Enbridge mulls alternatives for Mainline pipeline after regulator decision

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Enbridge Inc. will consider several options for its mainline crude pipeline system, including a modified version of its previous toll agreement, after Canada’s energy regulator denied the company’s bid to convert the system to long-term contracts.

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The Commission for Canada Energy Regulator, or CER, made its decision last Friday, nearly two years after Enbridge filed a proposal that saw oil companies enter into long-term agreements for 90 percent of mainline capacity, including 10 Percentage available. spot capacity.

Currently, 100 percent of the pipeline is open access. The commission said western Canadian oil producers “could face much more negative consequences” if the changes go ahead.

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In a statement on Sunday, Enbridge said it would reach out to companies that use mainline — and non-shippers — for input on options for the pipeline’s commercial infrastructure. This will also include industry inputs on whether there is any appetite to expand the pipeline in the future.

The mainline is the longest oil pipeline in Canada, extending from Alberta to the US border in Manitoba, and re-entering Canada into Ontario. It connects Canadian producers to refineries and other pipelines in Canada and the United States.

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It sends the most petroleum products of any Canadian pipeline, at nearly three million barrels a day – about 70 percent of Canada’s total capacity to send oil from western Canada to market.

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Enbridge said on Sunday that it had heard “significant concerns from the industry on continuing the mainline split due to increased Western Canadian production and a lack of adequate evacuation.”

However, it said that there appears to be no consensus on what a new commercial framework should look like; Some shippers want to contract, others would prefer to maintain the status quo.

Mainline’s most recent tolling agreement expired in June. The interim toll will remain in force until the CER approves a new agreement. Enbridge said it would begin consultations with the industry in the coming weeks, but does not expect a CER decision until 2023.

As of Monday afternoon, Enbridge shares on the Toronto Stock Exchange were down 3.5 per cent following Friday’s decision, before falling 2.11 per cent. The company said that Mainline’s eventual alternative commercial model “will be manageable,” and is not expected to affect its financial results.

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