Media Center News Clips

StarTribune: Central to Enbridge’s New MN Pipeline Request is How Much Oil is Needed

March 24, 2018
Central to Enbridge’s New Minnesota Pipeline Request is How Much Oil is Needed
By Mike Hughlett

At Flint Hills Resources’ sprawling refinery in Rosemount, Enbridge’s proposed new oil pipeline is seen as vital. Flint Hills wants to increase production there, but says it needs more oil to do so and Enbridge is its main supplier.

Enbridge says its six pipelines across northern Minnesota are so full that oil is being rationed, hurting refineries across the Midwest including Flint Hills. Enbridge wants to spend $2.6 billion to replace its aging and corroding Line 3. It says without the increased capacity from that project, the rationing — or apportionment as it’s known in the oil business — will just get worse.

“The current Enbridge Mainline fails to meet refinery demand for crude oil, despite a series of expansions over the last 15 years,” Neil Earnest, a consultant for Enbridge, said in testimony filed with state regulators.

And the company forecasts continuing growth in Canadian oil production well into the 2030s, even as changes in the global auto market portend weaker gasoline demand and national experts have predicted market changes because of that.

The need for that oil will play a key role when the Minnesota Public Utilities Commission decides on Enbridge’s request to build its new Line 3, a decision expected in June.

The Minnesota Department of Commerce — tasked with looking out for the public interest in pipeline matters — said the need for Enbridge’s oil isn’t enough to trump the potential risks to society, especially oil spills in pristine waters and wildlife areas.

Further, Commerce has questioned the accuracy of Enbridge’s forecast of future need and so-called negative effects of rationing.

For the oil industry, apportionment is evidence of “a system not running properly,” said Jake Reint, spokesman for Flint Hills’ Pine Bend refinery in Rosemount, one of the largest in the Midwest. Flint Hills is an arm of Wichita-based Koch Industries.

Reint said the refinery is not running as efficiently as it should and continued apportionment could lead to canceling future projects.

Flint Hills has spent about $750 million in upgrades at Pine Bend over the past five years, with some projects still ongoing (and oil output increasing). Another $600 million of investments are planned.

They would allow Flint Hills to further increase production from around 300,000 barrels per day now up to 339,000 barrels per day.

“Without the crude oil, it just doesn’t make as much economic sense,” Reint said.

Canada is the biggest source of U.S. oil imports, and Enbridge’s Minnesota pipeline corridor is the main artery of Canadian crude.

The Minnesota pipeline corridor delivers about 70 percent of the crude oil required at Midwest refineries served by Enbridge, the company says. It would not break out how much is used in Minnesota.

More than 20 percent of the oil flowing through Minnesota goes to the middle of the country or the Gulf Coast, routed through Enbridge’s big terminal in Superior.

As Canadian oil production has increased in the last several years, pipeline backups have followed. “Since 2014, we have been in almost continual apportionment,” Earnest, the Enbridge consultant, said in an interview.

For much of 2017, Enbridge’s apportionment was about 20 percent for Canadian heavy crude, meaning oil producers could have shipped 20 percent more given their own supply coupled with demand from refineries downstream.

The current Line 3, because of its age, can only run at 51 percent of its 760,000 barrel-per-day capacity. A replacement would restore full flow, and allow for 155,000 barrels per day more if eventually needed and approved by regulators.

Without a new Line 3, Enbridge forecasts apportionment of over 20 percent this year through 2020, rising to over 30 percent in 2021 and beyond.

Commerce questions the accuracy of Enbridge’s oil forecasts. Demand for gasoline and diesel fuel, it says, is likely to fall in the long-term as electric vehicles take off and fuel efficiency grows in traditional cars.

Crude demand will be dented, it said in a regulatory filing, potentially causing an oil glut and pushing down petroleum prices: “Global oil oversupply clearly could reduce demand for transportation of crude oil on the Enbridge Mainline which, in turn, could reduce [Enbridge’s] modeling projection of the use of that system.”

