Valero and Suncor question Enbridge Line 9 delay

The two biggest customers on Enbridge Inc's newly reversed pipeline to carry Western Canadian oil from Sarnia, Ontario, to Montreal want to meet Canada's energy regulator to find out why the pipeline's opening has been delayed by months.

Valero Energy Corp and Suncor Energy Inc, each of which owns of two refineries in the province of Quebec, said in separate letters posted on the NEB's website that the delay in approving the startup of the 300 000 bpd Line 9 pipeline is pushing up their costs and harming their operations.

They requested a meeting with the board's chairman, Peter Watson.

"We believe it is important that you are aware of the high cost and negative economic impacts to our business, and by extension to those communities and provinces in which we operate, as the time for a decision is ongoing," wrote Kris Smith, Suncor's Executive Vice-President of Refining and Marketing.

The controversial project will carry Western Canadian crude to Quebec, replacing supplies currently shipped by rail or imported from abroad. The board approved the project in February but refused to let Enbridge open the 639-km (400-mile) line until it met 30 conditions related to emergency response, continued consultation and pipeline integrity.

"Following the board's approval of the project...we made capital investments, including major structural work at our Montreal East terminal and Levis refinery, of close to CAN$200 million (US$162 million), in anticipation of receiving deliveries via Line 9," Ross Bayus, President of Valero's Canadian operations wrote.

"Moreover, the delays associated with satisfying certain of the conditions imposed by the board, particularly from last fall, required Valero to revert to international markets for supplies of crude oil to answer Eastern Canada's demand for petroleum products."

Line 9, in operation since 1976, originally moved oil from Sarnia to Montreal, but was reversed in the late 1990s to pump cheaper imported crude west. Enbridge applied in November 2012 to reverse the flow again, to pump oil eastward to Quebec.

The reversal will benefit Suncor's 130 000 bpd Montreal refinery and Valero's 265,000 bpd Jean Gaulin refinery in Levis, Quebec.

“We appreciate that the work of the NEB is to regulate in a way that considers all aspects of a project, including environment, social and economic factors,” Suncor’s Mr. Smith said in his letter.

“While no specific timeline is provided in how long the NEB may require to review and approve an application of this sort, we believe it is important that you are aware of the high cost and negative economic impacts to our business, and by extension to those communities and provinces in which we operate…as the time for a decision is ongoing.”

Edited from various sources by Elizabeth Corner

Sources: ReutersThe Globe and Mail

Published on 17/06/2015

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