A market test of Canadian demand for long oil delivery contracts and new capacity has begun on Express Pipeline, a 260-mile conduit from Alberta to Wyoming for 280,000 b/d or about 7% of traffic on the Enbridge Inc. network.
The Calgary firm launched two open season service auctions last Tuesday, with contracts for current Express capacity available until Aug. 7. Requests for additional delivery volumes would be received until Aug. 23.
Enbridge Vice President Guy Jarvis described the open seasons as a response to pipeline capacity shortages. A current excess of production over delivery service has depressed oil prices and investment throughout the Canadian industry.
Faced with blocked pipeline expansions by environmental, native and political opponents, the Canadian industry is debating whether to replace short with long oil transportation service contracts to improve the network’s reliability and predictability.
The change is controversial.
Small producers have warned the switch is liable to favor big systems by requiring large financial and oil volume commitments. An Express marketing success with long service contracts could spread across the Enbridge network carrying about 3 million b/d.
Canada’s pipeline regulatory ordeal advanced a political step in June when the Liberal government in Ottawa granted approval for a second time to the 590,000 b/d Trans Mountain expansion.
However, raised regulatory hurdles and expanded roles for critics confront the Canadian fossil fuel industry under hotly contested legislation passed in the final hours of the 2019 session of Parliament.
The new Impact Assessment Act widens project reviews beyond the physical realm of environmental effects on land, air, water and wildlife and into social issues including health, “sustainability,” climate change, women’s rights and aboriginal participation. The act also overhauls Canada’s federal regulatory apparatus.
The National Energy Board is to be reorganized and renamed the Canadian Energy Regulator. The Canadian Environmental Assessment Agency is to grow into the Impact Assessment Agency of Canada and take command of the new regime.