Line 5 pipeline study: Canada gets the oil, Michigan gets the risk

MACKINAC ISLAND – Canada ships and receives the valuable crude oil.

Michigan is the go-between that reaps little benefit but all the risk.

That's the assessment a new study makes of the aging Enbridge Line 5 pipeline, which crosses the environmentally sensitive Straits of Mackinac between Michigan's Upper and Lower Peninsulas.

The report from the Groundwork Center for Resilient Communities, an environmental nonprofit group based in Traverse City, is to be released Wednesday on Mackinac Island, but was made available to the Free Press on Tuesday.

The report, the release of which is timed to coincide with the Detroit Regional Chamber's Mackinac Policy Conference, which began Tuesday, says Line 5 puts Michigan at risk for an environmental disaster but has evolved into what is mostly a shortcut for a Canadian company to move Canadian oil to Canadian refineries.

"No successful businessperson would continue in an arrangement that massively risks a vital asset, while the other party in the deal receives nearly all of the financial benefit," says the 24-page report.

"Yet this is precisely the deal that Michigan's leaders continue to accept for our state by allowing Line 5 to pump oil through the straits as a shortcut to Canada."

Titled "Canadian Profits, Michigan Risk," the study traces the history of Line 5 since it was laid across the bottom of the Straits of Mackinac in 1953 and concludes: "Canada currently receives nearly all the economic benefits of the line, while Michigan receives very few."

The Groundwork Center for Resilient Communities focuses on issues related to transportation, energy, food and economy and seeks to identify solutions that improve daily life and build community health. Its board members include Bill Milliken Jr., the son of the former Michigan governor, and Julie Metty Bennett, a vice president and owner at the Lansing think tank Public Sector Consultants.

An Enbridge spokesman disputed the thrust of the report, saying 30% of the oil that moves through Line 5 goes to Marathon and other metro Detroit oil refineries. Ryan Duffy said Line 5 also moves to market 80% of the oil produced in Michigan and it provides more than half the propane used in the state.

Duffy also disputed the risk Line 5 poses to the Straits of Mackinac, saying recent inspections show the line is in very good condition, with more safety enhancements in the works.

The study says it wasn't always the case that Line 5 had little benefit for Michigan.

When the state granted Enbridge an easement to cross the Straits of Mackinac, Line 5 — which is a single pipeline on the mainland but splits into two pipelines as it crosses the straits — was used by Michigan refineries to supply a significant percentage of the crude oil they used, the report said.

The line from Superior, Wisconsin, to Sarnia, Ontario, replaced freighters that posed a greater environmental risk and which could not transport crude oil year-round because of ice on the Great Lakes, the report said.

More: Why Line 5 oil pipeline isn't on Mackinac Policy Conference agenda

More: Line 5 oil pipeline in Straits of Mackinac dented by ship

But over time, refineries in Michigan and the U.S. Midwest have become much more dependent on heavy crude oil supplied by other pipelines and the light crude oil Line 5 carries has increasingly been shifted to serve refineries in eastern Canada, the study says.

A key development in that shift, according to the report, came late in 2015, when Enbridge reversed the flow direction of another pipeline, Line 9, which runs from Sarnia to Montreal. The line, which used to carry Mideast oil from Montreal shipping ports to refineries in Sarnia and the Midwest, now carries western Canadian light crude to refineries in the Montreal area.

"Enbridge has effectively obfuscated the issue, diverting attention from the fact that Line 5 now primarily serves Canada," the report says. "Yet it is not difficult to lift the veil to see how Line 5 no longer benefits Michigan, and that Michigan's oil needs could easily be met without Line 5.

The decreased utility of Line 5 for Michigan is another reason — along with increasing worries about the aging pipeline and Enbridge's poor environmental record and lack of transparency in its reporting to the state — that the state should revoke the easement and shut down the line, the study says.

Though they are small in proportion to the volume of product Line 5 carries, the report says Line 5 still provides two important economic benefits to Michigan. One is the delivery of crucial propane to residents of the Upper Peninsula, used for heating. The other is the transport of crude oil to market from oil fields in northern lower Michigan.

Both of those needs could be served in other ways, including the use of trucks or rail, says the report, which calls on Gov. Rick Snyder to focus on finding the best solutions, to include a guarantee of secure propane supplies for the U.P.

Detroit's Marathon refinery, which is connected to Line 5 by a spur line, used to take about 80,000 barrels of light crude oil daily from the line, the report says. But the refinery now uses a much higher proportion of heavy crude and uses less than 15,000 barrels per day from Line 5, the report says.

The report details a litany of reasons for concern about the safety of Line 5, including the washout of soil areas that supported the pipeline on the floor of the straits, reports of changes in the shape of the pipeline in certain areas, instances of coating failure and exposed bare metal, and the 2010 incident in which another Enbridge oil pipeline ruptured and hundreds of thousands of gallons of crude oil spilled into the Kalamazoo River in Michigan.

Duffy said an Enbridge agreement with the state will enhance safety and "is a clear plan for safely operating Line 5 well into the future."

"The agreement outlines actions that Enbridge will take to enhance the safety of Line 5 as it continues to provide energy to Michigan and the region," Duffy said. "The agreement benefits everyone who wants to protect communities and the environment around the Great Lakes."

On Tuesday, citizens connected with several environmental groups protested near the Shepler's Ferry dock in Mackinaw City, calling for a shutdown of Line 5 as Mackinac Policy Conference attendees streamed by to catch ferries to Mackinac Island.

Dale Giddings of Wolverine, a member of Straits Area Concerned Citizens, said a recent incident in which a ship's anchor dented Line 5, resulting in a decision to temporarily reduce pressure in the pipeline, is the latest warning sign of problems to come.

"The incident with the anchor was a wake-up call," Giddings said. "It woke up everybody in the state except the governor and the attorney general."

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.