In this report, PLG Consulting examines potential market adjustments that could be made in the event of a planned and orderly shutdown of Enbridge’s Line 5 pipeline.
PLG concludes that for both the crude oil and NGLs currently transported by Line 5, a range of replacement options exists that are both commercially viable and operationally feasible. This report explores those options in detail.
Partial Executive Summary
The North American energy markets are dynamic and constantly adapting to change. In this report, PLG examines the suite of potential market adjustments that could be made in the event of a planned and orderly shutdown of Enbridge’s Line 5 pipeline. PLG takes no position on the merits of a shutdown, and the purpose of the report is not to prescribe any particular set of market reactions - those will be for the market to determine. Rather, it is PLG’s conclusion that for both the crude oil and NGLs currently transported by Line 5, there exists a range of replacement options that are both commercially viable and operationally feasible. This report explores those options in detail.
Key Findings
ALTERNATE LINE 5 SUPPLY
Based upon careful research as well as PLG’s more than 15 years of consulting experience in energy supply chains and logistics, our analysis demonstrates that energy markets will adapt - as they have always done and continue to do - in the event that Line 5 is shut down. With advance notice, the markets can be expected to do so without supply shortages or price spikes.
The companies participating in Line 5 products and markets are sophisticated and large energy firms that regularly evaluate and anticipate risks and market changes. Therefore, it’s not surprising that for at least the past six years, contingency plans have been developed by key refiners and other businesses whose supply chains may be altered in the event of a Line 5 shutdown.
Taken together, the characteristics of overall North American energy supply chains combined with the unique circumstances of Line 5 products and markets mean there is a range of commercially viable and operationally feasible supply chain alternatives for each of the end use destinations and markets that would be affected by a Line 5 shutdown.
IN SUMMARY
Taken together, it is clear that there exists a range of commercially feasible and operationally viable solutions that can provide alternative crude and NGL supply chains to affected markets in the event of a Line 5 shutdown. That such myriad options exist and can be readily implemented is consistent with the nature of hydrocarbon supply chains in North America, of which Line 5 products and markets are a part.
About PLG Consulting
PLG Consulting (www.plgconsulting.com) provides consulting and management services in strategy, supply chain, and logistics engineering focused on the industrial economy. Founded in 2001, PLG delivers objective, expert consulting services for shippers, transportation companies, financial firms, government entities, investors, and other stakeholders in the world of commodity supply chain and logistics. With a team of over 40 industry veteran consultants, PLG serves over 300 clients in the energy, renewables, chemicals, minerals, bulk commodities, private equity, and surface transportation sectors.
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