The wild card in the oil demand outlook is the future of electric vehicles (EVs).

Now, they’re a very small market. But if costs for EVs fall and demand for them grows as expected, they could displace oil demand and force automakers to increase the fuel efficiency of gas and diesel vehicles, according to a 2017 Wood Mackenzie report.

“For oil producers, the threat of EVs is existential,” the report said.

Boston Consulting Group, in a study released last month, said electric cars could represent more than 20 percent of new vehicle registrations by 2030. The company’s research suggests gasoline demand would drop by 10 to 15 percent by 2025, and by 30 to 35 percent by 2035.

“Global oil demand, as alternatives come online and as efficiency gains are realized, is expected to flatten, peak and decline, though it’s not a disruptive [steep] decline,” said Clint Follette, a managing director at Boston Consulting.

Enbridge doesn’t foresee a decline, at least in the next 20 years or so.

In a PUC filing, the company says that even if electric vehicles capture 75 percent of the North American auto market by 2035, its Minnesota pipeline corridor would still be operating at full capacity.

Canadian oil producers are coping with a bottleneck that goes beyond Enbridge because of a lack of pipeline capacity coming out of Canada, oil industry analysts say.

“They are getting a much lower value for their crude,” said John Coleman, a senior analyst with energy consultancy Wood Mackenzie. (Conversely, the Canadian discount helps U.S. refiners like Flint Hills, since they’re buyers).

Oil analysts expect that Enbridge’s new Line 3 will be the first of three proposed Canadian oil pipelines to come online to help alleviate the capacity shortage. However, like Line 3, the two other big oil pipelines have also faced considerable opposition.

Even with capacity upgrades, Canadian oil has another problem.

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Associated Press: Algae Leads to ‘Impaired’ Designation for Western Lake Erie

Algae Leads to ‘Impaired’ Designation for Western Lake Erie

By John Seewer

TOLEDO, Ohio (AP) — Ohio, for the first time, is designating the entire western end of Lake Erie as an impaired waterway because of the toxic algae that has fouled drinking water and closed beaches in recent years, officials said Thursday.

The shallowest of the Great Lakes has seen its largest algae blooms on record over the past decade, fueled mainly by farm fertilizers washing into the lake.

Until now, Ohio has resisted calls by environmental groups and some political leaders to issue an impairment declaration, saying federal regulators didn’t have standards to trigger such a decision for the lake’s open waters.

Officials within Ohio Gov. John Kasich’s administration also have been worried that calling the lake impaired would wrongly give the impression that it’s no longer safe as a drinking water source or for boaters and swimmers.

Ohio’s Environmental Protection Agency worked with university researchers to come up with a measurement standard and determined that water samples show the western part of Lake Erie aren’t meeting water quality standards, state EPA Director Craig Butler said.

The move comes as a federal judge is considering a lawsuit filed by environmental groups who want the lake classified impaired, hoping it would pave the way for increased pollution regulations.

Whether stiffer rules will be mandated isn’t clear.

Butler said he doesn’t expect the EPA to order any new regulations because Ohio already has a federally approved plan in place to combat the algae that now turns the lake’s blue waters into unsightly shades of green most summers.

An algae bloom in 2014 left more than 400,000 people around Toledo unable to drink their tap water for two days. The following year’s outbreak was the largest yet.

Blooms also have been blamed for fish kills and can sicken swimmers.

Two weeks ago, the U.S. EPA called for increased efforts to reduce the phosphorus that feeds the algae but didn’t recommend any new regulations.

Instead, the federal strategy relies on existing state and local programs and voluntary actions by farmers to prevent fertilizers, manure and sewage from flowing into waterways. It said some tougher rules might be needed but leaves those decisions to the states.

Environmental groups that have become frustrated by the pace and depth of those efforts applauded Ohio’s move, but they said tougher and enforceable regulations throughout the western Lake Erie region are still needed.

