Enbridge will defy Michigan Line 5 pipeline shutdown orders in advance of court battle

MOSCOW (MRC) -- Enbridge said it will defy the state of Michigan's order to shut down its Line 5 crude oil and propane pipeline system by May, and will instead challenge Gov. Gretchen Whitmer's permitting revocation in federal court, reported S&P Global.

Enbridge's Jan. 12 letter to the Democratic governor comes in response to Whitmer's decision in November 2020 to yank the Line 5's 1953 easement from when the pipeline system first came online, citing safety violations. In doing so, Whitmer said the dual pipelines had to close by May. The state also filed a lawsuit seeking legal recognition of the shutdown order.

Whitmer and Enbridge have maintained a confrontational relationship since she took office in the beginning of 2019, and tensions escalated last summer when the 540,000 b/d Line 5 was partially shuttered for much of this summer after an anchor support for the pipeline was damaged and eventually repaired.

The 645-mile line stretches from Wisconsin through Michigan and into Ontario, and is part of Enbridge's larger Mainline and Lakehead systems. Enbridge's planned Line 5 tunnel replacement project under the Great Lakes' Straits of Mackinac has progressed despite state opposition, although project completion is not expected until late 2024, according to Enbridge.

In terms of the more immediate fight, Enbridge said it has no intention of shutting down the Line 5 system because it said the state's unspecified allegations are baseless.

"Our dual lines in the Straits are safe and in full compliance with the federal pipeline safety standards that govern them," wrote Enbridge executive vice president Vern Yu in the response letter. "In the meantime, the dual pipelines will continue to operate safely until they are replaced on completion of the Tunnel Project."

Enbridge claimed the state lacks the authority to terminate or revoke the 1953 easement, and that Enbridge is in full compliance with revised safety agreements approved in 2017 and 2018 with the state under the previous Republican governor, Rick Snyder.

Enbridge added that the pipeline was reviewed and approved for operation by the US Pipeline and Hazardous Materials Safety Administration last year after the necessary repairs were made following the anchor support accident.

Enbridge is asking a federal court to dismiss the state's easement revocation.

"To make matters worse, the state of Michigan has offered no short-term or long-term plans for alternative propane or energy supply should Line 5 be shut down," Enbridge spokesman Michael Barnes added in a statement.

In yanking the easement in November, Whitmer cited "persistent and incurable violations of the easement's terms and conditions," including structural issues with the dual pipelines that provide Michigan customers with more than half of their propane supplies.

"Enbridge has imposed on the people of Michigan an unacceptable risk of a catastrophic oil spill in the Great Lakes that could devastate our economy and way of life," Whitmer said in a Nov. 13 statement. "That's why we're taking action now, and why I will continue to hold accountable anyone who threatens our Great Lakes and fresh water."

There's been greater scrutiny of Enbridge in Michigan since a significant 2010 oil spill from a separate Enbridge pipeline along the Kalamazoo River.

At the time, Alberta Energy Minister Sonya Savage called the move by Whitmer the latest in her "long-standing efforts" against Line 5. Savage predicted a "long, protracted process in the American court system."

Energy analysts have contented there is a low likelihood of the pipeline actually shuttering this spring given the protracted legal fight involved.

Enbridge reiterated that it is offering to meet with state officials to resolve any differences.

As MRC wrote previously, in late December 2019, Enterprise Products Partners and Enbridge agreed to jointly develop a deepwater crude oil export terminal offshore Houston, the latest sign of consolidation in the crowded field of US Gulf Coast export projects.

We also remind that Enterprise Products Partners' Mont Belvieu propane dehydrogenation unit in Texas restarted from planned maintenance in the first week of December, 2019. The PDH unit went offline for maintenance on November 13. That day, the company said in a filing with the Texas Commission on Environmental Quality that the RAC "B" turbine shut down, which resulted in flaring. The flaring was estimated to last 72 hours. The unit has a capacity of 750,000 mt/year of propylene.

Propylene is the main feedstock for producing polypropylene (PP).

According to MRC''s DataScope report, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- OPEC's secretary general said on Tuesday he was cautiously optimistic the oil market would recover this year from the slump in demand brought about by the coronavirus pandemic, reported Reuters.

