Two major oil companies have urged the National Energy Board in Canada to review a proposal which could see smaller refiners left without market access via Canada's Mainline pipeline system.
Shell and Suncor joined MEG Energy and the Explorers and Producers Association of Canada in opposing Enbridge’s proposal to introduce long-term fixed-volume contracts on the largest pipeline system in North America. The firms claim that the proposals by Enbridge, a Calgary-based multinational energy transportation firm, would be an abuse of the company’s market power.
Enbridge has launched a two-month 'open season' to solicit bids from shippers for contracted space on 90% of Mainline’s capacity. The Mainline system, with a capacity of 2.85 million barrels per day, carries the bulk of Canadian crude oil exports to the US. It currently allocates capacity on a monthly basis. According to a report by Reuters, this is a crucial channel for producers at a time when pipeline capacity is constrained.
Canadian shippers fear US refiners such as BP and ExxonMobil will gain the bulk of Mainline capacity, tying them into delivering crude oil to the Midwest region and hindering their ability to reach more liquid markets such as the US Gulf Coast.
Shell claimed that congestion on Canadian export pipelines meant Enbridge was forcing shippers to sign up for ‘unfair tolls’ on long-term committed capacity, or risk being left without market access.
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