Enbridge signs tolling deal with shippers for Mainline pipeline system

Enbridge Inc. says it has reached a take care of shippers for tolling on its Mainline pipeline system, which strikes over three million barrels a day of crude oil and liquids from Western Canada.

The announcement Thursday is a significant milestone for the Calgary-based pipeline firm, which has been negotiating with oil shippers on a brand new tolling settlement ever since its proposal to fill Canada’s largest oil pipeline community via long-term contracts was rejected by the Canada Energy Regulator in November 2021.

Enbridge CEO Greg Ebel mentioned the settlement has been accepted by the corporate’s board of administrators and obtained “overwhelming support” from a 37-member business stakeholder group that included producers, refiners, built-in firms, business businesses, and governments.

“This settlement is a win-win-win – customers will continue to receive competitive and responsive service; Enbridge will earn attractive risk-adjusted returns; and the Mainline will continue to feed North America and global markets with a long-term source of safe, secure, and affordable energy,” Ebel mentioned in a launch.

Enbridge’s Mainline is Canada’s largest oil pipeline system, offering about 70 per cent of the full oil pipeline transportation capability out of Western Canada.

The pipeline’s demand has exceeded capability over the previous few years, so Enbridge had utilized to enter into long-term contracts for 90 per cent of the Mainline system’s capability.

Enbridge had argued agency contracts would give clients extra predictable entry to the pipeline, however some Canadian oil producers argued the proposed change would worsen the prevailing capability constraints and will result in decrease oil costs.

In rejecting the proposal in 2021, the Canada Energy Regulator concluded Enbridge’s proposal would dramatically change entry to the pipeline. It mentioned sure firms would profit from long-term stability, however others would lose entry to the pipeline.

Enbridge mentioned Thursday the brand new settlement covers each the Canadian and U.S. parts of the Mainline system and can present clients with a secure, aggressive toll relative to competing alternate options.

The settlement additionally features a monetary efficiency collar offering incentives for Enbridge to optimize throughput and value, but additionally offering draw back safety within the occasion of utmost provide or demand disruptions.

Enbridge mentioned it expects to collectively finalize the settlement with business and submit an utility for approval to the Canada Energy Regulator within the third quarter.

It expects the brand new tolling settlement might be accepted and carried out later this yr. The settlement time period is seven-and-a-half years, lasting via 2028.

This report by The Canadian Press was first revealed May 4, 2023.