The Canada Energy Regulator (CER) on November 26 rejected Enbridge Inc’s plan to sell all space on its Mainline oil pipeline under long-term contracts instead of rationing it on a monthly basis. CER said that the change would benefit shippers with contracts but hurt others without them. The regulator noted that the dramatic change in assessing the pipeline would pose too many negative consequences to Western Canadian oil producers.
Enbridge announced plans to sell 90% of space in the 3 million bpd Mainline under long-term contracts in 2019 when the demand to use the 70-year-old pipeline greatly exceeded its capacity. However, demand in the pipeline linking Western Canadian oil production bases to refineries in Eastern Canada and the US Midwest has since eased. Enbridge has yet to comment on the decision, saying it was still evaluating it. CER’s spokesperson Ruth Anne Beck said the decision could be appealed within 30 days.
Fourteen shippers, including Cenovus Energy, Imperial Oil, BP, and Marathon Oil, supported Enbridge. These companies account for 75% of Mainline’s volume, and most of them have refining operations. Meanwhile, Canada’s largest oil producer, Canadian Natural Resources, opposes the change.
