CALGARY — An open season launched by Enbridge Inc. to try to lock shippers into long-term contracts on its Canadian Mainline oil pipeline system is designed to take advantage of “mostly captive shippers,” Suncor Energy Inc. says.
In a submission to the National Energy Board dated last Friday, Canada’s largest oil and gas producer by market capitalization demands Enbridge’s call for contracts be halted before it wraps up in October.
“The open season compels shippers that wish to maintain access to transportation on the Canadian Mainline to enter into irrevocable, binding, long-term firm contractual commitments on the basis of terms and conditions of access, and tolls, that have neither been settled through meaningful negotiation nor approved by the board,” Suncor charges.
Enbridge announced the open season on Aug. 2 and will accept bids until Oct. 2 from shippers who wish to enter into contracts of from eight to 20 years for priority transport on the Mainline, with discounts available based on contract length and volumes.
Only 10 per cent of capacity is to be reserved for uncommitted volumes, down from 100 per cent available to shippers now, with the new arrangement to start when the current tolling agreement expires on June 30, 2021.
Enbridge CEO Al Monaco has said the change is being made to address shipper demands for priority access and toll certainty.
“We’ve got a very diverse set of shippers. We’ve got producers, refiners, marketers, operating in different jurisdictions,” said Guy Jarvis, senior vice-president of liquid pipelines for Enbridge, in an interview on Monday.
“We think the open season offering represents the best balance of those interests … The result of that is that people don’t get everything they want.”
The open season has been accepted by supporters from all three types of shippers and its results will help inform a regulatory application to confirm the new Mainline allocation system to be submitted to the NEB before year-end, he said.
Suncor’s complaint echoes earlier submissions registered by fellow oilsands producers Shell Canada and MEG Energy Corp., and the Explorers and Producers Association of Canada, which represents smaller oil and gas producers.
The open season represents an “abuse of market power,” Shell said in its submission last week.
In response to the MEG and EPAC submissions, the NEB says in a letter posted on its website that it intends to assess any Enbridge application to offer firm service on the Mainline when it is made and will consider input from other parties at that time.
Suncor, however, insists a ruling must be made before the current open season ends because otherwise shippers will be forced to sign contracts out of fear that they will be shut out of the pipeline system that moves 70 per cent of Western Canada’s oil to United States and Canadian customers.
It contends the Mainline, with current capacity of 2.85 million barrels per day, faces little competition from the other major Canadian crude oil export pipeline systems, Keystone and Trans Mountain, because they are effectively fully contracted and utilized.