Canada’s largest oil producer, Canadian Natural Resources Ltd, has decided to shake hands with other firms so as to ask the Canadian energy regulators to interfere in Enbridge Inc’s plan to revamp shipping contracts on its Mainline pipeline system. The National Energy Board (NEB) has received a letter from Canadian Natural saying that they must delay Enbridge’s proposal to change into a long-term goal, which is well-decided volume contract on 90% of the Mainline. Similarly, a part of the US oil major, ConocoPhillips Canada, also penciled down asking for the development to be delayed owing to the surrounding uncertainties creeping up for the Canadian producers.
The regulators have received letters regarding a change in the plan from others including the Explorers and Producers Association of Canada, Suncor Energy Inc, Royal Dutch Shell Plc, Japan Canada Oil Sands Ltd (JACOS), and MEG Energy Corp. On August 2, Enbridge had unveiled a 2-month open season to request bids for predetermined capacity on the Mainline that transfers 2.85 million barrels per day of Canadian crude and is the biggest export channel for the US. Since last year, the customers have been talking to Enbridge’s Executive Vice President of liquids pipelines Guy Jarvis about implementing some changes in the volumes being transported on the Mainline system. A single contract is not enough for the shippers as not all get what they want.
The reason for fixed-volumes being put forward by the Canadian shippers is to help the US refiners to secure the Mainline capacity and also direct producers to provide crude to the Midwest region by relying on the other markets. Enbridge’s proposal is considered to have come up at the time of a complete imbalance like the pipeline capacity shortage in the Western Canadian Sedimentary Basin. The 4th largest crude producer has its price dropping and forcing Alberta’s provincial government to take stringent production measures due to congestion in pipelines, delay in building new ones. For now, the regulators should consider bringing new terms and conditions before signing new contracts. Likewise, Canada has assured that the pipeline should be in service by 2022 with a daily capacity of 590,000 barrels. For now, 325,000 bpd capacity of the pipelines has shown to lower to 150,000 bpd in total.