Enbridge extending rationing on oil pipelines

 

Pipeline safety checks and high demand from shippers limit volumes

 
 
 
 
Maintenance and high demand by shippers have reduced available nominations on Enbridge Inc.'s oil pipelines.
 

Maintenance and high demand by shippers have reduced available nominations on Enbridge Inc.'s oil pipelines.

Photograph by: Stuart Gradon

Enbridge Inc. has extended and increased rationing on its major oil arteries into the United States and Ontario, crediting tight space to maintenance and high demand from shippers.

The Calgary-based corporation, Canada's largest transporter of crude to the U.S., said it would be cutting back pipeline availability through January in part to deal with outages caused by safety checks along its massive network.

"The apportionment results from a combination of high nominations from shippers and temporary capacity restrictions that Enbridge has instituted in connection with the focused pipeline integrity inspection program on our system," spokeswoman Gina Jordan said in an e-mail Tuesday.

A rash of so-called apportionments and outages along key Enbridge crude lines since July have forced producers to seek alternative transportation, pump up stored volumes, and in some cases reduce output.

Canadian Oil Sands Trust, the majority shareholder of Syncrude Canada, said volume constraints are affecting shipments from the massive oilsands facility, but it has been able to store barrels on site.

"It really depends on how long the situation lasts," said Siren Fisekci, spokeswoman with Canadian Oil Sands Trust. "If we run out of storage room, we will have to begin reducing production."

Syncrude produced an average of 356,800 barrels per day of synthetic crude oil in November and is one of the largest bitumen producers in the world.

Enbridge said Line 5, which moves 490,000 barrels a day to Sarnia, Ontario, from Superior, Wisconsin, was apportioned at 33 per cent, meaning shippers can send just 67 per cent of their hoped-for volumes next month.

That is partly due to self-imposed rate restrictions as the company conducts integrity testing on the pipeline.

Line 6A, which moves 670,000 bpd to Griffith, Indiana; Line 14, a 320,000 bpd line to Mokena, Illinois, from Superior; and Line 61, a 400,000 bpd conduit to Flanagan, Illinois, from Superior, were apportioned at 26 per cent.

Line 6B, which ruptured in Michigan in July and was down for nine weeks, is apportioned at 43 per cent. It carries up to 290,000 bpd to Sarnia from Griffith, but has been operating at 80 per cent of its normal pressure since the rupture and spill.

Devon Energy Corp. cut heavy oil production by 10,000 barrels per day because of the outages, and are expected to reduce fourth quarter volumes by 300,000, the company said early December.

"Producers still have trucking and other lines to move their barrels, which we saw them to when Enbridge had those two leaks," said analyst Phil Skolnick, with Genuity Capital. "On differentials, I would expect it to put the pressure on."

Canada is the top foreign oil supplier to the United States, and two weeks ago an outage on Line 6A contributed to a cut in overall U.S. imports that prompted the largest drop in inventories since 2002.

The glut of crude in Alberta as storage tanks fill and feeder pipelines shut temporarily has pressured Canadian oil prices. In December, the discount on Western Canada Select heavy blend ballooned by nearly a third.

Kinder Morgan KMP. N said on Tuesday that shippers on its 300,000 bpd Trans Mountain pipeline to Vancouver from Alberta had their nominations cut to 73 per cent as they clamoured to move crude west.

domeara@calgaryherald.com

With files from Reuters

 
 
 
 
 
 
 
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Maintenance and high demand by shippers have reduced available nominations on Enbridge Inc.'s oil pipelines.
 

Maintenance and high demand by shippers have reduced available nominations on Enbridge Inc.'s oil pipelines.

Photograph by: Stuart Gradon

 
 
 
 
 
 
 

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