NorthAmOil: Canadian regulator rejects Enbridge’s Mainline contracting plan

The Canada Energy Regulator (CER) has rejected pipeline operator Enbridge’s proposal to change how it allocates capacity on its Mainline system. Under the plan, 90% of the capacity would have been sold under long-term contracts rather than allocated on a monthly basis as before.
In a written ruling, the regulator said the plan would dramatically change how shippers gain access to the Mainline, with the overhaul working in favour of those shippers with contracts while hurting those without them. A new proposed framework for setting tolls to move oil on the system would also "excessively” favour those with contracts, the regulator added.
"Overall, Western Canadian oil producers could suffer too many negative consequences," the CER said.
The Mainline has a capacity of 3mn barrels per day (bpd) of crude and is Canada’s longest oil pipeline system, carrying the crude from Western Canada to refineries in Eastern Canada and the US Midwest.
The plan to overhaul capacity allocation on the system has been on the table for two years, with Enbridge applying for the change in 2019. At that time, demand for use of the Mainline exceeded its capacity as the broader Western Canadian pipeline network struggled with takeaway capacity shortages.
The congestion has since eased, first thanks to the coronavirus (COVID-19) pandemic last year, which led to production curtailments, including in Canada’s oil sands, and then thanks to new capacity, including Enbridge’s Line 3 replacement, entering service.
Enbridge said in a statement that it would re-engage with all stakeholders – including shippers and non-shippers on the Mainline – to help negotiate a new commercial framework for the system.