Apr 5, 2022
After decades of operation under a “common carrier” system, Enbridge’s Mainline pipeline — the primary pipeline for transportation of Canadian oil to foreign markets — has been operating with interim tolls since its last agreement expired in June 2021. But oil producers who use the pipeline are hopeful the parties will be able to agree on a new commercial structure soon.
Last November, the Canada Energy Regulator (CER) rejected Enbridge’s application to introduce “firm service,” whereby customers would enter longer-term contracts for shipment of specified volumes of crude oil on the Mainline. The Canadian Energy Regulator Act requires pipelines to provide access to producers and shippers seeking to use them to transport oil, referred to as the common-carriage obligation. Enbridge’s initial application did not meet this requirement, with the CER saying it could have resulted in inequitable access to the pipeline for some shippers. Instead of appealing the decision, Enbridge opted to re-enter negotiations with shippers to find a solution. Those negotiations appear to be going well, with increased optimism that a deal will be struck. Enbridge says there are currently two main options under consideration: an agreed-upon incentive tolling arrangement and a cost-of-service structure that is still being debated.
“The CER did lay down some broad principles as to what would amount to compliance with the common-carriage obligation, but it was also very careful not to pre-determine the results of any negotiations,” says Martin Ignasiak, QC, partner and Co-Chair of Osler’s Regulatory, Environmental, Indigenous and Land practice group.
You can read Julius Melnitzer’s full article, “Oil producers optimistic about deal with Enbridge over Mainline pipeline access,” on the Financial Post website.