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The governor has served notice the state will try to revoke a 68-year-old easement that allows the pipeline to cross under the straits, while Enbridge has challenged the Michigan order in court, insisting the pipeline falls under federal jurisdiction.
If Michigan is successful, the move would cut off supplies to Ontario and Quebec refiners and also halt the supply of 55 per cent of propane required in the state.
As that fight intensifies, work continues on Enbridge’s Line 3 Replacement Project, slated to start up later this year, and the Trans Mountain pipeline expansion, expected to begin operating in late 2022.
Construction on both projects is giving Canadian producers more confidence increased transportation capacity is coming.
“The positive part is they are all continuing to move forward,” Canadian Natural Resources president Tim McKay told the online forum.
The oil-price discount facing Western Canadian Select heavy oil has been relatively narrow in recent months, sitting around US$10 a barrel this week. A tight differential indicates the market is growing more optimistic Line 3 will be completed, Cenovus Energy CEO Alex Pourbaix said at the symposium.
“I just believe the industry will expand production to meet whatever egress comes on the pipeline side,” he added.
However, no pipeline development is done until it’s operating. As the Line 5 clash indicates, even existing projects aren’t immune to facing new obstacles.
Crescent Point Energy CEO Craig Bryksa called the loss of Keystone XL (KXL) a “blow to the sector” but believes Canada’s oil industry will have enough pipeline capacity in the mid-term with the two projects now advancing.
“For the next 10 years, I think we’re in a good spot. Ideally, you would have liked to have the KXL line built,” Bryksa said in an interview.
“But pipelines right now, I guess it doesn’t matter if you’re on the north or south side of the border, there can be some challenges in getting that infrastructure built.”
Chris Varcoe is a Calgary Herald columnist.