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Bright natural gas flares dot the North Dakota landscape amid an oil boom that is changing the energy dynamics of North America.

The U.S. Federal Energy Regulatory Commission has delivered a potential setback to plans by Enbridge Inc. for a massive new pipeline to carry oil out of North Dakota's fast-growing Bakken field.

In a decision released Friday, FERC denied an application by Enbridge to set tolls, or costs to move oil, through its $2.5-billion (U.S.) Sandpiper project. By blocking those tolls, it may delay the project, as Enbridge will now have to present an alternative way to pay for the large new pipeline, which would carry oil 603 kilometres from North Dakota to Minnesota.

Enbridge has not "filed anything that would qualify as an uncontested settlement that could be approved as fair and reasonable and in the public interest," FERC said in its ruling.

The decision is a partial setback for Enbridge, but will have a greater impact on its U.S. subsidiary, Enbridge Energy Partners. It comes amid a great rush to "re-pipeline" the continent, as a surge of new oil supplies seek ways to market. But the decision is on commercial, rather than environmental, grounds – Enbridge and shippers were unable to come to an agreement.

"Is this the end of the pipeline? Does Enbridge say, 'well then it can't be built?' That's the most important question," said Steven Paget, an analyst with FirstEnergy Capital Corp. He pointed to a similar decision by FERC that turned down a toll deal on its Southern Access Extension project in 2008. Enbridge is only now seeking to revive that project.

The decision on Sandpiper could, however, benefit Canadian producers by limiting the amount of U.S. oil that can flow into export pipelines used by Alberta crude producers. Sandpiper, if built, would deliver U.S. Bakken crude to those pipelines.

In a statement Friday, Enbridge spokesman Graham White said, "this decision does not block the project." Enbridge is free to reapply, he said, and FERC "does not have jurisdiction over facilities or infrastructure, so the timeline on the project is not affected in those key areas."

A number of companies involved in moving oil out of the Bakken had loudly protested Enbridge's proposed Sandpiper tolls. EnWest Marketing LLC told FERC that "the amount of [Sandpiper] capacity was not necessary in view of rail and pipeline alternatives." Another protester, WPX Energy Marketing LLC, accused Enbridge of staging "an attempt to double the price of transportation while receiving a risk-free guaranteed rate of return." Others said the Enbridge proposal would force shippers to shoulder the full extent of increased costs if Sandpiper is not filled to capacity.

"While Enbridge North Dakota filed 15 letters in support, a number of parties protested the filing and in those protests stated that Enbridge North Dakota itself has indicated there may be over 200 shippers on the system," FERC said in its ruling.

For that reason, FERC said, it turned down the Enbridge application, although Enbridge is free to reapply with "rates fully supported pursuant to the Commission's regulations or an uncontested settlement."

Two FERC commissioners, in a dissenting opinion, warned that, "In declining to address Enbridge North Dakota's request, today's order results in a complete dismissal of the pipeline's proposal that will unduly delay much needed investment in infrastructure."

Enbridge did not immediately respond to a request for comment.

The company "will now likely have to undertake a more extensive and time consuming full cost-of-service rate filing, which will likely delay pipeline service from the original target of early 2016," RBC analyst TJ Schultz wrote in a research note Friday.

"However the denial looks more procedural than an outright denial of the route or an indictment of the merits or need of the project."