Canada says ties with the US could be undermined if Michigan closes the pipeline

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© Reuters. FILE PHOTO: General view of the Imperial Oil refinery near Enbridge Pipeline 5, which Michigan Governor Gretchen Whitmer shut down in Sarnia, Ontario, Canada on March 20, 2021 in May 2021. REUTERS / Carlos Osorio

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By Nia Williams (NYSE 🙂 and David Ljunggren

CALGARY, Alberta (Reuters) – A day ahead of Michigan’s deadline for closing a major pipeline, Canada made its strongest remarks on Tuesday, saying the move could undermine ties with the United States, its closest ally and trading partner.

The Canadian company Enbridge (NYSE 🙂 Inc is preparing for a lawsuit with Michigan and soliciting protests from environmental groups. Bet it can ignore the state’s Wednesday deadline for shutting down Line 5, which runs under the Straits of Mackinac.

The Canadian government stated in a US federal court that Michigan had no right to act unilaterally because a 1977 pipeline contract between Canada and the US guaranteed the free flow of oil between the two nations.

“This case raises concerns about the effectiveness of the historical framework on which US-Canada relations have been successfully managed for generations,” Ottawa said.

Michigan’s move “threatens to undermine important aspects of this cooperative international relationship,” he added.

The letter said Canada would “suffer massively as well.”

potentially permanent disruption “from a shutdown. Line 5 brings 540,000 barrels of oil per day from western Canada to refineries and airports in Ontario, Quebec, Michigan, Ohio and Indiana.

In November, Michigan Governor Gretchen Whitmer gave Enbridge six months to close the pipeline that runs 6.4 km along the bottom of Lake Michigan-Huron.

The order requires a confirmatory warrant from a judge to enforce, and Enbridge and Michigan are arguing over whether the matter should go to a state or U.S. federal court.

The sides are in judicial mediation, the next meeting is scheduled for May 18th.

“We will not cease operations on the pipeline unless we are instructed to do so by a court or our regulatory agency, which we believe is highly unlikely,” Enbridge spokeswoman Tracie Kenyon said in a statement earlier this week.

Joe Comartin, Canada’s Consul General in Detroit, who argues on behalf of Ottawa, said litigation could drag on until at least 2024.

“I don’t see a court jumping the gun and ordering it to close … until the litigation and constitutional issues are resolved,” he said over the phone.

Canada has lobbied to keep Washington officials pipeline open in an expected election year in Canada, but the White House has so far not interfered.

Ontario estimates the city of Sarnia across the Michigan border could lose 5,000 jobs in refineries and chemical plants. Industry lobbyists say thousands of U.S. jobs are at risk.

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

“We are very confident to hear from the governor that there will be accountability measures for the operation of this pipeline,” said Beth Wallace of the National Wildlife Federation.

Michigan is looking into what it could do if Enbridge continues to operate after the deadline, a spokeswoman for the Michigan attorney general said.

Canadian crude oil market forward prices suggest that most traders don’t expect Line 5 to close in the coming months, but the lack of security is worrying, a Calgary-based market source said.

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