Monthly meetings of the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia - a grouping known as OPEC+ - are there to stop an imbalance from re-emerging, OPEC's Mohammad Barkindo told a virtual forum.

"We all agree that the recovery is fragile, there are still more uncertainties, but we are cautiously optimistic that the recovery will materialise this year," he said.

Oil prices have rallied to an 11-month high this month, helped by a Jan. 5 decision by most members of OPEC+ to hold production steady in February and a pledge by Saudi Arabia to voluntarily cut output.

Barkindo, speaking at the Atlantic Council Global Energy Forum, said that OPEC+ needed to be flexible and was seeking stable markets.

The energy minister for OPEC member the United Arab Emirates earlier told the same event he saw the start of the market recovery this year.

"This year the way we see it is a year of recovery, whether it's going to be the end of the year where we are supposed to reach the balance or the beginning of 2022," Suhail al-Mazrouei said.

The minister of the Gulf producer also said he sees good oil demand growth in China and India as more countries begin their coronavirus vaccination campaigns.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Hedge funds purchased petroleum derivatives for the 11th consecutive week, but the buying impulse that started with the announcement of successful coronavirus vaccines appears to be fading, said Hydrocarbonprocessing.

Hedge funds and other money managers bought the equivalent of 17 million barrels in the six most important petroleum futures and options contracts in the week to Jan. 19, according to data from regulators and exchanges.

Since early November, portfolio managers have purchased a total of 466 million barrels, taking their net holding to 822 million, the highest for a year.

In the latest week, there were small purchases of NYMEX and ICE WTI (+7 million), European gas oil (+6 million), U.S. diesel (+6 million) and U.S. gasoline (+1 million) but small sales of Brent (-3 million).

None of these changes was significant, except the focus on buying gas oil and diesel, which reversed the bias towards crude and gasoline in previous weeks, and suggested some opportunistic relative value-seeking.

The combined net long position across the six contracts is in the 78th percentile for all weeks since the start of 2013 while the ratio of long to short positions is in the 76th percentile. Fund positions therefore appear stretched on the long side, though not yet excessively so, implying there is still room for position building, but risks are now concentrated on the downside.

Bullish positions are most lopsided in gasoline and crude. Positioning remains neutral in diesel and gas oil, which likely explains some of the recent buying interest in those two fuels.

As per MRC, top oil exporter Saudi Arabia has cut supplies of February-loading crude for some Asian buyer by up to a quarter while meeting requirements of at least four others. This comes after Saudi Arabia pledged additional voluntary output cuts of 1 million barrels per day (bpd) in February and March under a deal between the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

As MRC wrote previously, Formosa Petrochemical Corporation (FPCC) was running its crackers in Taiwan at 100% capacity utilisation in end-December, 2020. The company"s crackers have combined ethylene production capacity of 2.935 million metric tons/year. Meanwhile, FPCC is planning overhaul of the smallest cracker in mid-2021.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.


MRC

MOSCOW (MRC) -- Avient Corporation, formerly PolyOne, has recently announced the official opening of its new CycleWorks facility in Pogliano, Italy, according to GV.

The new lab and plant will conduct chemistry testing and evaluations to help customers meet the challenge of plastics recycling and advance the goal of a circular economy. The demonstration plant mimics real-world recycling conditions in a research environment, said Avient.

Avient has opened its CycleWorks Innovation Center in Pogliano, Italy. (Source: Avient)Avient has opened its CycleWorks Innovation Center in Pogliano, Italy.

“We have established CycleWorks to study and meet the challenges of plastic recycling while furthering its viability. This high-tech facility will allow our dedicated team to understand the chemistry of polymers in the mechanical recycling process, and to see how and where problems occur. For example, why and where are polymer chains degrading? What role do colour and additives play in recyclability? It is our goal to find answers to these questions and to understand the science behind recycling,” said Dr. Jan Sultemeyer, global head of innovation & sustainability at Avient.

CycleWorks has already started producing useful data. The company will use this data to develop masterbatch formulations with proven science behind how they perform during recycling processes, offering customers a portfolio that’s essentially field-tested for recycling. Avient expects to introduce solutions throughout 2021 as new data is generated.

