(Bloomberg) — Enbridge Inc. wants to show the Joe Biden administration that the tunnel the Canadian company is building for its oil pipeline under Lake Michigan is exactly what the U.S. president’s plan for better infrastructure is all about.
The tunnel project for the company’s Line 5, opposed by Michigan Governor and Biden ally Gretchen Whitmer, is the kind of upgrade that will make a crucial piece of infrastructure safer, Enbridge Chief Executive Officer Al Monaco said in an interview. The Calgary-based pipeline giant is engaging with the Biden administration to get that message across, he said.
“Under the theme of ‘Build Back Better’ that the president has been talking about, it fits exactly,” Al Monaco said. “That’s what we are doing: We are modernizing an existing piece of infrastructure with a tunnel that reduces the risk to as close to zero as humanly possible, and we are doing it on our dime.”
Enbridge is fighting Whitmer’s move last November to revoke an easement that permitted the pipeline to cross the lake bed, a decision that could force the system to shutdown by May. Meanwhile, Enbridge is pushing ahead with the tunnel project approved by Whitmer’s predecessor.
Line 5 crosses the Straits of Mackinac between Michigan’s upper and lower peninsulas and supplies light oil and fuel to refineries and consumers in the U.S. Midwest and Canada.
While the new U.S. president is aggressively seeking to promote spending on infrastructure, he has also canceled a key permit for the Keystone XL pipeline that would have carried Canadian oil sands crude from Alberta into the U.S.
Al Monaco argues that blocking the existing Line 5 would trigger a crisis given its importance to Midwest refineries. The tunnel addresses concerns about potential oil spills into the water posed by ship anchors, for instance. A court-ordered mediation is scheduled to start on April 16.
“It doesn’t make much sense to create a crisis when we have a solution there in the tunnel,” he said. “Protecting the Great Lakes is exactly what we’re doing.”
Another project that Monaco says fits well with Biden’s goals is its Line 3. Enbridge is currently building a replacement to the aging cross-border pipeline with a new one that can pump increased volumes of Canadian crude into the U.S. Construction of the project in the U.S. only began in December after years of regulatory and legal delays. Protesters, including some indigenous groups, have regularly tried to disrupt construction, but Enbridge plans to finish the line on schedule, by year end. Horizontal directional drilling planned for the summer and eight pump stations are “on track,” he said.
Canadian oil sands producers have struggled for years with a shortage of export pipelines, a situation that’s depressed prices for local crude oil. Projects to build new pipelines have faced environmental opposition and delays. But new pipelines such as the Line 3 replacement are being built, and large new project’s aren’t going to be needed, Monaco said.
“We are going to see fewer projects generally in the next two to three years,” he said. “That’s less about opposition in my view and more about the fundamentals of energy. We’ve gone through a massive build in pipelines across North America, and so I think we’ve got enough capacity to keep us going for a while.”
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
