CALGARY – Despite objections that Enbridge Inc. was abusing its market power with a plan to overhaul its largest oil pipeline network, the pipeline giant is pressing forward with controversial changes to the Mainline.
Enbridge, North America’s largest pipeline company, applied to the Canada Energy Regulator on Thursday for approvals to switch its Mainline, a network of multiple pipes that move 2.9 million barrels of oil per day from Canada to the U.S. Midwest, to a system that’s 90 per cent contracted from operating without long-term contracts.
The plan is controversial in the oilpatch as major oil producers including Suncor Energy Inc., Canadian Natural Resources Ltd., Shell Canada Ltd. and smaller companies such as MEG Energy Corp. and Crescent Point Energy Corp. objected to being forced into contracts when all other pipelines exiting Canada are full.
Amid the controversy, the regulator took the unprecedented step of halting Enbridge in the middle of an open season call for producers to sign contracts on the system in late September.
Two months later, Enbridge is deferring its open season but looking for CER approvals for the same plan that invited objections from dozens of companies.
Enbridge executive vice-president, liquids pipelines Guy Jarvis said the company had made “only a couple very minor changes” to its plans to contract the Mainline and will present its evidence for making changes to the system at a hearing that is expected in the second half of 2020.
“We’ve got a situation where some people simply don’t want change, but we’ve got clear evidence that 70 per cent of the throughput on our system does want a change,” Jarvis told reporters on a conference call.
“They want the priority access, the toll stability,” Jarvis said of the companies that support the application, adding, “and it’s difficult for us to respond to somebody who doesn’t want to change.”
On Sept. 29, the CER ordered Enbridge to halt the contracting process that had been underway because the pipeline giant was “in a dominant position in the market” and the regulator had “concerns regarding the fairness” of its plan to contract the network now, when other pipeline options are chock full.
The CER said that “many potential shippers may have little choice” but to participate. The decision marked the first time the pipeline regulator had intervened in a free-market pipeline contracting process.
Since that decision, Enbridge has made some small changes to its proposal, reducing the credit requirements for shippers looking to contract on the Mainline.
Now, rather than attempt another open season call for contracts, Enbridge is applying to the CER to approve its plan, which many domestic oil companies objected to the first time around.
“At that point in time, the CER had not even seen our negotiated package, nor had they seen our application or our evidence,” Jarvis said. “We believe on the balance of that evidence that we’ll have a successful outcome.”
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