“Voluntary efforts haven’t been enough,” said Howard Learner of the Environmental Law & Policy Center, which brought the lawsuit seeking the impairment designation. “To be clear, this is a first step and not the ending.”

Peter Bucher of the Ohio Environmental Council said that without a plan reducing the pollutants, Lake Erie will be “inundated by yearly large-scale algal blooms for the foreseeable future.”

Ohio officials say the impairment designation doesn’t mean that the western end of the lake isn’t safe or that it should be avoided when there are no algae blooms in the water.

The worry, though, is that it will cause people to think twice about visiting the lake, Butler said.

“I’m very concerned about the negative consequences this could bring for our tourism and fishing industries for very little environmental gain,” he said.

Ohio’s impairment designation covers an area of the lake that stretches roughly 60 miles — from Toledo to Marblehead — and is popular with boaters and anglers.

Until now, the state had designated only shoreline waters and a small area near Toledo’s water intake pipe as impaired.

The impairment designation is part of a two-year evaluation of all state waterways that’s mandated by the Clean Water Act.

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Michigan Radio, NPR: What Will Replace Coal?

Michigan Radio, NPR
What Will Replace Coal?
By Tracy Samilton

The President of the United States says coal is coming back, but in reality coal is going away.

The fight is over what will replace it.

Even utilities are dumping coal. In Michigan, DTE Energy wants to shut down three coal-burning power plants and replace them with a billion dollar natural gas plant.

But environmentalists think there’s a better way.

First of all, there’s no such thing as clean coal.

Even brand new coal plants dump a lot of carbon into the air. Carbon emissions are very bad for the planet, and it’s a fact that renewable energy sources like solar and wind emit zero carbon.

DTE Energy’s Irene Dimitry doesn’t disagree.

“We support renewables and want to make sure that people understand that we do,” Dimitry says. “We just need to do it in a paced, thoughtful, plan-ful way.”

Dimitry says DTE is closing three of its coal-burning plants in five years, but she says it’s not feasible for renewables to take their place. That’s where a plan for a new 1,100 megawatt natural gas plant comes in.

“Because the wind doesn’t always blow, and the sun doesn’t always shine, and because storage is not yet commercial viable at a large scale, we really need a plant that can operate 24-7 and insure reliability for our customers,” Dimitry says.

Right now, natural gas is cheap and plentiful, and it produces about 60% fewer carbon emissions than coal. Still, DTE can’t just build the plant; it needs permission from the Michigan Public Service Commission.

To do that, it has to analyze the alternatives and show the plant is the best choice. So, a fancy computer program ran 50 different simulations. Dimitry says all concluded the plant is necessary.

Not so fast, says Margrethe Kearney of the Environmental Law and Policy Center.

Kearney says if a fancy computer program is told to maximize renewables, and maximize programs that reduce demand for electricity, the two combined beat out the natural gas plant.

“Everything that our experts ran shows that, yes, it’s feasible, absolutely, it’s cost effective,” Kearney says.

Kearney thinks DTE is stuck in an old mind set, one that viewed natural gas as a necessary bridge to replace coal until renewables are ready for prime time.

“Renewables are a legitimate available resource, and by not recognizing that, we’re keeping Michigan in the dark ages,” says Kearney.

She adds that, at the very least, DTE could build a smaller plant or defer building one to give alternatives time to develop.

But she thinks there’s a disincentive for DTE Energy to do that, because the utility doesn’t pay for the plant; rather, its customers do.

“It’s not just that the customers pay for it,” Kearney says. “Part of what the customers are paying is a return on that investment, so DTE is going to make around 10% in profit on that investment, DTE shareholders.”

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Milwaukee Journal Sentinel: Wisconsin Wants Break from Ozone Rules in Advance of Foxconn Development

Wisconsin Wants Break from Trump Administration on Ozone Rules in Advance of Foxconn Development
By Lee Bergquist

Despite evidence that southeast Wisconsin is violating new and tougher emissions standards for smog, state officials are asking the Trump administration to set aside a recent federal finding and conclude the state is complying with the law.

