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Enbridge wins one, loses one in toll dispute
Gary Park For Petroleum News
Enbridge took the first round in a toll dispute with Canadian shippers to the United States, but victory was fleeting and only partial.
The U.S. Federal Energy Regulatory Commission gave the green light for Enbridge to impose higher tolls on the U.S. segment of its 450,000 barrel per day Alberta Clipper system from the Alberta oil sands to Wisconsin.
Within hours, however, Canada’s National Energy Board issued a ruling March 31, ordering the Calgary-based pipeline company to refile a toll application it made in 2007.
For now, Enbridge said it needs time to determine what the NEB decision means, but the shippers were quick to proclaim success.
The spat started in February when Suncor Energy, Imperial Oil (which submitted 500 pages of legal documents) and a host of other shippers made a case to FERC that Enbridge had been “imprudent” in building the 1,000-mile, $3.7 billion Clipper system at a time when demand was falling.
They asked for a deferral of toll increases until Enbridge could prove Clipper is needed.
Analyst estimates 41% surplus Chad Friess, an analyst with UBS Securities, had estimated the pipeline would have 41 percent surplus capacity until 2013 because of a spate of cancellations and delays of oil sands production projects.
But FERC sided decisively with Enbridge, opening the way for a toll increase of 97 cents per barrel, or 33 percent over 2009 levels, about three-quarters of the increase tied to Clipper costs.
Friess said the hike would not significantly affect producers’ profits, but had Enbridge lost it would have been a “negative” for the pipeline company’s earnings.
However, shippers face the prospect of a further increase as TransCanada builds even more cross-border pipeline capacity which is expected to divert volumes from the Enbridge system.
“At some point Clipper is going to be used, but that may take 10 years,” Friess said.
An Enbridge spokesman said the FERC ruling “further supports the common carrier system, which we believe benefits the producing community as a whole.”
Other interveners were Marathon Petroleum, Total E&P Canada, Canadian Oil Sands Trust, Husky Gas Marketing, Nova Chemicals (Canada) and Flint Hills Resources Canada.
FERC had approved a tolling structure between Enbridge and the Canadian Association of petroleum Producers in 2004 and updated one to include Clipper costs in 2008.
“The protesters’ speculative arguments concerning the benefits (of Clipper) are not sufficient to abrogate the settlement or find that the proposed rates are unjust and unreasonable,” it said.
A Suncor spokeswoman said the NEB’s request for Suncor to refile its 2007 trolling application, which contains the tolling calculation provided for Clipper, shows the regulator “listened to the arguments and concerns put forward by a number of companies.”
Imperial argued the situation has changed from the time CAPP negotiated the tolls in 2004 until the tolls were actually introduced.
An Imperial spokesman said Imperial believes FERC failed to reflect those changed circumstances.
The NEB accepted a proposal from Imperial and Suncor that interim tolls for the Canadian portion of Clipper should be no higher than the per unit toll levels forecast by Enbridge in the 2007 regulatory proceeding.
It said that was a reasonable argument given that the determination of final tolls might result in tolls that were either higher or lower than the interim tolls.
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