The Line 9 Enbridge pipeline is seen being worked on in East Don Parkland in Toronto on March 6, 2014. The reversed pipeline is designed to send up to 300,000 barrels a day of Western Canadian oil from Sarnia, Ont., as far as Montreal, replacing Brent-priced crude and rail shipments to Eastern Canadian refineries.MARK BLINCH/Reuters
Canada's top energy regulator has slapped new conditions on Enbridge Inc.'s Line 9, delaying shipments of Alberta crude to Quebec refineries owned by Suncor Energy Inc. and Valero Energy Corp.
The National Energy Board (NEB) on Thursday said Enbridge must conduct additional integrity tests on three segments of the 639-kilometre pipeline before starting deliveries, as well as increased inspections during the first two years of operations. The board also placed a temporary pressure reduction on the pipeline, a move that could reduce the amount of crude that can be transported on the line once it starts up, a spokeswoman said.
Line 9 "is located in a heavily urbanized area with a large number of waterways; any release would travel rapidly to the water systems and affect a large number of people," the regulator said in a statement. "A higher degree of confidence in the integrity, or condition, of the pipeline is required to show that the pipeline is safe to operate."
The order marks another potential setback for Line 9 and comes days after two of the project's biggest customers questioned the regulator over delays that they say are driving up costs.
The reversed pipeline is designed to send up to 300,000 barrels a day of Western Canadian oil from Sarnia, Ont., as far as Montreal, replacing Brent-priced crude and rail shipments to Eastern Canadian refineries.
Enbridge applied to open the pipeline in February, and its oil shipper customers have grown frustrated waiting for the regulator to give the project the all-clear. It was first built in the 1970s and currently ships oil from east to west.
San Antonio, Tex.-based Valero sunk nearly $200-million into upgrades at its Montreal East terminal and Lévis refinery near Quebec City to handle an influx of western oil. Instead, it has reverted to buying pricier foreign crude to feed its 265,000-barrel-a-day Jean Gaulin plant, Ross Bayus, president of the company's Canadian operations, said in a letter to the regulator last week. The company joined Suncor in seeking a meeting with NEB chairman Peter Watson.
It is unclear how soon the expanded pipeline will start up. Enbridge spokesman Graham White said on Thursday the company is reviewing the new conditions to determine next steps, including the timeline for completing the required work.
"Although conditions must be met before the pipeline can be operated, the granting of the leave to open is an acknowledgment of the thorough, detailed engineering analysis and real actions on safety and integrity that Enbridge has invested in this project over the past three years," Mr. White said in an e-mail.
"We are confident that Line 9 can be operated safely and we will fulfill the regulator's conditions."
Separately, dozens of environmental groups on Thursday accused the company of using a "backdoor scheme" to dramatically boost exports of Alberta crude across the Canada-U.S. border. Enbridge is seeking an amendment to an existing presidential permit to increase capacity on the U.S. portion of its Alberta Clipper pipeline to 800,000 barrels a day from about 450,000 barrels today.
In a letter addressed to U.S. President Barack Obama, groups including the Sierra Club and ForestEthics said the project should face a full review by the State Department – the same process that has tied up TransCanada Corp.'s Keystone XL project.
Mr. White rejected the assertion the company was dodging scrutiny, noting it has an existing permit to legally operate the Clipper line.
Enbridge Inc. (ENB)
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