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Enbridge toll war heats up
News Articles | Calgary Herald | Dina O'Meara | February 27, 2010
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A legal dispute between oilsands major Sunc or Energy and Enbridge over the timing of the launch of a crude pipeline into the U.S. Midwest has heated up, with more shippers jumping into the fray, while analysts wonder what other options players have.
Five major oil and gas producers, plus a major chemical manufacturer, have applied for intervener status in Suncor’s motion with the U.S. Federal Energy Regulatory Commission to shut down the southern leg of the Alberta Clipper pipeline until needed.
“We support additional capacity but the timing of Clipper is no longer a prudent fit with supply,” said Suncor spokeswoman Sneh Seetal. “And we are concerned about the potential impact of unnecessary pipeline and related costs in view of unused capacity on the competitiveness of Canadian heavy oil and oilsands crude into the U.S.”
The motion was filed in January as construction on the U.S. portion was almost completed because Suncor had exhausted other options, the company said.
Suncor’s petition stated “dramatically changed circumstances” made approved tolls unreasonable for the 1,600-kilometre oil pipeline from Alberta to refiners in Wisconsin.
The oilsands giant wanted the U.S. commission to hold off the in-service date of the line until Enbridge proved its existing Lakehead system into the United States was full.
Enbridge, headed by chief executive Pat Daniel, transports about 1.1 million barrels of oil per day to the United States, enough to provide 12 per cent of that nation’s daily crude consumption.
The $3.7-billion expansion project will add 450,000 barrels per day of capacity to Enbridge’s main line system, and start taking on oil April 1, several months ahead of schedule.
Tolls across Enbridge’s main line will increase due to the Alberta Clipper expansion, which Suncor says isn’t needed.
Enbridge said the petition was “an unwarranted collateral attack” on the commission that “poses a potentially mortal threat” on investment in new pipelines and the free movement of energy supplies into the U.S.
“Our position is that we do not believe that this petition has merit,” said spokeswoman Jennifer Varey. “To that end, we are not going to speculate on potential outcomes at this point.”
The producers’ petitions could be moot as the only other option for shippers would be to tie into TransCanada’s Keystone project — which requires long-term contracts, noted analyst Steven Paget.
Paget, with FirstEnergy Capital Corp., also noted producers pushed to have the line be a common carrier with the view of not leaving any barrel behind in Alberta during a time when investment in the oilsands seemed infinite.
“The pressure was all the other way, to purchase pipeline and do everything necessary to get this pipeline online at this time,” he said.
Imperial Oil, Canadian Oil Sands, Husky Gas Marketing, Flint Hills Resources Canada and Total E&P Canada also have filed for intervener status in the dispute.
Nova Chemicals also sought intervener status, saying “higher costs from increasing pipeline toll surcharges will ultimately be passed on through to end users,” according to spokeswoman Sherri Merkel.
The Canadian Association of Petroleum Producers brokered the deal making Alberta Clipper a common carrier, but has distanced itself from the legal dispute — despite being named in Enbridge’s Feb. 19 statement to the FERC asking for the commission to dismiss the petitions.
“This relates to a filing by Suncor in the U.S. on which CAPP is not currently involved,” CAPP said in an e-mail statement.
Tagged with: pipeline, alberta clipper, enbridge, oil demand, suncor, calgary herald, ferc
