Ford’s ‘Northern Shield Energy Corridor’ appears to be a pipe dream

OTTAWA—Ontario Premier Doug Ford has jumped aboard Canada’s noisy oil pipeline bandwagon—albeit as something of a free rider.

Ford travelled to the Calgary Stampede last month to join Alberta Premier Danielle Smith in announcing a proposal for brand new line to carry crude 3,300 kilometres from the oilsands to the refining hub in Sarnia, Ont.

His “Northern Shield Energy Corridor” appears to be a pipe dream. 

The 500,000-barrels-per-day project would cost many billions of dollars, have to seek consent from a host of First Nations along the route, and require uncompetitive tolls to serve a market that is currently well-supplied by existing infrastructure. 

Ford has faced a long-running political and legal fight in Michigan over its governor’s threat to shut down a key pipeline that serves Sarnia refiners. After a six-year battle, that risk remains.

Ford’s foray into national pipeline politics serves as a political signal to both Alberta and his own constituents that his Progressive Conservative government remains fully committed to the oil economy.

His intervention also comes as Alberta prepares to vote this fall on whether the province should have a referendum on separation. To the dismay of climate activists—including some in his own party—Prime Minister Mark Carney is wooing Albertans with his support for a new crude pipeline to Canada’s West Coast.

Canada’s pipeline push conflicts with the need to prioritize the transition off fossil fuels and the adoption of electric vehicles as part of global effort to mitigate climate change. The growing devastation from global warming is readily apparent from the disastrous wild fires in Canada and Europe this summer. It will get much, much worse.

Ford’s announcement of the proposed Northern Shield Energy Corridor was wrapped in flag-waving language that has become the norm since United States President Donald Trump returned to the White House 18 months ago and launched his attacks on Canadian trade and sovereignty.

Both the prime minister and premier defend their support for new oil pipelines by saying they would contribute to the economic strength, export diversification and energy security. 

Those security concerns have been heightened by the supply disruptions in the Middle East and Trump’s unpredictability and fecklessness, although the president has generally exempted oil trade from his economic attacks on Canada.

Ontario provincial Energy Minister Stephen Lecce said the pipeline would be part of a “refinery expansion strategy” that could include Canada’s first strategic oil reserve that could be used to shelter consumers from volatile international crude markets.

The Carney government has largely been silent on the proposal—it has not added it to its list of potential “projects of national interest” that would qualify for special regulatory treatment—but is in discussion with Ontario over it.

Nor is there any sign of a private-sector developer for the pipeline proposal, or even much vocal support. Ontario is undertaking a feasibility study and consultations with industry.

“For us, anything that strengthens our energy security is welcome,” said Bob Larocque, president of the Canadian Fuels Association, which represents the refining and marketing side of the oil business.

However, Laroque added that it’s impossible to know whether the project would be viable until all the technical, regulatory and commercial questions are answered.

Meanwhile, Calgary-based Enbridge Inc.—North America’s biggest oil pipeline company—is spending more than US$1.2-billion to upgrade its Line 5 pipeline that moves western Canadian crude through Wisconsin and Michigan to markets in Ontario and the Great Lakes states.

Enbridge currently delivers more than three million barrels per day of Canadian crude into U.S. and Ontario markets. Line 5 delivers 500,000 barrels per day to four Ontario refiners in Sarnia and Nanticoke on Lake Erie. The pipeline and refineries also supply energy products to the American Great Lake states. 

The all-Canadian route would undercut the value of Enbridge’s existing pipeline network.

Michigan Governor Gretchen Whitmer and Attorney General Dana Nessel have pursued efforts to shut down Line 5 since taking office in 2018 over fears that a catastrophic break that would pollute the Great Lakes.

The name “Enbridge" conjures a bad smell for many Michiganers, given its 2010 pipeline rupture that spilled more than a million gallons of diluted bitumen into the Kalamazoo River. It was one of the worst and costliest land-based oil spills in American history.

The governor issued an order to shut down the pipeline in 2020, but a Federal Court blocked it last year. It remained operational pending the court’s decision.

Nessel, meanwhile, is pursuing a lawsuit to deny Enbridge access to the bottom of the Straits of Mackinac and shut down the line. In April, the U.S. Supreme Court rejected Enbridge’s argument that lawsuit should be held in Federal Court, and sent it to the state level where it is now pending.

Michigan regulators recently issued permits for Enbridge to begin construction of a tunnel under the straits that connect Lakes Michigan and Huron. The company would then run a new pipeline section through the tunnel to protect against damage from passing ships. However, the state Supreme Court on Aug. 3 ordered the regulators to reconsider the permits to give greater weight to environmental considerations. Enbridge says it is reviewing its legal options.

Neither Whitmer nor Nessel are running for re-election this November, and their would-be successors have not made the pipeline issue a prominent part of their campaigns. Given the steep run-up in gasoline, diesel, jet fuel, and propane prices since the start of the Iran war in February, politicians are clearly wary of any proposal that could further disrupt energy markets.

In an emailed statement, Enbridge said it is confident the courts will rule in its favour, saying the pipeline falls under a Canada-U.S. treaty that allows for the free flow of oil and gas across the border.

Ford’s Northern Shield project would be an enormously costly insurance policy against risks that could be otherwise managed. 

The proposal to add a storage component to the Sarnia refining sector may have some merit as a cushion against temporary disruptions.

In the longer term, real energy security cannot come from an environmentally unsustainable source. Doubling down on EV adoption would significantly lessen Ontario’s vulnerability to volatile oil markets while contributing to Canada’s climate change goals.

Editor's note: On Monday, the Michigan Supreme Court ordered state regulators to revisit construction permits issued to Enbridge, adding new risk to the plan to upgrade the existing pipeline serving Sarnia refineries. This column was updated on Aug. 4 to include this relevant news.

Shawn McCarthy is a senior counsel at Sussex Strategy and a former national business reporter covering global energy for The Globe and Mail. He's also the past president of the World Press Freedom Canada, a volunteer advocacy group based in Ottawa.

The Hill Times