Canadian Natural Resources Ltd, the country’s biggest oil producer, has joined a number of other firms asking energy regulator to intervene in Enbridge Inc’s plan to overhaul shipping contracts on its Mainline pipeline network.
Canadian Natural’s letter to the National Energy Board (NEB), filed late on Monday, calls on the regulator to delay Enbridge’s proposal to switch to long-term, fixed-volume contracts on 90 per cent of the Mainline.
ConocoPhillips Canada, a unit of the U.S. oil major, also wrote to the NEB on Monday asking for the process to be delayed because of the “avoidable uncertainty” it created for Canadian producers.
Suncor, Shell join calls to block Enbridge’s Mainline pricing plan
Suncor Energy Inc, MEG Energy Corp, Royal Dutch Shell Plc, Japan Canada Oil Sands Ltd and the Explorers and Producers Association of Canada previously wrote to the regulator expressing concerns about the planned changes.
Enbridge launched a two-month open season on Aug. 2 to solicit bids for fixed capacity on the Mainline, which carries 2.85 million barrels per day of crude and is the largest export conduit to the United States. Space is currently allocated on a monthly basis.
Guy Jarvis, Enbridge’s executive vice president of liquids pipelines, said the company had been in discussions with customers since last year and that the proposed changes were supported by shippers behind the majority of the volumes transported on the Mainline system.
“We’ve been through an 18-month process with a diverse set of shippers. Landing on a single contract is a compromise and clearly not everyone gets what they want,” Jarvis told Reuters.
The NEB said it was reviewing the letters to determine its next steps.
Canadian shippers have complained the switch to fixed contracts would enable U.S. refiners downstream to secure most of the Mainline capacity, and tie producers into delivering crude to the Midwest region at the expense of other markets.
“Enbridge’s proposal is completely inappropriate, and is being made at a time when considerable market power imbalance exists because of the shortage of pipeline capacity leaving the Western Canadian Sedimentary Basin,” Canadian Natural President Tim McKay said in the letter.
Canada is the world’s fourth-largest crude producer, but congestion on existing export pipelines and delays building new ones have led to deep price discounts, prompting Alberta’s government to impose mandatory production curtailments.
Canadian Natural said the NEB should direct Enbridge to halt the open season until the regulator can consider the issue of market power imbalance raised by producers. The regulator should also approve the new terms and conditions and tolls before shippers are required to sign any binding contractual commitments for space, the company’s letter added.
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