Rhubarb over Clipper rates pits Suncor, Imperial against Enbridge

CALGARY, Alta. - Suncor Energy Inc. and Imperial Oil Ltd. are accusing Enbridge Inc. of overbuilding pipeline capacity into the U.S. at a time when it's not needed, and are looking to escape the increase in tariffs that will come once the Enbridge Alberta Clipper, a major new crude pipeline, enters service later in 2010.
In a bid to duck the possibility of billions in extra tolls that could result, Suncor and Imperial have filed nearly 500 pages of documents with the U.S. Federal Energy Regulatory Commission (FERC), laying out a plan to force Enbridge Inc. to give them a break on pipeline rates into the U.S.
Though the industry agreed to tariffs for the pipeline three years ago, the two companies argue that Enbridge did not heed their urging to reconsider before it began construction in 2008, and called the company “imprudent” for building the 1,600-kilometer Alberta Clipper after it became clear oil sands production would not grow as quickly as expected.
The $3.7-billion line is to take oil from Hardisty, Alta., to Superior, Wis. It's expected to enter service in the first half of 2010, perhaps as early as April.
Suncor is leading an effort asking the U.S. regulator to prevent Enbridge from raising its tolls to pay for the cost of building and operating the 520-kilometer U.S. portion of Clipper until Enbridge can prove that there is enough demand for it.
Not only are oil producers trying to back out from Alberta Clipper, but Enbridge itself has battled an effort by TransCanada Corp. to build another major pipeline, called Keystone XL, to export crude to the U.S. That dispute, too, arises from a key problem: there are simply too many pipelines and not enough oilsands crude.
By 2013, pipeline companies plan to have capacity for 1.65 million b/d of crude more than Canada's energy companies expect to export.

Enbridge CEO sees pipeline overcapacity from oil sands to U.S.

NEW YORK - Enbridge Inc. said pipeline companies have overbuilt capacity from Alberta to the U.S. in the hopes of capitalizing from a boom in the Canadian oil sands before crude prices fell from a record high.
The extra capacity could reach 200,000 to 400,000 b/d and will be used when companies like EnCana Corp. and Suncor Energy Inc. start production of new projects in the oil sands, said Chief Executive Officer Patrick Daniel.
“There is no doubt that we are going to have overbuilt the pipeline capacity needed ex-Alberta,” Daniel said in an interview with Bloomberg Television in New York on Oct. 7. “A good part of this is already committed, but the projects have yet to be developed that will bring that production on stream.”
Enbridge, the biggest shipper of crude from the oil sands, said ON Oct. 6 that it is in talks with producers such as EnCana, Suncor or Husky Energy Inc. to transport more of their crude on its existing Athabasca and Waupisoo conduits. About 20 percent of daily U.S. oil imports come from Canada, according to the U.S. Energy Department.