Enbridge response to Michigan Attorney General’s Legal Filing

June 28, 2019

CALGARY, ALBERTA, June 28, 2019 – Enbridge yesterday received two separate court filings made by the Michigan Attorney General (AG). One filing relates to our action filed in the Michigan Court of Claims seeking enforcement of the agreements we entered into in good faith with the State of Michigan last year. The AG has asked the Court to dismiss our claim. We will respond in due course as part of the court’s process and we are comfortable with the case we can make as described in our filing June 6th. These agreements were a major accomplishment for the State of Michigan and were only possible after extensive negotiations with State officials. They included various commitments by Enbridge and the construction of a $500 Million tunnel at the Straits crossing to house a new Line 5. This would further reduce the risk to the Straits to near-zero and provide for continued safe operation of the existing system until completion of the tunnel, thereby assuring undisrupted supply to Michiganders and surrounding regions.

The second filing requests the State of Michigan Circuit Court to declare that the easement that Enbridge has for the operation of the dual pipelines in the Straits of Mackinac to be invalid and to enjoin continued operation of the pipelines in the Straits of Mackinac “as soon as possible after a reasonable notice period to allow orderly adjustments by affected parties”. The filing does not indicate what period of time that would be in the opinion of the AG. Enbridge will vigorously defend this action.

Line 5 Safety and Reliability

Enbridge has been operating Line 5 safely for 65 years. During that time there have been no releases from the lines into the Straits. Additionally, the Straits lines are subject to the most extensive operating and risk management plan of any section of pipe in our system. Our program exceeds federal regulatory requirements, reflecting the priority we place on protecting the Great Lakes and the environment.

Safety measures include the use of extra heavy wall pipe; a robust cathodic protection system to prevent external corrosion; anchor devices to counter the effects of water currents; operating the crossing at less than 25% of maximum operating pressure to provide a significant safety margin well beyond normal pipeline operations; and frequent inspections, including the use of sophisticated in-line inspection tools, divers and remotely operated vehicles to confirm the integrity of the crossing.

A voluntary 2017 hydro-test of the Straits pipelines clearly validated continued fitness – a number of Michigan agencies, PHMSA, the EPA and the Coast Guard observed the test and undertook an active role in the test. A number of independent experts have examined the integrity and operation of Line 5 on behalf of the State and PHMSA. In 2016, experts contracted by PHMSA reviewed 20 years of Line 5 inspection data and concluded that no locations required additional attention.

Notwithstanding the safety of Line 5, Enbridge has continued to listen carefully to the concerns of Michiganders and committed to further actions including the entire replacement of the Straits crossing at a cost of $500 Million. This commitment, along with others, was part of a set of comprehensive and binding agreements with the State of Michigan.

Enbridge Stands Ready to Construct the Line 5 Straits Tunnel

The Tunnel plan is the culmination of several years of independent analysis and extensive engagement between Enbridge and the State. A 2017 report commissioned by the State concluded that the risk of a release into the Great Lakes from a replacement pipeline housed within an underground tunnel would be “negligible” and “un-quantifiably low”. This resulted in a series of agreements with the State whereby Enbridge committed to develop and construct the Tunnel to house a replacement pipeline 100 feet below the Straits, while ensuring the safe operation of the existing crossing lines until the replacement line was completed.

Since the new Administration began, Enbridge has engaged the Administration to seek a mutually acceptable path forward and offered additional commitments to: 1) further accelerate the completion of the Tunnel; 2) provide additional operating safeguards while the Tunnel was being constructed; 3) actions that would further reduce the risk of anchor strikes; 4) additional transparency and oversight provided to the State. The impact of these actions would allow for construction of the Tunnel to begin in 2021 with an estimated in-service date as soon as 2024 assuming no delays in the permitting process. Importantly, this plan would ensure continued supply of energy to Michigan and avoid major disruptions and price increases that would result if the line was shut down prior to the tunnel being completed.

Enbridge also welcomed implementation of an Emergency Order to provide additional predictability of the permitting processes and the appointment of an independent Michigan mediator who could convene Enbridge, Michigan and other stakeholders to work towards an acceptable tunnel plan.

The State did not respond to these additional commitments and proposals by Enbridge and continued to take the position that Line 5 should be shut down by 2021. It is simply not physically possible to design, permit and construct the Tunnel within that timeframe. The State’s position on an early shut down and the need to assure Michigan’s energy needs necessitated Enbridge seeking confirmation from the Michigan Court of Claims of the enforceability of the agreements entered into with the State in 2018.

Energy Security for Michigan Consumers

Line 5 is critical to the energy needs of Michigan and surrounding regions. The line provides 540,000 barrels per day of light crude oil and propane - shutting down this critical conduit would result in major supply disruptions and higher energy prices as confirmed by regional refiners. Line 5 serves an estimated 55% of Michigan’s propane needs including about 65% of the propane needed in the Upper Peninsula and northern Michigan. The State has not identified any viable solutions to meet these critical energy requirements as outlined in a report commissioned by the State in 2017.

