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Fifty-one oil companies filed complaints or letters of support to the Canada Energy Regulator about Enbridge’s plan.Bayne Stanley/The Canadian Press

Enbridge Pipelines Inc. is defending its plan to contract out capacity on its Mainline pipeline network, days after Canadian Natural Resources Ltd. called the proposal an “abuse” of market power.

Enbridge’s plan, filed with the Canada Energy Regulator in December, would require oil companies to enter into long-term agreements covering 90 per cent of Mainline’s capacity. The remaining 10 per cent would be available for shippers without a contract. Mainline is currently 100-per-cent open access. It operates under a walk-up system, in which customers bid for space for the coming month.

The Mainline pipeline network supplies refineries in the United States and Ontario and carries approximately 70 per cent of total Western Canadian crude exports.

The contracting-out proposal drew both ire and support from oil producers, shippers and marketers at the deadline for feedback to the CER last week. Enbridge had until Friday to rebut those concerns. Now the CER will weigh all the feedback and decide whether there will be a single hearing on the matter, or whether it will be split in two.

The heart of CNRL’s argument is that the change would amount to a “drastic and unprecedented shift” that flies in the face of previous regulatory decisions and is contrary to Enbridge’s legal obligations as a common carrier. It wants two hearings, the first to examine only the question of whether the CER should even allow the switch. The second one would focus on more detailed arguments.

Enbridge countered in its submission Friday that the issues CNRL brought to the fore – whether the contracting process would unjustly discriminate against smaller producers, for instance, or whether Enbridge is exercising market power via the switch – are all intertwined, and having two hearings would be a waste of time and money.

“It is hardly efficient ... to turn one lengthy proceeding into two lengthy proceedings, particularly when there is a significant overlap in the evidence that would be required in each proceeding,” Enbridge wrote in its rebuttal.

Enbridge went on to say that CNRL, Canada’s largest oil producer, was gaming the CER review system to delay hearings for its own commercial interests.

“Such delay might benefit CNRL by providing more time for it to sort out its transportation options, which include its significant contractual commitments to the Trans Mountain and Keystone expansion projects,” Enbridge argued.

Vern Yu, president of Enbridge’s liquids and pipeline division, likened the attempted delay to a get-out-of-jail free card; a longer hearing would allow CNRL to assess the construction on Trans Mountain or Keystone and weigh that against space it will want on Mainline.

CNRL said in an e-mail on Friday it would not comment on the matter while it is under CER review.

Fifty-one oil companies filed complaints or letters of support to the CER about Enbridge’s plan. Mr. Yu said 13 of those were pro-Enbridge, adding many of the negative responses were form letters from smaller producers that have never shipped on the Enbridge system.

Mr. Yu wouldn’t comment on whether there is an organized movement against Enbridge, but said “there was definitely some gamesmanship in the fact [CNRL] filed their protest letter the day before the deadline that would allow others to follow suit.”

“We want to have a full regulatory hearing where we can go through the merits of what we’re trying to do here. We believe what we’re doing is in the best interests of the basin,” he said.

Ultimately, the CER commission will have to decide who has the better case and whose arguments are the most compelling. The current toll arrangement is set to expire in June, 2021.

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