Falling short of that, the state Department of Natural Resources is recommending federal officials carve out narrow strips of land of a few miles along the Lake Michigan shoreline as violating the new standard for ozone pollution and declare the rest of the state in compliance.

The state’s request to the U.S. Environmental Protection would weaken the impact of stricter regulations on factories and other large sources of air pollution — including Racine County where Foxconn Technology Group is planning to build a giant manufacturing campus.

To justify their request, DNR officials are arguing that meteorological and air emissions data show that Illinois and Indiana are primarily responsible for pollution that blows north along the lake and creates smog.

But environmental groups say the claim ignores Wisconsin’s own contribution of ozone pollution.

If the Trump administration sides with Gov. Scott Walker and other state officials, it could benefit Foxconn and comes after Wisconsin promised environmental exemptions for the company as part of a state and local financial incentive package totaling $4 billion.

Regardless of the outcome, motorists in southeastern Wisconsin will still be required to buy reformulated gasoline, said Gail Good, director of air management for the DNR. Reformulated gas, which is more expensive, has been sold in the Milwaukee area since 1995 and is a tool regulators use to reduce smog.

Ozone is a summer pollutant and is created when heat and light interact with nitrogen oxides and volatile organic compounds. The pollutants come from sources such as factories, power plants and emissions from cars and trucks.

Depending on how the EPA responds, the outcome could have far-reaching health and economic impacts for counties stretching from Kenosha to Door. An EPA spokeswoman said the agency is evaluating Wisconsin’s proposal.

Higher levels of ground-level ozone can lead to reduced lung function for people working and exercising outdoors or those with respiratory problems like asthma. The stricter regulations would help to lower ozone levels in the region and were advanced after a five-year scientific review.

If the EPA declares all or parts of nine Wisconsin counties as violating the stricter ozone standard, factories could face higher costs, especially new or expanding plants that would be required to purchase top-of-the-line pollution controls regardless of cost and make other changes to their operations.

“EPA’s intended designations threaten Wisconsin’s economic engine and could result in severe and unnecessary economic consequences,” DNR Secretary Daniel L. Meyer said in a letter to the EPA on Feb. 28.

The ozone rules have taken on a political dynamic because of the potential impact on Foxconn and future development near the plant and because the rules were advanced in 2015 under the Obama administration.

Wisconsin and other like-minded states filed a lawsuit against the rules in 2016, arguing the stiffer ozone limits failed to take pollution into account that was outside a state’s control.

Also, an EPA spokeswoman said Regional Administrator Cathy Stepp recently recused herself in the Wisconsin request. Stepp had advocated against the Obama rules as Wisconsin DNR secretary.

President Donald Trump attended the announcement in Washington, D.C., that Foxconn had chosen Wisconsin for its plant.

Foxconn is building a $10 billion plant to produce liquid crystal display panels. The plant could employ as many as 13,000 people.

In a statement, Foxconn said it is monitoring the situation. Foxconn said it supports the DNR’s recommendation, adding that it is “grounded in science, and supports Wisconsin’s economic goals while effectively meeting air quality requirements.

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Update: Second Bill Emerges in Iowa to Cut Energy Efficiency Programs

 

Update: Second Bill Emerges in Iowa to Cut Energy Efficiency Programs

By Karen Uhlenhuth

Another threat to energy conservation programs has emerged in the Iowa Legislature.

One week after a bill to repeal utilities’ energy efficiency requirements surfaced in the state Senate, a broad public utility reform bill is set to reach a subcommittee Thursday.

The study bill (SSB3093) would let large industrial customers opt out of efficiency programs, allow utilities to apply a different cost-effectiveness formula, and also require each initiative be cost-effective on its own instead of evaluating the portfolio as a whole. It would also cap efficiency spending at 2 percent of a utilities’ revenue.

“It’s a significant scaling back of energy efficiency, and a step away from our leadership on energy efficiency,” Environmental Law & Policy Center attorney Josh Mandelbaum said.

