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‘Extraordinarily risky’

On Jan. 7, an international market-based group released a report all of us in Michigan should pay close attention to.

The group is Institute for Energy Economics and Financial Analysis (IEEFA), and their global work relates to energy markets, trends, and policies.

The 55-page report was specifically about the Enbridge Inc. Line 5 pipeline that runs through Wisconsin, Michigan’s Upper Peninsula, through the lakebed of the Straits of Mackinac, and down through the middle of northern Michigan on its way to Sarnia, Ontario.

We all know that Line 5 is a controversial pipeline, but do we all know it is 71 years old? Do we all know that Line 5 has spilled many times, releasing over a million gallons of oil into the environment? Do we all know that an exhaustive study by the University of Michigan said a significant spill in the Straits would be the worst place for a spill?

Well, most of us have heard of the risks Line 5 poses to the Great Lakes, but the IEEFA study didn’t focus on the environmental risks. It focused on the financial feasibility of such a project, including Enbridge’s desire to build a tunnel 370 feet below the Straits lakebed.

Although I read the entire report, I was fortunate enough to sit in on a virtual meeting this week presented by IEEFA to interested people concerned about Enbridge’s project.

They focused on three financial issues: the financial risks to the debt-to-earnings ratio for Enbridge, the rising costs of construction both on Line 5’s reroute in Wisconsin and the tunnel under the Straits, and, finally, the changes in the entire energy market.

For instance, Enbridge initially thought the tunnel would cost $500 million, but inflation and construction costs have risen, and, now, Enbridge has said it must go 100 feet deeper with the tunnel, resulting in costs that could triple by 2030 and cost as much as $1.5 billion. The reroute in Wisconsin will be $500 million or more, and Enbridge is liable for nearly $11 million because they breached a Wisconsin aquifer on four occasions.

Other financial liabilities, many that are not foreseen when initial estimates are presented, can occur.

IEEFA reported that the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) has had to take 53 enforcement actions against Enbridge, resulting in $1.9 billion in civil penalties.

And, just a month ago, Enbridge had yet another spill — that time 69,000 gallons — which will cost $1 million to remediate.

IEEFA looked closely at energy trends to evaluate the long-term need for investing in a 71-year-old pipeline.

The market is changing very rapidly and will change significantly by 2030, the target date of the tunnel. An international energy agency has predicted a 20% to 40% decline in demand for oil in the near future.

Also, a declining use of propane, the growing switch to electricity, and global efforts to curb oil-based plastics are all reasons why a long-term commitment to Line 5 is being questioned.

The new IEEFA information is confirmation to me that it is time to end Line 5, especially when added to the environmental risks that remain to the hundreds of rivers and streams it crosses and the devastation that would occur to shipping, tourism, and recreation if and when a spill into the Great Lakes might happen.

We are Michiganders, and it is our duty to preserve and protect those Great Lakes, which hold over 20% of the entire world’s fresh surface water.

Alternative delivery methods for Line 5 oil and propane have also been studied, and experts agree that market demands could be met rather quickly if Line 5 were to close down.

IEEFA’s conclusion of the exhaustive report was, “Enbridge Energy L.P. should reconsider its current business strategy of pouring billions of dollars into redesigning troubled segments of the Line 5 oil/NGL pipeline. An expeditious but well-planned approach for closing Line 5 would not only relieve Enbridge of debt burdens and significant litigation battles related to the projects, but also would allow the company to chart a more flexible energy transition course.”

The report ended with this recommendation: “Both the United States and Canada, as well as the administrative agencies involved in the tunnel pipeline project, should also consider the substantial advantages of a non-Line-5 solution. Considering the no-Line-5 alternative makes sense given the risks and policy implications of building the tunnel pipeline.”

The IEEFA presenter said, “They (Enbridge) should walk away from Line 5 and the tunnel. And leaving Line 5 if there is no tunnel is irresponsible and extraordinarily risky.”

I fully agree.

Do you? Let me know at gregawtry@awtry.com.

Greg Awtry is the former publisher of the Scottsbluff (Neb.) Star-Herald and Nebraska’s York News-Times. He is now retired and living in Hubbard Lake. Greg can be contacted at gregawtry@awtry.com.

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