Contract service plan for pipeline halted

Regulators halted Enbridge’s plan to convert Canada’s largest crude pipeline network to contract service, handing a win to oil producers who had argued that the change was unfair and would limit their access to the system.

Enbridge must halt an open season that allows companies to bid for space on its Mainline network until all terms and conditions of the new service agreement have been approved, the Canada Energy Regulator said in a letter Friday.

The decision throws into doubt whether Enbridge will be able to lock customers on the Mainline into contracts of up to 20 years, a shift from the current system, in which space is allocated on a monthly basis.

Some producers have said they want more clarity on those major pipeline projects before committing to decades of shipments on the Mainline. The change also could mean that a relatively few large refiners in the U.S. will gain control of a large portion of the Mainline, according to Mike Walls, an analyst at Genscape Inc.

But opposition to the plan wasn’t unanimous. Oil sands producer Cenovus Energy and Exxon Mobil’s Imperial Oil came out in support of letting the open season run its course. Among buyers of Canadian crude, Saudi Arabia’s Motiva Enterprises, which operates the largest U.S. refinery, and Houston-based LyondellBasell Industries also expressed support.