Resolution and Next Steps

Enbridge shares the Governor’s vision of protecting the Great Lakes and reducing the risk to the Straits of Mackinac. Enbridge remains fully committed to moving forward in a constructive manner with the Administration to reach our mutual objective of replacing the existing Line 5 crossing as soon as possible. We believe that the most effective path forward is to work expeditiously toward permitting and construction of the Tunnel, rather than through the courts. Evidence of our commitment to work collaboratively includes continuation of our $40 Million 2019 engineering and geotechnical program, which will allow us to maintain the earliest possible in-service date for the crossing. In the meantime, Enbridge will continue to assert its rights in the courts to ensure we safely meet the critical energy needs of Michiganders.

FORWARD-LOOKING INFORMATION

Forward-looking information, or forward-looking statements, have been included in this news release to provide information about the Company and its subsidiaries and affiliates, including management’s assessment of Enbridge and its subsidiaries’ future plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as ‘‘anticipate’’, ‘‘expect’’, ‘‘project’’, ‘‘estimate’’, ‘‘forecast’’, ‘‘plan’’, ‘‘intend’’, ‘‘target’’, ‘‘believe’’, “likely” and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included or incorporated by reference in this document include, but are not limited to, statements with respect to the proposed underground tunnel to house a replacement of the existing Line 5 pipeline (“Line 5”), including the benefits, risks, costs and timing thereof, the receipt of applicable permits and governmental, regulatory and other approvals, and related matters such as additional protective measures and other commitments.

Although Enbridge believes these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Assumptions regarding the expected supply of and demand for crude oil, natural gas, NGL and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements, as they may impact current and future levels of demand for the Company’s services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company operates and may impact levels of demand for the Company’s services and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty. The most relevant assumptions associated with forward-looking statements with respect to projects such as the replacement of Line 5, including estimated completion dates and expected capital expenditures, include the following: the impact of customer, government and regulatory approvals on construction and in-service schedules and cost recovery regimes; the availability and price of labour and construction materials; the effects of inflation and foreign exchange rates on labour and material costs; the effects of interest rates on borrowing costs; and the impact of weather.

Enbridge’s forward-looking statements are subject to risks and uncertainties, including, but not limited to those risks and uncertainties discussed in this news release and in the Company’s other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge’s future course of action depends on management’s assessment of all information available at the relevant time. Except to the extent required by applicable law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary statements.

About Enbridge Inc.

Enbridge Inc. is North America's premier energy infrastructure company with strategic business platforms that include an extensive network of crude oil, liquids and natural gas pipelines, regulated natural gas distribution utilities and renewable power generation. The Company safely delivers an average of 2.9 million barrels of crude oil each day through its Mainline and Express Pipeline; accounts for approximately 62% of U.S.-bound Canadian crude oil exports; and moves approximately 18% of all natural gas consumed in the U.S., serving key supply basins and demand markets. The Company's regulated utilities serve approximately 3.7 million retail customers in Ontario, Quebec, and New Brunswick. Enbridge also generates approximately 1,600 MW of net renewable energy power in North America and Europe. The Company’s common shares trade on the Toronto and New York stock exchanges under the symbol ENB.

Initial statement made on June 27, 2019

Enbridge will need time to fully evaluate the Attorney General’s filing.

We are disappointed the State chose not to accept our offer to advance talks on the Straits tunnel, a project that would make a safe pipeline even safer. The State also ignored our offer to suspend litigation and jointly appoint an independent, Michigan-based moderator to help facilitate the discussions. We also committed to making additional safety enhancements to the current line.

We remain open to discussions with the Governor, and we hope we can reach an agreement outside of court. The lawsuit will take time to work through the court system, and in the meantime we will continue to safely operate Line 5. Enbridge is deeply committed to being part of Michigan’s future. We believe the Straits tunnel is the best way to protect the community and the Great Lakes while safely meeting Michigan’s energy needs. 

Line 5 is a critical source of 540,000 barrels per day of propane and crude oil supply for Michigan and surrounding areas, and shutting it down would lead to a serious disruption of the energy market. Line 5 serves an estimated 55% of the state’s propane needs, including approximately 65% of the propane used in the Upper Peninsula and northern Michigan, for which no viable alternatives exist.

Line 5 also supplies Michigan and regional refineries that provide the state with various fuels its residents rely on in their day-to-day lives. Refineries served by Line 5 supply a large percentage of the aviation fuel at Detroit’s Metropolitan Airport, an important contributor to the state’s economy.

Shutting down the line would impact the pocketbooks of Michigan residents, the competitiveness of the state and could lead to job losses for those working at refineries.

Line 5 is critical infrastructure that Michigan residents depend on every day, and it would be irresponsible to shut it down. It is safe and well maintained, and we intend to continue to operate it for decades to come.

Background information on Line 5 and the tunnel project is available here.