CALGARY (Bloomberg) –Enbridge Inc. is evaluating two tolling options for its vast Mainline oil pipeline network after a proposal to offer long-term contracts to keep the conduits full was rejected by Canada’s energy regulator.
North America’s largest pipeline company will either pursue a modified, incentive-based version of its current arrangement, which allows producers to decide the volumes they want to ship each month, or a system that would ensure tolls are enough to cover costs and provide a return on investments, Chief Executive Officer Al Monaco said in a presentation Tuesday.
The Mainline pipeline network ships more than 3 million barrels of crude a day from Alberta to the U.S. Midwest, where it connects to the Gulf Coast, as well as Ontario and Quebec. It includes the Line 3 and Line 5 conduits that have faced opposition in the U.S.
New tolling options are being discussed after Canada Energy Regulator rejected Enbridge’s proposal to offer as much as 90% of space on its Mainline to companies with long-term contracts.
Enbridge sought the new system to ensure that it could keep pipelines full as it faces increasing competition from projects that have contracted space, including the Trans Mountain expansion scheduled to be completed as early as next year.
The incentive-based version of the current tolling arrangement could be implemented by the middle of 2023, but reaching “consensus can be difficult” among those who use the Mainline, said Colin Gruending, the company’s president of liquid pipelines. Switching to a so-called cost-of-service system would take longer, he said.
The current tolling system expired in June but will continue operating until a replacement is implemented.
