Maintaining Uninterrupted Propane Supply to the Upper and the Northern Lower Peninsulas

Maintaining Uninterrupted Propane Supply to the Upper and the Northern Lower Peninsulas of Michigan Enbridge has suggested that residents in the Upper Peninsula and northern Lower Peninsula would be unable to obtain uninterrupted propane for home and commercial use if the flow in Enbridge Line 5 stopped at the Straits. This is not the case. Enbridge now uses Line 5 to periodically transfer natural gas liquids (“NGLs”) to Rapid River, Michigan, located 125 miles (by road) west of the Straits. At Rapid River, propane is removed from the NGLs and purified. It is then distributed to local propane suppliers in the Upper Peninsula. The remaining NGLs are re-injected into Line 5 and transported southward, across the Straits, along with crude oil. Thus, the Rapid River operation could continue uninterrupted if the flow of oil in Line 5 at the Straits is stopped.

It is important to recognize that Enbridge is not the sole supplier of propane to the Upper Peninsula. In discussions with a major distributor of propane for the Upper Peninsula, we learned they purchase propane from a number of suppliers, dependent – not surprisingly - on a “spot” price. Enbridge is NOT the sole supplier of propane to this region. Alternatives Using Enbridge’s Existing Pipelines and other Infrastructure: 1. Move the existing depropanizer (the unit that separates propane from the other NGLs) at Rapid River to Superior, Wisconsin, or replace it with a new depropanizer at Superior. Use existing truck and rail infrastructure to distribute propane to the various locations in the Upper Peninsula. 2. Same as 1. --- except --- Use existing truck and rail infrastructure to move propane from Superior to Rapid River. Use the existing Rapid River facility to distribute propane to local suppliers for delivery, and then use the existing distribution system. 3. Same as 1. --- except --- periodically, pump propane (via the existing Line 5) from Superior to Rapid River, and then use the existing distribution system. 4. Periodically pump NGLs from Superior, Wisconsin to Rapid River via Line 5. Use the existing depropanizer at Rapid River to remove the propane – as it is done today. Continue to distribute propane from the Rapid River distribution facility. Return the NGLs to Superior for transport in Line 6B. Alternatives Using Other Suppliers: 1. If Enbridge ceases supplying a portion of the propane to the Upper Peninsula, it creates an opportunity for other suppliers in the Upper Peninsula or northern Wisconsin to enter the business. Currently one of the largest propane suppliers in the Upper Peninsula buys from terminals in Green Bay, Flint, Grand Rapids, Niles – and yes, Enbridge, but not exclusively from Enbridge. So Enbridge is NOT the sole supplier of propane to the Upper Peninsula. 2. Suppliers of natural gas (v. propane) could take the opportunity to expand their distribution of natural gas to customers in the Upper Peninsula. Since natural gas is considerably cheaper than propane, the fuel cost to the customer would decrease significantly. 3. The northern Lower Peninsula is currently supplied with propane from several non-Enbridge sources, located in the Lower Peninsula and elsewhere. They would not be affected by the shutdown of Line 5 at the Straits. Our Findings:  While there are engineering and logistic issues that need to be addressed for each of the alternatives, it is our opinion that none of these alternatives are difficult to implement  Redefining where Enbridge produces propane – as suggested – is technically straight forward. If, for example, Enbridge decided to relocate the depropanizer to Superior, the project cost would be of relatively minimal and would meet their needs.  Adaptations in the pipeline, rail and truck systems can absorb the propane supply requirements currently covered by Line 5. These adaptations, along with the continued evolution of a natural gas network in the UP, will provide more reliable and cost competitive fuel supplies. While there may be a financial impact on Enbridge, this would pale in comparison to the risk and economic loss from a Line 5 rupture at any point in the Upper Peninsula or at the Straits.  If Enbridge decided to exit the business of supplying propane to UP customers, we believe it would have a minimal impact on their overall operating revenue, and would allow other propane suppliers to fill the void.  While some alternatives may take a few months to implement, proper planning would assure that during the transition, a continuous supply of propane would remain in place. The Michigan Pipeline Safety Advisory Board, the Michigan Attorney General, and Governor Snyder should consider all alternatives for the supply of propane to the Upper Peninsula of Michigan in decommissioning Line 5 at the Straits, including those by Enbridge as well as other propane suppliers.