Mark Maki, president of Enbridge Energy Partners, says he is confident a Dane County zoning committee will approve plans to expand a pumping station near Marshall – a key step in his company’s effort to triple the amount of oil in a pipeline that runs from Superior to the Illinois border.
Some environmentalists have criticized the project – dubbed Line 61 – and the company, citing a 2010 spill from an Enbridge pipe break that led to the largest inland oil spill in the country’s history when 834,000 barrels leaked into the Kalamazoo River in Michigan. According to a Polaris Institute report, Enbridge had 804 other spills between 1999 and 2010, releasing 161,475 barrels. Critics also note that the line would carry heavy tar sands oil, which they say would be difficult to clean up in the case of a spill.
If built out, Maki said the Wisconsin pipeline’s capacity will jump from 400,000 to 1.2 million barrels (50.4 million gallons) of oil a day – a figure that is greater than the controversial Keystone XL project. That pipeline, which is awaiting federal approval, would run from western Canada to refineries in Illinois and Texas.
In an interview with WisBusiness.com, Maki said his Houston-based company’s Wisconsin project has received nearly all its state and local permits. The Dane County Zoning and Land Commission will meet tomorrow to decide if it will approve the Enbridge request to enlarge its pump station.
Maki, who grew up in Superior, said the pipeline is “of critical importance to the state and the country.” He said it was designed to flow at a rate of 1.2 million barrels of oil a day, but was only commissioned to carry 400,000 barrels daily when it went into service in 2009.
“The reason for that was we expected over time that supply would grow from Canada,” he said. “Then we were pleasantly surprised in North Dakota with what’s happened with the Bakken formation in North Dakota. We saw this line as an important element of growth for the company and designed it to carry much more product.
“This would expand our system in Wisconsin and enhance the access of Great Lakes area refiners to North American crude oil rather than foreign imports. Those products are used in this state and other states in the Great Lakes area.”
Maki said his company has had “good back and forth” with the zoning commission, resulting in changes to the pump station’s design.
“We think this project will move ahead,” he said. “We think we’ve addressed the concerns that have been raised appropriately by the zoning board. By and large, everything else is in place (around the state) that needs to happen.”
If permitted, he said construction of the pump stations will take place this year and next, with the 1.2- million-barrel-a-day flows beginning in the second half of 2016.
Maki said he is aware of criticism of his company for the Michigan oil spill, calling the mishap a “humbling experience” for Enbridge.
“From the highest levels, including the CEO at the time, we made it very clear that we were going to fix this and make it right and we have done that. As a result of that incident, there was a complete reexamination of how we look at the integrity of pipeline systems and safety. We take safety as job No. 1 at Enbridge.
“We’ve made gigantic investments since that time to insure its integrity and using the highest level of technology to ensure that we have a very good understanding of the state of the pipeline using high-resolution internal inspection tools. To use an analogy, it’s almost like you are using an MRI down the inside of the pipeline so you have a picture of every centimeter by centimeter of the condition of the line.”
In addition to big technological investments in technology, he said other improvements included retraining of the company’s control center staff, beefing up of its emergency response capabilities to address “the weaknesses that we have in the company that became apparent with the (Michigan) incident back in 2010.”
If there were to be a spill in Wisconsin, he said his company is well covered with a $100 million sudden-and-accidental discharge policy.
“But what’s more important is to look at the net worth of the company first and its ability to deal with an incident,” he said, noting that Enbridge Energy Partners has $17 billion in assets, substantial cash flow generation and credit facilities.
He said Enbridge paid for the Michigan spill with cash flows and insurance and pledged it would “make things right” in event of any future spill.
Maki said if the oil is not transported through the pipeline, it would be shipped via rail.
“That’s the most likely alternative,” he said. “Energy is produced in places that tend to be relatively remote, and it needs to be moved to some place where it can be refined and processed and turned into something that people can use. So you have to move it from North Dakota or the oil sands region of western Canada to Midwestern refining complexes.”
Maki said he believes rail transport is safe, but he argued that pipelines are safer. In addition, he said Line 61 would free rail traffic for carrying grain, finished goods and propane, which was in short supply in the Upper Midwest last winter, in part because of transportation problems.
Though the price of oil has dropped dramatically in recent months, Maki said that has not affected the need for the pipeline.
“I’ve been with the company since 1986 and I’ve seen all kinds of ups and downs in prices including $10 (a barrel) oil around 1998-99,” he said. “The decisions that an oil producer makes are very long-term in nature. They may lay down rigs short term, but the bigger projects, like the oil sands development in Canada, those are built on 30-year economics or longer with the expectation that oil prices are going to increase.
“The need for oil in the U.S. is supposed to be relatively static over the next few years, but globally it is going to increase substantially. And when that happens, it will be more and more of a draw on overseas sources of oil. We may see $48 a barrel oil for a year, but I think over time we will see prices increase.”
— By Brian E. Clark