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Enbridge running Mainline with unused space as Canada cuts oil output

Pipeline company Enbridge Inc is running North America’s biggest oil pipeline network, the Mainline, with unused capacity as Canadian producers cut output due to the spread of coronavirus and low prices, a senior executive said.

“Right now we’re going to see as much production turned down as possible in western Canada,” said Vern Yu, Enbridge’s executive vice-president of liquids pipelines, in an interview on Monday.

He declined to say how much space the Mainline had, but Alberta Premier Jason Kenney said last week it was running with 150,000 barrels per day of unused room.

The spare capacity is a sudden, if temporary, reversal for the country’s oil producers. Congestion on key export routes has plagued the industry for years, weakening prices and forcing the government of Alberta to curtail production.

Canada, the world’s fourth-largest crude producer, could suspend as much as 1.7 million barrels per day, or a third of the country’s total output, to cope with falling demand caused by the coronavirus pandemic, according to Royal Bank of Canada analysts.

The Mainline, Canada’s longest oil pipeline system, has capacity for nearly 3 million barrels per day, moving western Canadian oil to U.S. refiners.

Yu said in February the best-case scenario for its proposed Line 3 replacement project was to obtain all permits needed in Minnesota in time to start construction in summer. Construction of the long-delayed Line 3, which is part of the Mainline, would take six to nine months, he said.

“We’ll have to reassess once we have the permits on what’s a reasonable construction timeframe given what may or may not be there as far as physical distancing restrictions,” he said Monday.

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