More than two dozen oil companies have weighed in on whether Canada’s energy regulator should intervene in Enbridge Inc’s contentious proposal to overhaul shipping contracts on its Mainline pipeline network.
The Mainline is North America’s largest pipeline system, shipping around 3 million barrels per day of crude from western Canada to the U.S. Midwest. Enbridge currently allocates capacity based on monthly nominations from shippers, but is proposing to switch to long-term fixed-volume contracts.
The company launched a two-month open season to solicit bids for space on Aug. 2. It faces stiff opposition from many Canadian producers, who say the tolls are unfair and the changes will limit their access to markets.
After complaints from companies, including Suncor Energy and Canadian Natural Resources Ltd, the Canada Energy Regulator (CER) said it would hold a fast-track process to gather comment and gave interested parties a deadline of 12 p.m. local time on Thursday.
Most written responses came from parties in favour of the regulator intervening before the end of the open season. They included MEG Energy Corp, the Saskatchewan government and the Canadian Association of Petroleum Producers (CAPP).
The CER requested comment on whether it should consider the terms and tolls offered by Enbridge before – instead of after – the end of the open season, and whether the open season should be delayed.
CAPP underlined the importance of the Mainline system to Canadian producers.
“The conversion of the Mainline ... is no small thing and it should perhaps be no surprise and certainly no shame to anyone if the attempt to achieve the conversion by confidential negotiations and an open season turned out to be insufficient to the magnitude of the task,” Nick Schultz, CAPP’s vice president of pipeline regulation, said in a letter.
Enbridge has been negotiating with shippers since last year but the terms and tolls on offer have not been publicly disclosed. The company has until Sept. 11 to file comment with the CER and welcomed the letters of support for its Mainline proposal from a number of shippers.
“We are pleased that a range of customers have submitted letters to the CER today in support of what we are doing,” said Guy Jarvis, Enbridge’s executive vice president of liquids pipelines.
Companies opposed to any intervention by the CER include refiners Marathon Petroleum Corp and Motiva Enterprises.
Oil sands producers Cenovus Energy and Imperial Oil, which is majority-owned by ExxonMobil Corp, also supported the Mainline changes.
“Cenovus is in favour of contract carriage or firm service on the Enbridge Mainline. This will provide volume certainty for shippers to downstream markets,” Chief Executive Alex Pourbaix wrote.
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