Enbridge Inc. has delayed the start of an open season to solicit bids for contracted space on its Mainline oil pipeline system, North America’s largest oil-shipping network, three market sources told Reuters on Wednesday.
The reason for the delay was not immediately clear.
Canadian pipeline company Enbridge plans to turn the Mainline system from a common carrier system in which shippers submit monthly bids for capacity, to one that is mostly contracted for up to two decades.
The open season, a period in which shippers can submit bids for contracted space, was meant to start in mid-July and last for two months, Enbridge said previously to Reuters.
Three sources said the start of the open season was scheduled for Monday, July 15, but had been pushed back. Two of the sources said the delay was expected to last about a week.
“We have been in discussions with interested shippers and are working to accommodate to their needs. We anticipate on holding the open season soon,” Enbridge spokeswoman Tracie Kenyon said in an emailed statement when asked about the delay.
The Mainline system is vital to transport barrels out of Canada, the world’s fourth-largest oil producer, which has grappled with delays in pipeline projects because of environmental and legal opposition.
Locking shippers into long-term contracts offers Enbridge a chance to capitalize on delays to competitors’ plans to build pipelines, and secure future cash flow at a time when anxiety about market access is dominating headlines.
The Mainline currently operates under a system in which customers nominate the barrels they want to move each month, generating criticism that some larger shippers inflate their nominations to game the system.
Space on the Mainline is often rationed, contributing to price volatility in marketing hubs in Alberta, Canada’s main crude-producing province.
Changes to the Mainline system will need to be approved by Canada’s National Energy Board regulator and would take effect in 2021.
Currently, the open season pertains solely to the Canadian Mainline, Kenyon said, adding that Enbridge will evaluate interconnecting pipelines after the Canadian Mainline open season. Enbridge also operates major U.S. oil pipelines including Spearhead and Flanagan South.
Smaller Canadian producers have raised concerns they will not be able to meet Enbridge’s minimum-term and volume commitments and be shut out of the Mainline by larger competitors and U.S. refiners snapping up all the available capacity.
Last week, Enbridge confirmed it had lowered the minimum oil volumes required to 2,200 barrels per day from 6,000 barrels per day.
(Reporting by Nia Williams in Calgary, Alberta, and Devika Krishna Kumar in New York; Editing by Peter Cooney and Tom Brown)