The bill, set to be discussed in a Commerce subcommittee meeting Thursday, was introduced by State Sen. Jake Chapman with support from Interstate Power & Light, one of the state’s largest investor-owned utilities.

Chapman did not respond to an interview request.

Interstate Power spokesman Justin Foss responded to questions about the bill with a brief statement:

“Iowa has been a pioneer in renewable energy and energy policy, providing economic growth for the state. To maintain this leadership position, Iowa needs updated policies to continue to promote the integration of new energy technologies, reduce regulatory inefficiencies, help customers save money, and provide even more opportunities for business growth and job creation.”

Other supporters include Black Hills Energy, a smaller investor-owned utility, the Iowa Association of Municipal Utilities, and the Iowa Association of Electric Cooperatives. MidAmerican Energy is seeking similar changes in its next five-year energy efficiency plan, now under consideration by the Iowa Utilities Board.

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Rockford Register Star Editorial: Illiana Expressway Is Bad for Northern Illinois and Rest of the State

Seldom has a meeting of the Chicago Metropolitan Agency for Planning been so important to northern Illinois or the state of Illinois itself.

The CMAP board and its policy committee will meet Wednesday to approve a four-year update of the Chicago region’s master plan. Normally in these parts there would be little interest in what the CMAP board decides, but Wednesday’s vote could put Illinois taxpayers on the hook for $440 million to $1.1 billion over 35 years.

The project that will suck up all those tax dollars is the Illiana Expressway, a project that came out of nowhere, serves no one but political cronies and builds a road from nowhere to nowhere.

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Time to Get WI Back on Track with High Speed Rail

CHICAGO, Ill. – Wisconsin now has to play catch-up, says Howard Learner, executive director of the Environmental Law and Policy Center (ELPC), noting the state has been left behind by its Midwest neighbors in high-speed rail. The ELPC is expanding its advertising campaign in Wisconsin, erecting another billboard south of Milwaukee to encourage political leaders to support high-speed rail. Learner says it’s time to put partisan politics aside.

“Even though Republican Gov. Tommy Thompson and Democratic Gov. Jim Doyle were strong advocates of advancing high-speed rail in Wisconsin, Gov. Walker made the quixotic decision to turn down funding for higher speed rail going from Milwaukee to Madison that would have created jobs in Wisconsin,” says Learner.

Gov. Scott Walker turned down $810 million in federal stimulus money in 2010, saying state taxpayers would be on the hook for millions more in the years to come. Now, that money has gone to Michigan, where Republican Gov. Rick Snyder is using it to beef up connections between Detroit and Chicago. Learner says it’s not just about Madison and Milwaukee; high-speed rail would pull the entire region together.

“This is a time to put the ideology behind and for Wisconsin to say we want the better transportation, we want the jobs, we want the economic connectivity and growth that comes from modern higher-speed rail development,” says Learner. “The Gov. needs to go to Washington and say. ‘let’s step up and get Wisconsin back on track.'”

Democratic Gov. Pat Quinn of Illinois recently announced the state is allocating an additional $102 million for the high-speed line that connects Chicago to St. Louis. In Minnesota they’re planning for a Zip Rail high-speed train that will connect the Twin Cities to Rochester.

According to Learner, Wisconsin has the opportunity to play catch-up and move forward, because it’s all about regional development.

“Connecting the Twin Cities to Madison, Milwaukee and Chicago, but also the cities in between that are being cut off from air services, where people face congestion delays and high prices of gasoline, and La Crosse, Brookfield, Oconomowoc, connecting those mid-size cities to the larger communities,” says Learner.

The Amtrak passenger train that runs between Chicago and Minneapolis is now regularly delayed because of the huge amount of rail freight carrying Wisconsin frac sand, and the oil from North Dakota that results from fracking. 

Crain’s Chicago Business: War breaks out again over Illiana Expressway

Hostilities have resumed in the political war over the proposed Illiana Expressway, with Cook County Board President Toni Preckwinkle and environmental groups trying to block a legal maneuver that would make it easier to build the controversial road.

