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Report warns Enbridge, DTE, part of pipeline "bubble" that could burst

Part of the new line 6B pipeline in central Michigan.
Mark Brush ??
Michigan Radio

A new report by an energy watchdog group says companies are betting over a trillion dollars in risky gas pipeline projects.

Global Energy Monitor says these projects are hugely expensive - so the payback is over decades. Climate scientists say we need to stop burning fossil fuels completely by 2050.

That means the pipelines could become stranded assets for the companies.

Enbridge Energy is engaging in a particularly risky expansion, according to Ted Nace, co-author of the report. He says Enbridge, the world's third largest pipeline company, has a heavy debt load.

That could leave the company at risk of needing government bailouts if global demand for natural gas stays stagnant, or falls.

Nace says investors are already turning away from fossil fuel projects over concerns about climate change.

That makes Enbridge Energy's plan to put its Line 5 into a tunnel under the Straits of Mackinac a risky bet, he says.

"After they finish building that tunnel, will anyone be interested in the product that's going through the tunnel?" he asks.

In a statement, a spokesman for Enbridge said the company has "the scale, financial flexibility and market access to be an energy leader in the gathering, processing and transporting of crude oil, liquids and natural gas across North America." 

Our assets are now more diversified and balanced between natural gas and crude oil, complemented by our rapidly growing renewable power generation business. We move 28 percent of the crude oil produced in North America, and 20 percent of the natural gas consumed in the U.S. Our core values and our commitment to stewardship of the environment and community engagement will not change. Going forward, we have the best platform for growth, providing greater opportunities for communities, consumers, customers and investors.
As far as our commitment to renewable energy, since our initial investment in a wind farm in 2002, we've committed more than $7.8 billion in capital to renewable energy and power transmission projects currently in operation or under construction.
Together, our renewable energy projects (either operating or under construction) have the capacity to generate 3,639 megawatts (MW) gross of zero-emission energy (1,748 MW net). Today, Enbridge is one of the largest renewable energy companies in Canada, and we have a diversified portfolio of renewable energy projects.

DTE Energy is also participating in the gas pipeline boom, according to Matt Kasper, an analyst with Energy and Policy Institute, commenting on the Global Energy Monitor Report.

"People think of DTE as their electricity or gas provider - but they've increasingly become a pipeline company," says Kasper.

He says DTE Midstream's new Nexus pipeline, and DTE Energy's current construction of a billion-dollar natural gas plant in St. Clair Township, are long-term investments in fossil fuel.

"Scientists have warned us for years now, you really need to start to shut down alot of this infrastructure, you cannot continuously expand it," says Kasper.

DTE Midstream is the gas storage and pipelines business unit of DTE Energy.    DTE provided this statement in response to the Global Energy Monitor report:

DTE Midstream and its business partners closely examine market demand and environmental impacts before developing new projects. In addition, all natural gas pipeline projects across state lines, must receive approval from the Federal Energy Regulatory Commission (FERC), which determines whether there is a need for the project. FERC conducts a thorough review of the proposed pipeline route to minimize environmental and other impacts.
DTE Energy, as a whole, is committed to reducing its carbon emissions 80% by 2040. Working together, renewables and natural gas will help us get there, as they deliver clean, secure and low-cost energy to power our customers. The result is reduced emissions and a reliable power source –natural gas generators are able to ramp up quickly when intermittent renewable sources are unavailable.

Editor's Note: DTE Energy and Enbridge Energy are corporate sponsors of Michigan Radio.

Correction, 5/2/19:  This story was corrected to refer to DTE Midstream as the utility's gas storage and pipelines business unit, rather than DTE's natural gas arm.  

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.
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