U.S. approval of Enbridge pipeline plan irks some oil shippers

Thu Jul 18, 2013 6:53pm EDT
 
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By Nia Williams

CALGARY, Alberta (Reuters) - U.S. regulators have approved a plan by Canada's largest pipeline company Enbridge Inc to alter how it calculates the amount of crude shippers can nominate on its export network, a move the company says will cut overbooking on congested lines.

The plan has been criticized by a number of shippers, who say the changes would give Enbridge too much discretion to allocate capacity and warned pipeline apportionment could rise as a result.

The opposition to Enbridge's move, designed to reduce overbooking, shows the fierce competition among oil sands producers and refiners for space on pipelines that are running close to full capacity.

The U.S. Federal Energy Regulatory Commission (FERC) on Thursday approved Enbridge's proposal to use a new system based on the capacity of refineries to calculate the amount of crude shippers can nominate on pipelines each month. Enbridge will then verify the nominations itself.

U.S. approval is needed as parts of Enbridge's pipeline network runs through the United States.

"In this case, Enbridge has filed a proposed Nomination Verification Procedure that the Commission has deemed to be just and reasonable," said the FERC document that was released on Thursday. Telephone calls to FERC for comment were not answered Thursday afternoon.

Since 2010, when a huge oil spill in Michigan shut for several months a major oil line between Indiana and Sarnia, Ontario, shippers have based nominations on the highest monthly volume they moved to refining facilities in the U.S. Midwest and Ontario over the previous two years.

According to filings, Enbridge say the change will help eliminate "air barrels" - industry terminology for nominations above shippers' ability to move oil. It is a way of gaming the system so companies get as much crude as possible to refineries.   Continued...