Spectra Energy Partners LP has dropped plans to charge for scarce capacity on its Express pipeline system, bending to objections by oil company shippers already grappling with severe export constraints.
Houston-based Spectra told Canadian regulators it nixed changes to an existing tariff that would have forced shippers to bid on capacity not covered by firm contracts during times of apportionment, when orders to move crude exceed available space.
Some of the world's largest energy companies, including ExxonMobil Corp., China's CNOOC Ltd. and Vitol Inc., said the plan would have imposed hefty premiums for capacity on the Canadian portion of the system, a critical export route for Canada's energy industry. Express carries about 280,000 barrels of crude per day south from Hardisty, Alta. to as far as Wood River, Ill.
North American pipelines have been running at or near full tilt in recent years as production gains from Alberta's oil sands, and the boom in light, tight oil in regions like North Dakota's Bakken, outstrip available capacity. That has contributed to depressed prices for Alberta's heavy crude, although benchmark Western Canada Select has been strengthening recently as expansions to existing networks come online and more oil is transported by railways.
Enbridge Inc. said last month it plans to begin shipping crude on its Line 9 conduit through Ontario to Montreal as soon as Nov. 1.
Crude will also begin flowing on the company's much-anticipated Flanagan South pipeline from Chicago to Cushing, Okla. by early December, giving Canadian producers their first major access to the U.S. Gulf Coast, chief executive Al Monaco said this week.
Spectra said the proposed tariff changes on Express were designed to "fairly allocate scarce capacity" among an increasing number of shippers using the system on a spot basis. Shippers balked, arguing the move could lead to similar fees on other export lines.