A second round opened Thursday in a Canadian regulatory duel over proposed conversion of Enbridge Inc.’s oil mainline into a contract transporter after 69 years as an open access common carrier providing service with monthly bookings.
The firm filed an application for the switch with the Canada Energy Regulator (CER), three months after shipper protests prompted the agency to order a halt to an attempt to make it with a commercial "open-season" contract sale.
"The pipelines that Enbridge competes against already offer shippers the ability to contract for firm service on a long-term basis," says the application for CER approval of a second try at completing the sale.
"It would be unfair to deny Enbridge the opportunity to respond to market requests for firm service on the Canadian Mainline when its competitors have been allowed to provide such service on the majority of their capacity."
The application reports the Mainline-approved shippers roster includes more than 120 producers, refiners, marketers and "integrated" oil giants with operations from wells to retailing.
But the big refiners and integrated firms account for about 88% of the three million b/d flowing through the system, adds Enbridge. Of the total, 1.9 million b/d go directly to refineries and 1.1 million b/d travel farther through connected pipelines.
The CER application includes support letters from 13 shippers that Enbridge says account for more than 70% of Mainline traffic, such as Imperial Oil and Cenovus Energy in Canada and Lyondellbasell (Houston Refining) and Citgo Petroleum in the United States.
The CER order to halt the initial Mainline contract sale followed complaints that it was an abuse of market power from Suncor Energy Inc., Canadian Natural Resources Ltd., Shell Canada and the 170-company Explorers and Producers Association of Canada.
The successful shipper protest described the canceled contract sale as a bid to corner a forecast C$150 billion ($112 billion) in future tolls before TC Energy and Trans Mountain Pipeline complete projects that confront Enbridge with competition.
The new CER application says, "The impetus for the new service and tolling framework was the desire of some shippers for long-term priority access to Canadian Mainline pipeline capacity at reasonable and stable transportation tolls, as well as the desire of Enbridge to retain volumes on the Enbridge Mainline and reduce its long-term volume risk."
Enbridge seeks CER approval of its conversion plan in time to complete an open-season sale of delivery contracts for 90 per cent of the Mainline’s capacity before the scheduled expiry of its current tariff and toll agreement with shippers on June 30, 2021.