Enbridge’s proposal to have crude oil shippers on its now fully uncommitted Mainline sign long-term contracts for as much as 90% of the 2.9-MMb/d pipeline network’s capacity is a big deal — and controversial. Refiners and integrated producer/refiners generally support the plan, which is now up for consideration by the Canada Energy Regulator, while Western Canadian producers with no refining operations of their own — and, for many, no history of shipping on the Mainline — mostly oppose it. What’s driving their contrasting views? It’s complicated, of course, but what it really comes down to is that everyone wants to avoid what they see as a bad outcome. Refiners and “integrateds” fear that if the current month-to-month approach to pipeline space allocation remains in place, cost-of-service-based tariffs on Mainline will soar when new takeaway capacity is built on the Trans Mountain and Keystone systems and fewer barrels flow on Mainline. Producers, in turn, are wary of making multi-year, take-or-pay commitments to Enbridge if they’ll soon have other takeaway options, and are equally concerned that they’d be left in the lurch if they don’t commit to Mainline and the Trans Mountain Expansion and Keystone XL projects don’t get built. Today, we consider both sides of this important debate.
Push Comes to Shove, Part 2 – Shippers Take Sides on Enbridge’s Mainline Recontracting Plan
