The Canada Energy Regulator does not have the authority to intervene in Enbridge Inc.'s ongoing open season to contract space on the nation's biggest oil-export conduit, the pipeline giant said in a filing.
In its response to demands by some of Canada's largest oil companies that the process should be halted, the Calgary, Alberta-based company said shippers that represent most of the capacity on its mainline system support the switch to long-term contracts from the existing common carrier status that sees volumes booked on a month-ahead basis. The Sept. 11 filing also noted that the regulator's predecessor, the National Energy Board, has allowed open seasons for pipeline space on new projects or expansions to proceed without intervention. The switch to the new system would take place in 2021 when the existing tolling agreement expires and the newly established regulator, known as the CER, could rule on its validity after the company makes its rate application, Enbridge said.
"Enbridge respectfully submits that the CER does not have the authority to stay an open season," the company said in its submission. "But even if it did, there is entirely no basis for the CER to exercise such authority in this case. Granting a stay of the open season would not be in the public interest."
Canada's oil producers are split over Enbridge's plan to switch to contracted status on the system that carries about 75% of Canada's oil exports. The mainline system is a network of conduits that snake across Canada and the U.S. Midwest, starting at a pipeline hub in Edmonton, Alberta, and terminating at Superior, Wis. Opponents of the switch claim that U.S. refiners could buy enough capacity to monopolize the system and use that market power to dictate Canadian oil prices. Supporters have pointed to the increased certainty the contracts would bring by ending monthly prorating of space on the system. The system was built in the early 1950s by a Canadian affiliate of Exxon Mobil Corp. and has operated as a common carrier system since then.
"Enbridge recognizes that some of its shippers are opposed to having firm service on the Mainline or are opposed to the amount of capacity that might be contracted for firm service," the filing said. "In the first instance, whether firm service will be provided and what amount of capacity will be contracted will depend on the results of the open season. Then, assuming that the open season is successful, whether firm service can be provided and what amount of capacity can be contracted will be decided by the CER when it considers the tariff and toll application that Enbridge will file."
Detractors of the open season, which is scheduled to end Oct. 2, ship about 20% of the volume on the line, Enbridge said. Supporters ship about 30% of the volume. The system has a capacity of about 2.85 million barrels per day, according to Enbridge.
Canadian Natural Resources Ltd., Canada's largest oil company by production, filed a formal complaint with the National Energy Board on Aug. 26 asking it to stop the open season before its scheduled end. Legislation establishing the CER took effect Aug. 28, and existing regulatory matters filed prior to that date are to be considered under the National Energy Board rules.
