Federal regulator asks Enbridge to take a pause on Mainline open season
After reviewing comments from more than 30 "interested parties," the Canada Energy Regulator (CER) has ordered Enbridge to halt open season on its Mainline, which would have locked producers into fixed-volume contracts.
The Mainline export pipeline currently operates as a common carrier, with no set contracted volumes. Customers are required to nominate the volume of crude they would like to ship on the line every month, prompting some operators to complain of "air barrels," accusing large operators of nominating more space than needed. The backlash prompted Enbridge to change its nomination procedure, switching 90% of Mainline volumes to fixed take-or-pay agreements.
Enbridge negotiated with shippers for about 18 months, before launching open season in August. The company was asking for terms of between 8 to 20 years, and had hoped to implement the new plan by July 2021.
A number of Alberta's biggest oil producers, including MEG Energy, Suncor, Shell Canada, Canadian Natural Resources, as well as the Canadian Association of Petroleum Producers (CAPP), voiced opposition to the new plan, calling it "completely inappropriate" and an abuse of power.
The Mainline network handles more than two-thirds of Western Canada's total crude exports by pipeline, accounting for more than 2 million bbl/day of crude exports to the US. The companies asked the federal regulator to intervene in the bidding process, allowing operators more time to review terms, tolls and conditions before committing to fixed monthly volumes.