Enbridge Moves on $650M Michigan Oil Pipeline in Fast-Changing Market
Oil giant Enbridge has selected a team to design and construct a new oil pipeline under the Straits of Mackinac between Lake Michigan and Lake Huron to replace the deteriorating Line 5.
The Canadian company on March 6 announced that Great Lakes Tunnel Constructors, a partnership of Michigan tunnel construction firm Jay Dee Contractors Inc. and the U.S. affiliate of Japanese tunnelling contractor Obayashi Corp., will build the four-mile-long tunnel about 100 ft below the Lake Michigan lake bed. Arup will design the tunnel.
Construction of the pipeline, expected to begin in 2021, could take up to 10 years and cost up to $650 million. Enbridge has said replacement of the 65-year-old pipeline will also include a utility corridor to hold power lines, fiber optics and other utilities. Environmental groups have argued that the line is unnecessary and threatens the lake.
The administration of former Michigan Gov. Rick Snyder (R) approved legislation that paved the way for construction of the line, a move that was opposed last year by successor Gov. Gretchen Whitmer (D).
However, she now is working with the company after the Michigan Court of Appeals in January rejected an attempt to stop construction of the line. But the court has yet to decide whether the law that established authority for Enbridge to build the tunnel is constitutional.
With the law still in effect and the state involved, the firm moved forward to hire the contractors and is pursuing permit applications.
Meanwhile, noting the global oil price drop, Andrew Wittmann, lead engineering and construction sector stock analyst for Baird Equity Research, said in a March 10 report that while “it’s still early and uncertain … lower oil prices could also degrade associated natural gas,” with capacity expansion cuts slowing drilling and demand for offtake.
“We suspect that pipes already started construction will finish, but that planned pipelines will see broad-based delays,” he said.