Up in Canada, there is finally a regulatory timeline for reviewing Enbridge’s long-standing proposal to revamp how it allocates space — and charges for service — on the company’s 2.9-MMb/d Mainline. But the plan to convert the largest crude oil pipeline system out of Western Canada from one whose space is 100% uncommitted and allocated every month to one with 90% of its capacity locked in via long-term contracts remains controversial, especially among producers. Plus, the world has changed in the past few months. Oil sands and other production in Alberta and its provincial neighbors is off sharply in response to pandemic-related demand destruction and low oil prices, and the always-full Mainline has been running at well under 90% of its capacity lately. Further, the Trans Mountain Expansion and Keystone XL projects — competitors to the Mainline in a way — have progressed this year, making shippers wonder whether to lock in capacity on the Mainline if TMX and KXL’s completion may be imminent. Today, we begin a short series on the prospective shift to a contract-carriage approach on the primary conduit for heavy and light crudes from Western Canada to U.S. crude hubs and refineries.
Push Comes to Shove – Will Crude Shippers Soon Need to Commit to Enbridge’s Mainline System?
