Enbridge ends Line 5 tunnel design phase, starts construction bid process
Enbridge says it has completed the engineering and design phase of a 4-mile tunnel beneath the Straits of Mackinac that will house a new segment of the controversial Line 5 oil pipeline.
The company will turn its efforts next to the hiring of a contractor to build the tunnel, a task that preliminary analysis last fall showed increasing in cost.
Enbridge's contract with Great Lakes Tunnel Constructors — made up of Japanese tunneling firm Obayashi and Livonia-based Jay Dee Contractors — ends Wednesday, the company said. In March 2020, Enbridge described its preconstruction agreement with the contractors as lasting 18 months, but it appears to be ending five months early.
"GLTC’s work product is a critical input to the tunnel project," Enbridge spokesman Ryan Duffy said in a statement. "Enbridge is appreciative of GLTC’s positive working relationship and contributions to this important infrastructure investment for the State of Michigan."
As recently as October, Enbridge Energy told the state of Michigan that preliminary designs for construction revealed "significant cost creep" and were nearly double the initial $500 million price tag. At that point, the Canadian oil giant said it would take the project's construction phase back to market at a later date.
With Wednesday's end to the contract with Great Lakes Tunnel Constructors, the company will switch from a construction manager/general contractor model to a request for proposals from new bidders.
It's possible Great Lakes Tunnel Constructors is among the new bidders for construction and it's not uncommon to switch to a different model with a new phase of the project, Duffy said.
"It's common and it's usually the smart thing to do to treat these as separate phases," he said. "We see this as an opportunity here to solicit competitive bids for construction of the tunnel."
Under a 2018 agreement with the state, Enbridge agreed to pay the full cost of the tunnel construction and the placement of a new segment of Line 5 within the tunnel. The state agreement did not list a potential cost for the project, but Enbridge has estimated from the tunnel's inception that it would cost about $500 million.
The administration of Gov. Gretchen Whitmer has said it is revoking the easement for Line 5 and wants the dual pipeline shut down by May. But Enbridge is fighting the matter in federal court.
The tunnel project was granted state permits earlier this year, but still is waiting on permits from the U.S. Army Corps of Engineers and approval from the Michigan Public Service Commission to relocate the pipeline. Enbridge hopes to place a new segment of Line 5 into service in the tunnel in 2024.
As of February, about $100 million had been spent on the project, Enbridge said.
Michigan Department of Transportation personnel estimated earlier this year that the use of a construction manager/general contractor model was one of the reasons for cost creep on the tunnel construction phase.
The construction manager/general contractor model lends itself to more complicated projects by bringing in an expert contractor early on to participate in the design and engineering processes. But the model can sacrifice competition on cost that a request for proposals from a variety of companies would create so some companies switch to a request for proposals after the initial design is complete
Enbridge said it hopes its request for proposals will bring plans from "world class contractors."
"This will be followed by a competitive bid process with the requirement that the contractor work with union labor," Duffy said in a statement.