February 7, 2020 / 8:24 PM / in 17 days

Canada's Enbridge fears year-long delay to Mainline change from CNRL

WINNIPEG, Manitoba (Reuters) - Canada’s biggest pipeline company, Enbridge Inc (ENB.TO), fired back on Friday at the country’s largest oil producer, saying Canadian Natural Resources’ (CNQ.TO) suggestions for determining future terms on the Mainline would cause at least a one-year delay.

FILE PHOTO: The Enbridge Tower is pictured on Jasper Avenue in Edmonton, Alberta, Canada on August 4, 2012. REUTERS/Dan Riedlhuber/File Photo

Enbridge plans to sell 90% of space under long-term contracts to shippers on the nearly 3 million barrel per day Mainline, Canada’s longest oil pipeline system, rather than continue to ration space monthly.

Canadian pipelines are congested, and some oil producers worry that Enbridge’s changes will further limit access.

CNRL told the Canada Energy Regulator (CER) last week that it should first consider whether Enbridge should be allowed at all to convert the Mainline from common carrier status, before it examines other issues.

Breaking up the regulatory process into parts would drag it out by at least a year, and push the Mainline open season - the period for shippers to bid on space - to 2022, Enbridge said in a CER filing on Friday.

Enbridge wants the new Mainline contracts to take effect in mid-2021.

“Such delay might benefit CNRL by providing more time for it to sort out its transportation options,” Enbridge said in its filing, noting expansions planned for the rival Trans Mountain and Keystone XL pipelines. “But the conclusion of the regulatory process should not be delayed to suit the commercial interests of CNRL.”

Terms of the Mainline change are an effort to suit most of the shippers who currently use it, Vern Yu, Enbridge’s executive vice-president of liquids pipelines, said in an interview.

Thirteen shippers representing 70% of current Mainline volume support Enbridge’s proposal, Yu said. They include Canadian producers Cenovus Energy Inc (CVE.TO) and Imperial Oil Ltd (IMO.TO), but the list is made up mostly of U.S. refiners.

Imperial and Cenovus also own refineries in whole or part.

A CNRL spokeswoman could not be immediately reached.

CNRL noted in its letter last week that changing the Mainline’s common carrier status is unprecedented and carried “potential harm” to Canadian oil producers.

Meanwhile, Yu said the best-case scenario for its proposed Line 3 replacement project is to obtain all permits needed in Minnesota in time to start construction in summer. Construction of the long-delayed Line 3, which is part of the Mainline, would take six to nine months, he said.

Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Richard Chang and Grant McCool

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