Monopoly accusation ‘absurd’: Enbridge

PUSHES MAINLINE PLAN

CALGARY • North America’s largest pipeline company is firing back after being branded a “monopoly” by some oilsands companies as it pushes for approval of a controversial plan to re-contract its largest pipeline network.

In a May 1 regulatory filing, Enbridge Inc. dismissed as “absurd” criticism from some Canadian oil companies that say the pipeline giant is leveraging its market power to lock them into longterm contracts.

Suncor Energy Inc. and Canadian Natural Resources Ltd. and others, have argued they are being forced into contracts at a time when there’s limited choice as competing pipelines such as the Trans Mountain expansion project and Keystone XL are still under construction, and have asked the Canada Energy Regulator to postpone the re-contracting process.

Enbridge characterized requests to postpone regulatory hearings for the new contracts as “totally unrealistic” and built on “flimsy assertions,” including the assertion that companies can’t prepare for a regulatory review given the coronavirus pandemic.

The filing continues a months-long war of words between Enbridge and some of Canada’s largest oil producers over how the country’s biggest oil pipeline network sets contracts.

Enbridge wants shippers to sign contracts that would take up 90 per cent of the volume on the Mainline system, the largest export pipeline network for Canadian crude that can move 2.9 million barrels of oil per day.

This would mark a major change for the network that has historically operated in the spot market. In the past, none of the capacity on the Mainline has been reserved for long-term contracts.

The application “has absolutely nothing to do with market power,” but it “has to do with predictable and timely decision-making” in part because the existing toll structure on the Mainline is set to expire and should be replaced with a new system, Enbridge stated in its application.

“It is apparent that some parties remain opposed to the application and want to have its adjudication deferred as long as possible,” the company told the CER in a filing last week.

If the regulator agrees to postpone the hearing, Enbridge argued, “these parties would be back in six months looking for a further postponement unless the COVID-19 pandemic had ended and oil markets had recovered to their satisfaction. That might take years.”

Until it is able to provide firm service on the Canadian Mainline, it will be the swing pipeline and will bear the brunt of the Western Canadian oil production decreases, Enbridge wrote in its filing.

“This not only increases the volume risk on the existing Mainline system, but it also adversely affects the ability and willingness of Enbridge and shippers to make additional capital investments to accommodate the transportation of western Canadian oil.”

Many U.S. refining companies and at least one major oilsands producer support Enbridge’s application.

“Postponing the regulatory review of the Enbridge application for approval of a new service that will address the current inefficiencies in the allocation of Mainline capacity will compound the effects of those delays,” Cenovus Energy Inc. wrote in a submission dated April 24.

The company has a 50-per-cent stake in two refineries located in Roxana, Ill., and Borger, Tex. that are part of its joint venture with Phillips 66.

“Cenovus is well familiar with the effects of the current oil price war,” the company wrote.