Pipeline shutdown may lead to gas hikes in Ontario

Michigan judge orders Enbridge Line 5, which brings Alberta oil east, shuttered

A Michigan judge’s decision to shut a key Enbridge Inc. oil pipeline running across North America could send gasoline and diesel prices soaring in Ontario and Quebec and refineries scrambling to secure oil supplies.

On Thursday, North America’s largest pipeline operator suffered a major setback after a Michigan judge sided with the state’s attorney general and ordered operations to halt at Line 5. Enbridge had shut down the pipeline completely last week after an underwater anchor shifted on the east leg, but resumed operations on the west leg after two days. The decision was disputed by the state’s attorney general, which sought an injunction.

Line 5’s shutdown could be a blow for every refinery in southern Ontario, which depend on it for its crude supplies.

“Should Line 5 remain out of service for an extended period, into mid-july, production rates at our two refineries will be reduced,” Imperial Oil Ltd. spokesperson

Jon Harding said Friday.

Imperial operates two refineries in Ontario. The company’s Sarnia refinery processes 119,000 barrels of oil per day and its Nanticoke refinery processes 113,000 bpd.

“Reducing rates will likely result in shortfalls of gasoline, diesel and jet fuel in our distribution points in southern Ontario. That would happen within approximately a week,” Harding said.

Suncor Energy Inc. and Shell Canada Ltd. also operate refineries in Ontario that depend on Line 5 for oil deliveries.

“We are working hard to continue to deliver the products our customers need and depend on,” Shell spokesperson Tara Lemay said in an emailed statement.

Suncor did not respond to a request for comment.

Line 5 runs through the Straits of Mackinac between Lake Michigan and Lake Huron, from Alberta through Michigan en route to Ontario, and is part of Enbridge’s massive North American Mainline network that connects Alberta to U.S. Midwest refineries.

A regulatory filing from Enbridge shows southern Ontario refineries are dependent on Enbridge’s Line 5 and to a lesser extent Line 78 and Line 95 pipelines.

With Line 5 shut down, analysts say the other secondary lines, such as Line 78 and Line 95, might be overwhelmed and Enbridge would be forced to allocate space on those lines, so there would still be supply shortfalls as companies scramble to move crude onto other pipes.

A source in the refining industry said those refineries are “all screwed without Line 5.”

The next court hearing on the case is scheduled for Tuesday and analysts say if the line doesn’t restart then, there could be supply shortages and price spikes in southern Ontario and potentially Quebec and the U.S. Midwest shortly thereafter.