The focus of the renewed battle is the board of the Chicago Metropolitan Agency for Planning, an obscure but powerful group that acts as the gatekeeper for many federal funding programs in the Chicago area and whose blessing is needed to proceed with any mayor transportation project.

CMAP’s staff and board last year strongly objected to including the Illiana, a tollroad that would run from I-55 in Illinois to I-65 in Indiana, in its Go to 2040 priority list of approved projects. But after intense lobbing from aides to Gov. Pat Quinn, CMAP’s policy committee backed the proposal in October.

That decision promptly was challenged in by the Environmental Law & Policy Center, who contends that, legally, CMAP’s board and not its policy committee has the binding say. But pending before the CMAP board now — and scheduled to come up at its October meeting — is a periodic update of the Go to 2040 plan that now includes the Illiana.

ELPC’s Howard Learner considers that a back door effort to block his law suit and make the policy committee superior to the board. Ms. Preckwinkle doesn’t think much of the tactic either.

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Chicago Tribune: Fracking in Illinois: The rules, and why they matter

Environmentalists, oil and gas developers and anti-fracking groups are anxiously awaiting Friday’s unveiling of regulations for fracking operations in Illinois.

Once approved by the Joint Committee on Administrative Rules, possibly as early as September, high-volume horizontal hydraulic fracturing operations can apply to drill in the state.

The latest rules are expected to address about 30,000 comments made on the first draft, which was submitted nearly a year ago. Some people sought to ban fracking — it involves injecting fluids and chemicals at high volumes to crack open shale rock and unleash oil and natural gas — and others pointed out loopholes in the proposed regulations.

Environmentalists and oil drillers will be looking to see if the final draft has addressed their concerns.

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Howard Learner’s New Comment in Environmental Law Reporter: “Emerging Clarity in Climate Change Law: EPA Empowered and State Common Law Remedies Enabled”

Please see ELPC Executive Director Howard Learner’s new Comment in the Environmental Law Reporter (September 2014):  “Emerging Clarity in Climate Change Law:  EPA Empowered and State Common Law Remedies Enabled” (pdf).  This legal analysis addresses: (1) How the U.S. Supreme Court’s recent decisions in EPA v. EME Homer City and UARG v. EPA fill out the climate change law framework of Mass. v. EPA and AEP v. Connecticut; and (2) The recent Third Circuit decision and the Iowa Supreme Court decision that allow state common law actions to address carbon and other air pollutants.  Here’s a brief summary of Howard’s Comment on this timely and important set of issues:

The emerging law of climate change is becoming clearer. The U.S. Supreme Court’s series of climate change and other Clean Air Act decisions authorize the U. S. Environmental Protection Agency to advance its standards-setting process, and provide general deference to EPA’s implementation of the Clean Air Act and other statutory programs. The Court is sending a clear message to the U.S. Court of Appeals for the District of Columbia Circuit, which reviews most of EPA’s final standards, and to other courts, to restrain judicial activism.  Likewise, federal and state courts are opening the door for plaintiffs to assert state common law tort remedies.

The Court’s majority has made clear its solid support for the landmark Massachusetts v. EPA decision authorizing EPA to regulate greenhouse gases. The partisan political attacks and the novel theories of the cottage industry of appellate attorneys representing certain polluting industries have not deterred the Court. The Court’s recent decisions in EPA v. EME Homer City Generation and Utility Air Regulatory Group v. EPA, which strongly, although not entirely, uphold EPA’s CAA implementation discretion, should reduce confusion and bring much-needed increased certainty for both state policymakers and energy industry executives to move forward in making business decisions.  At the same time, both federal and state courts are beginning to fill in the blanks left by the Court in its American Electric Power v. Connecticut decision, which held that the Clean Air Act displaces federal common law injunction actions brought by states and other plaintiffs seeking to limit carbon dioxide pollution from coal plants, by preserving citizens’ traditional rights under state common law.

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