CALGARY: Canadian Natural Resources Ltd, the country's biggest oil producer, has joined a number of other firms aski
CALGARY: Canadian Natural Resources Ltd, the country's biggest oil producer, has joined a number of other firms asking Canada's energy regulator to intervene in Enbridge Inc's plan to overhaul shipping contracts on its Mainline pipeline network.
Canadian Natural's letter to the National Energy Board (NEB), filed late on Monday, calls on the regulator to delay Enbridge's proposal to switch to long-term, fixed-volume contracts on 90% of the Mainline.
Suncor Energy, MEG Energy, Royal Dutch Shell, Japan Canada Oil Sands Ltd (JACOS) and the Explorers and Producers Association of Canada have also written to the regulator expressing concerns about the planned changes.
Enbridge launched a two-month open season on Aug. 2 to solicit bids for capacity on the Mainline, which carries 2.85 million barrels per day of Canadian crude and is the largest export conduit to the United States. Capacity is currently allocated on a monthly basis.
Canadian shippers have complained the switch to fixed contracts would enable US refiners downstream to secure most of the Mainline capacity, and tie producers into delivering crude to the Midwest region at the expense of other markets.
"Enbridge's proposal is completely inappropriate, and is being made at a time when considerable market power imbalance exists because of the shortage of pipeline capacity leaving the Western Canadian Sedimentary Basin," Canadian Natural President Tim McKay said in the letter.
Canada is the world's fourth-largest crude producer, but congestion on existing export pipelines and delays building new ones have led to deep price discounts, prompting Alberta's provincial government to impose mandatory production curtailments.
The NEB should direct Enbridge to halt the open season until the regulator can consider the market power issues raised by producers, Canadian Natural said. The regulator should also approve the new terms and conditions and tolls before shippers are required to sign any binding contractual commitments for space, the company's letter added.
In an interview with Reuters on Monday, Enbridge said it is premature to ask the NEB to intervene before the open season ends on Oct. 2.
The NEB said it is reviewing the letters to determine its next steps.