Enbridge Inc submitted on Thursday its application to the Canada Energy Regulator (CER) to contract out space on its Mainline oil pipeline, and said it had significant support from shippers, documents filed with the regulator showed.
Enbridge plans to allow shippers to book 90% of space under long-term contracts on the nearly 3 million barrel per day Mainline, Canada’s biggest oil pipeline system, rather than continue to ration space on a monthly basis.
The move comes as existing Canadian pipelines are congested, and the oil industry struggles to win regulatory or legal approval to expand them over environmental opposition.
The main change Enbridge made to an earlier proposal that drew sharp criticism from Canadian oil producers was to delay open season – the period when it auctions off space – until after the CER approves its change, Enbridge’s executive vice president of liquids pipelines, Guy Jarvis, told reporters on a conference call.
“We believe the approach we’ve proposed is the gold standard to allowing all participants to participate,” Jarvis said.
The company filed letters of support from 12 shippers representing 70% of the current Mainline volume. They include Canadian producers Cenovus Energy Inc and Imperial Oil Ltd , but the list is made up mostly of U.S. refiners who buy Canadian crude such as BP Plc and PBF Energy .
In an unusual move, the CER halted Enbridge’s open season in September, after Canadian producers complained that Enbridge had too much market power and that U.S. refiners could book most of the Mainline’s space under the new system.
If approved, the new contract system would take effect once the existing framework expires in mid-2021.