PLG Consulting’s 111-page October 2023 report, Likely Market Responses to a Potential Shutdown of LINE 5, provides an overview of potential impacts and market responses in the event of a planned and orderly shutdown of Enbridge’s Line 5 pipeline. Line 5 is part of Enbridge’s Lakehead System, transporting crude oil and natural gas liquids from Superior, Wisconsin — through the underwater Straits of Mackinac — to Sarnia, Ontario.
For several years, litigation and policy efforts have sought Line 5’s closure. Recently, a federal court ordered the removal of a section of the pipeline by June 2026 – a significant development in the Line 5 saga. The report addresses what would happen to Line 5 products and markets in the event of a planned shutdown, exploring alternative options for crude oil and natural gas liquids (NGLs) transportation. PLG emphasizes that it does not take a position on the merits of a shutdown.
Market Adaptation: With advance notice, energy markets can be expected to adapt to a Line 5 shutdown without experiencing supply shortages or price spikes.
Resilience Characteristics: The report highlights the resiliency of Line 5 products and markets, with large energy firms having developed contingency plans since 2017.
Crude Oil Alternatives: Commercially viable and operationally feasible alternative supply chain solutions exist for crude oil, involving existing infrastructure and increased utilization of rail capacity.
NGL Alternatives: The report outlines solutions for propane delivery to specific regions, including utilizing existing rail terminals in the short term, and longer-term options like expanding rail terminals.
Long-Term Trends: Decarbonization will have long-term impact on refined fuels demand, considering factors like vehicle fuel efficiency standards and the growing market share of electric vehicles.
A range of commercially feasible and operationally viable solutions exist for alternative crude and NGL supply chains in the event of a Line 5 shutdown.
For a more detailed understanding, please refer to the original document.