Enbridge won’t ration Mainline deliveries as oil cuts mount

Pipeline operator Enbridge Inc said on Monday it would not ration June deliveries on North America’s biggest oil pipeline network, the Mainline, as Canada’s oil producers step up production curtailments to cope with low prices.

The notice by Enbridge shows pipeline congestion that has played a role in the deep discounting of Canadian crude is easing as producers shut in production to cope with plunging demand for crude caused by the coronavirus outbreak.

Enbridge’s Mainline has capacity for 3 million barrels a day moving western Canadian oil to U.S. refiners. The pipeline has been regularly oversubscribed in recent years, forcing Enbridge to ration the number of barrels each shipper can move.

Shipping constraints have eased, however, as oil sands producers have turned down an estimated 300,000 barrels per day of output, primarily at steam-driven extraction sites.

Enbridge said earlier this month it was running the Mainline with unused capacity and that some 20% to 25% of Western Canada’s oil production could be shut in during the second quarter.

Husky Energy Inc and Crescent Point Energy Corp on Monday cut spending and production, days after Canada’s federal government offered financial relief to the hard-hit sector.