Enbridge Inc. says it has reached an settlement with shippers for tolls on its mainline pipeline system, which strikes greater than three million barrels a day of crude oil and liquids out of Western Canada.
The announcement Thursday is a serious milestone for the Calgary-based pipeline firm, which has been negotiating a brand new toll cope with oil producers since its proposal to fill Canada’s largest oil pipeline community by long-term contracts was rejected by Canada’s Vitality Regulator. in November 2021.
Enbridge CEO Greg Ebel mentioned the settlement was accepted by the corporate’s board and acquired “overwhelming assist” from a 37-member business stakeholder group that features producers, refiners, built-in corporations, business businesses and governments.
“This settlement is a win-win-win — prospects will proceed to obtain aggressive and responsive service; Enbridge will earn engaging risk-adjusted returns; and the mainline will proceed to feed North America and international markets with a long-term supply of secure, safe and inexpensive vitality,” Ebel mentioned in a launch.
Enbridge’s Mainline is Canada’s largest oil pipeline system, offering roughly 70 p.c of the entire oil pipeline transportation capability out of Western Canada.
Demand for the pipeline has exceeded capability lately, so Enbridge has utilized to enter into long-term contracts for 90 p.c of the mainline system’s capability.
Enbridge argued that agency contracts would give prospects extra predictable entry to the pipeline, however some Canadian oil producers argued the proposed change would exacerbate current capability constraints and will result in decrease oil costs.
In rejecting the proposal in 2021, Canada’s vitality regulator concluded that Enbridge’s proposal would dramatically change entry to the pipeline. It mentioned sure corporations 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 provide prospects a secure, aggressive toll in comparison with competing alternate options.
The settlement additionally features a monetary efficiency collar that gives incentives for Enbridge to optimize throughput and prices, but additionally supplies 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 software for approval to the Canadian Vitality Regulator within the third quarter.
He expects the brand new toll settlement to be accepted and applied later this yr. The settlement time period is seven and a half years and runs till 2028.
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