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Canada warns Michigan oil line shutdown could undermine U.S. ties

Stock MarketsMay 11, 2021 04:21PM ET
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2/2 © Reuters. FILE PHOTO: General view of the Imperial Oil refinery, located near Enbridge's Line 5 pipeline, which Michigan Governor Gretchen Whitmer ordered shut down in May 2021, in Sarnia, Ontario, Canada March 20, 2021. REUTERS/Carlos Osorio 2/2

By Nia Williams (NYSE:WMB) and David Ljunggren

CALGARY, Alberta (Reuters) -A day before Michigan's deadline to close down a key crude oil pipeline, Canada on Tuesday issued its strongest remarks so far about the move, warning that it could undermine relations with the United States, its closest ally and trading partner.

Canadian company Enbridge (NYSE:ENB) Inc is preparing for a legal battle with Michigan and courting protests from environmental groups, betting it can ignore the state's Wednesday deadline to shut down Line 5, which runs under the Straits of Mackinac.

The Canadian government, intervening in the case to back Enbridge, said in a U.S. federal court filing that Michigan had no right to act unilaterally since a 1977 Canada-U.S. pipeline treaty guarantees the free flow of oil between the two nations.

"This case raises concerns regarding the efficacy of the historic framework upon which the U.S.-Canada relationship has been successfully managed for generations," Ottawa said.

Michigan's move "threatens to undermine important aspects of that cooperative international relationship", it added.

The brief said Canada would suffer "massive and potentially permanent disruption" from a shutdown. Line 5 brings 540,000 barrels-per-day of oil from western Canada to Ontario, Quebec, Michigan, Ohio and Indiana.

Canada has been lobbying https://www.reuters.com/business/energy/frustrated-canada-presses-white-house-keep-great-lakes-oil-pipeline-open-2021-04-26 Washington officials to keep the pipeline open in what is likely to be an election year in Canada. The White House has so far kept quiet.

"We don't weigh in on that ... it will be decided in court," U.S. Secretary of Energy Jennifer Granholm told reporters on Tuesday when asked about the White House's position on Line 5.

The government of Alberta, Canada's main crude-producing province, welcomed the federal government's intervention. Energy Minister Sonya Savage said Michigan's attempt to shut down an operating pipeline set a dangerous precedent for future oil and gas projects.

In November, Michigan Governor Gretchen Whitmer gave Enbridge six months to shut down the pipeline that runs four miles (6.4 km) along the bottom of Lake Michigan-Huron, citing fears it could rupture.

The order needs a confirmatory order from a judge to enforce it, and Enbridge and Michigan are disputing whether the issue should be heard in state or U.S. federal court.

The sides are in court-ordered mediation, with the next session scheduled for May 18.

"We will not stop operating the pipeline unless we are ordered by a court or our regulator, which we view as highly unlikely," Enbridge spokeswoman Tracie Kenyon said in a statement this week.

Michigan Governor Gretchen Whitmer wrote to Enbridge on Tuesday threatening to seize company profits if Line 5 continues to operate past the Wednesday deadline.

"The State intends to assert claims for trespass and unjust enrichment against Enbridge at the appropriate time," Whitmer wrote, adding Michigan was confident it would win the ongoing legal battle.

Litigation could drag on until at least 2024, said Joe Comartin, Canada's consul general in Detroit who is arguing on behalf of Ottawa.

"I don't see a court jumping the gun and ordering it closed ... until the litigation and constitutional issues are resolved," he said by phone.

Ontario estimates the city of Sarnia, across the border from Michigan, could lose 5,000 refinery and chemical plant jobs. Industry lobbyists say thousands of U.S. jobs are in danger.

Environmentalists and indigenous groups opposed to Line 5 say the potential job losses are exaggerated. They plan "Evict Enbridge" rallies in Mackinaw City, Michigan, on Wednesday and Thursday.

Canada warns Michigan oil line shutdown could undermine U.S. ties
 

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Comments (6)
Investing Man
Investing Man May 11, 2021 6:04PM ET
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Why oil companies insist on running pipes through fresh water lakes is ridiculous, however this is an international agreement. Sadly, when the pipes rupture they will destroy the fresh water system and the company will go bankrupt, however the ceos will be sitting pretty with their hundreds of millions in tax subsidized bonuses they paid out to themselves before hand.
Connecticut Yankee
A_Jaundiced_Eye May 11, 2021 4:30PM ET
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Oh, wait - I thought it was that dummy Trump who fought with our allies.  What's this? The Dems and Biden going to fight with Canada? Oh, dear, is it possible, is it? That the left-wing media LIED to us?
igor bogdanoff
igor bogdanoff May 11, 2021 4:30PM ET
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Not that I like oil but there is a lot of rail infrastructure being built to facilitate the lack of pipelines.  Not sure why these supposed environmentalists think rail is cleaner and less accident prone than rebuilding 50+ year old pipelines up to modern standard.
Rod Deh
Rod Deh May 11, 2021 4:06PM ET
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I should run for POTUS .. I would build all the pipelines possible but not allow oil to flow.. get congress to approve it. pass it off to them. you don't lose its all on Congress
Desmond McKee
Desmond McKee May 11, 2021 2:48PM ET
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Shut it down! Global warming will *******us all, after Covid kills us all!
igor bogdanoff
igor bogdanoff May 11, 2021 2:48PM ET
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If the pipeline is shut down it simply moves by rail.  Not to mention, BEVs are barely a mature technology and certainly not ready for a Canadian winter yet.  Plus, COVID is serious but doesn't really ******that many people.  Economy's don't shut down for the real #1 public enemy - obesity.  More dangerous than smoking/alcohol.
Desmond McKee
Desmond McKee May 11, 2021 2:47PM ET
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Shut it down!  Global warming will *****us all!
 
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