Quantcast

Canada's Enbridge solicits bids for Mainline oil pipeline amid space crunch


Reuters


By Debroop Roy and Rod Nickel

Aug 2 (Reuters) - Canadian pipeline company Enbridge Inc said on Friday it would invite bids for contracted space on its Mainline system, as shippers compete to move oil on the country's congested pipeline networks.

Currently, shippers nominate barrels on a monthly basis, but Enbridge proposes to switch to a system in which shippers sign long-term fixed volume contracts. The change comes as shippers have complained that the current system is inefficient and as Enbridge seeks to secure volumesahead of rival projects in the works.

"Our new contract offering responds directly to what customers are asking for," Enbridge Chief Executive Al Monaco said on a quarterly conference call.

He said the company took nine months to hear shippers' concerns and refine terms, resulting in balanced access for all types of customers.

Some shippers are, however, concerned that smaller Canadian producers will be elbowed out by refiners like BP Plc in the U.S. Midwest as they snap up the bulk of space.

"Effectively foreign entities will (potentially) own the largest transportation corridor in Canada. That spells disaster for Canadian producers," one Calgary-based trading source said.

Open season began on Friday and runs through Oct. 2. Enbridge said it would sign contracts of eight to 20 years with shippers on 90% of the network, leaving the remainder for spot sales.

The contracts take effect in mid-2021, pending regulatory approval.

The company lowered its volume requirements last month to satisfy smaller producers, Reuters reported.

Enbridge shares rose 1.2% in Toronto.

Separately, the company reported adjusted earnings that rose to C$1.35 billion ($1.02 billion), or 67 Canadian cents per share, in the second quarter, from C$1.09 billion, or 65 Canadian cents per share, a year earlier.

Analysts on average were expecting 59 Canadian cents per share, according to IBES data from Refinitiv.

The company transported 2.66 million barrels per day through the Mainline, up from 2.64 million barrels per day a year earlier.

It also said its natural gas line in Moreland, Kentucky, that exploded, killing one person and igniting homes, will not return to service until it is "absolutely safe."

($1 = 1.3220 Canadian dollars)






This article appears in: World Markets , Stocks , Economy , Oil
Referenced Symbols: BP



More from Reuters

Subscribe







See Reuters News













Research Brokers before you trade

Want to trade FX?