Walter Ripple, vice president of sustainability at Avient, said: “As one of the founding members of the Alliance to End Plastic Waste (AEPW), Avient is committed to doing our part in advancing a circular economy through partnerships and innovation. CycleWorks further strengthens our recycling focus and ability to enable our partners’ recyclability goals.”

To facilitate industry partnerships, CycleWorks includes a collaboration platform to ensure input from across the plastics value chain. Avient said it expects this to improve the ability of new technologies to be implemented in recycling processes and to assist brand owners in raising the sustainability of their products.

On 1 July 2020, PolyOne and Clariant Masterbatches joined together as Avient, a company focused on specialised and sustainable material solutions with projected 2020 pro forma revenues of approximately USD 3.7 billion. Avient has approximately 9,100 employees and is certified ACC Responsible Care and a founding member of the AEPW.

As MRC reported earlier, in December 2019, Clariant (Muttenz, Switzerland) agreed to sell its entire Masterbatches business to PolyOne Corp. (Avon Lake, Ohio). The transaction values the Masterbatches business at USD1,560 million, representing about 12.2 times the last twelve months reported EBITDA (ending September 2019) on a cash and debt free basis.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Braskem has signed an agreement for the purchase of wind power from Casa dos Ventos, one of the pioneers and largest investors in the development of wind power projects in Brazil, as per Braskem's press release.

The corporate power purchase agreement (PPA) is linked to the construction of a new wind power plant and provides for the supply of renewable energy for 20 years, with emissions avoided in the period estimated at around 700,000 tons of CO2. Casa dos Ventos will be responsible for directing the investment in building the new wind farm.

"This is our fourth long-term agreement for the acquisition of renewable energy and involves the largest volume acquired to date. With it, we will help build another power generation farm and strengthen our strategy of ensuring an energy matrix with a growing share of renewable energy in our operations and in the operations of the petrochemical chain, reaffirming our commitment to sustainable development. We are working hard to become a carbon neutral company by 2050, with the target of reducing by 15% our emissions by 2030, and this is just another step on this journey," said Gustavo Checcucci, Energy Director at Braskem.

In addition to acquiring energy, Braskem will have the option to acquire, subject to approval by government authorities, an ownership interest in the wind farms, creating the possibility for implementing a self-production model. "We created a custom model in which we are responsible for building and operating the wind farms, but we offer the possibility for our partners to become shareholders in these projects in the future. This is a win-win model, especially for the country, since it encourages an energy transition model for large consumers," explained Lucas Araripe, new business director at Casa dos Ventos.

In 2020, Braskem announced two other major agreements for the acquisition of renewable energy. The first agreement, announced in March, with the France-based multinational Voltalia , will enable the expansion of the Serra do Mel Solar Complex located in the state of Rio Grande do Norte, with generation capacity of 270 MW. The second agreement, announced in June, is a partnership with Canadian Solar that enables the construction of a solar plant in northern Minas Gerais state, with installed capacity of 152 MWp, which is sufficient to supply a city of 430,000 people.

In late 2018, the company signed an agreement with EDF Renewable for the purchase of wind power for 20 years. Through these four agreements, with Casa dos Ventos, Voltalia, Canadian and EDF Renewable, Braskem estimates that it will avoid around 1.5 million tons of CO2 emissions.

Braskem announced a public commitment to expand its efforts to become a carbon neutral company by 2050. To achieve this target, the company's strategy includes initiatives for carbon reduction, offsetting and capture, expansion of the I'm greenT portfolio, which comprises products focusing on the circular economy, as well as engagement over the next ten years to reach the proper disposal of 1.5 million tons of plastic waste.

Both Braskem and Casa dos Ventos are formal signatories to the Global Compact and to the 17 Sustainable Development Goals of the United Nations. The partnership, combined with Braskem's initiatives for the following decades, is aligned with the UN 2030 Agenda and the Paris Agreement for controlling the impacts from climate change.

As MRC wrote before, Brazil’s state-run oil company Petrobras is seeking 800 million reais (USD152 million) in compensation from engineering group Odebrecht in arbitration proceedings over its alleged violation of the shareholders agreement in petrochemical company Braskem. Odebrecht is seeking to sell its 38.3% stake in Braskem SA, while Petrobras aims to offload its 36.1% stake.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC