New Independent Research: Decommissioning Line 5 Feasible Economically

Alternatives to Line 5 Have No Significant Impact on Cost, Energy Markets

(September 12, 2018 — Ann Arbor, MI) — Michigan businesses can meet their oil production goals while providing affordable gasoline to consumers if an aging pipeline under the Straits of Mackinac is decommissioned to protect the Great Lakes from an oil spill, according to two reports released today. The reports were conducted by London Economics International, LLC (LEI) and commissioned by the National Wildlife Federation. They can be viewed in full at http://bit.ly/Line5OilAltReport and http://bit.ly/Line5AltRefiningReport.

“This analysis shows that we have feasible solutions that work for our citizens and our businesses if we decommission Enbridge Energy’s Line 5,” stated Mike Shriberg, the National Wildlife Federation’s Great Lakes Regional Executive Director and a member of the Michigan Pipeline Safety Advisory Board. “The implications are clear: the best course of action for Michigan’s economy and environment is to decommission Line 5. While there are substitutes for Line 5, there are no alternatives for the Great Lakes and our way of life.”

Michigan’s crude oil production: Alternatives to Enbridge Energy Line 5 found that the small volume of crude oil production that utilizes Line 5 to get to market could utilize trucking directly as a feasible alternative. If Line 5 were decommissioned, this oil could be in higher demand and, therefore, the projected small cost increase ($1.31/barrel) would likely not impact profitability for Michigan crude oil producers.

“The cost increase from using alternatives to Enbridge Line 5 would be lost in the noise of typical crude oil price volatility,” wrote London Economics International. “The impact on the profitability of Michigan crude oil producers may therefore be minimal” the report later stated.

Michigan’s refining sector: Alternatives to Enbridge Line 5 for transportation found that there is enough capacity in existing oil pipelines to make up much of the potential losses at Detroit and Toledo-area refineries if Line 5 were decommissioned. The estimated increased cost to consumers would be a fraction of a cent/gallon.

“The Enbridge system has more than one route to Michigan and Sarnia,” wrote London Economics International. The report concluded that the cost of alternative routes “[W]ould amount to a rise of less than one cent (0.65 cents) to gasoline prices even assuming the refiners could pass along the whole price increase.”

These reports complement a previously released report — Assessment of alternative methods of supply propane to Michigan in the absence of Line 5 — which found that trucking could supply the raw materials for propane to Michigan’s Upper Peninsula with minor price impacts ($.05/gallon), so long as the industry has the lead time needed to develop and implement the trucking-based supply chain.

The LEI reports are detailed, independent and authoritative, conducted by a leading expert in the field, and directly compare and challenge the more limited assessment contained in the Enbridge-funded alternatives report completed by Dynamic Risk last year. The Dynamic Risk report assumed high costs for alternatives to Line 5 and often selected the most expensive alternatives. This resulted in a strong bias against decommissioning Line 5, one which is not supported by the data.

The 65-year-old Line 5 — operated by Enbridge Energy — carries up to 23 million gallons of oil and natural gas liquids per day from Superior, Wisconsin, to Sarnia, Ontario, taking a shortcut through Michigan and along the lake bottom of the Straits of Mackinac. The Mackinac Straits section of Line 5, designed for 50 years, has been plagued by a series of issues, ranging from missing protective coating to three dents left by an anchor strike just this past April. It lies in what University of Michigan researchers have called “the worst possible place for an oil spill” in the Great Lakes.

“These reports provide our state leaders with the best available information about the cost of alternatives to Line 5, and demonstrate that the costs are low relative to typical propane, oil, and gasoline price volatility,” said Shriberg. “We do not have to choose between protecting the Great Lakes and protecting our economic vitality — Line 5 is not critical to our state. The Great Lakes are our most valuable asset and the good news is that we do not have to continue to put them at risk by allowing Enbridge Energy’s Line 5 to continue pumping oil and natural gas liquids.”