plan that includes trusted wholesalers and transportation companies. You may want to have more than one wholesaler or transportation company serving your company. MPGA encourages you to make sure whichever companies you are choosing to do business with are members of the association.
- Utilize dispatching software and logistics experts.
- Invest in additional storage.
- Pursue relationships with contractors, builders, HVAC professionals, plumbers, etc. to help you increase customer loads and burner tips.
- Review NPGA’s “ABC’s of Supply Preparation” checklist.
- Consider making time for NPGA’s Supply Webinar Series. — Pat Thornton
