Enbridge slashes tolls for Mainline system, setting up pipeline price war (NYSE:ENB) - Seeking Alpha
Enbridge slashes tolls for Mainline system, setting up pipeline price war (NYSE:ENB) | Seeking Alpha
Enbridge slashes tolls for Mainline system, setting up pipeline price war
Enbridge Inc. (ENB),
ENB:CA By:
Carl Surran, SA News Editor
9 Comments zorazhuang/iStock via Getty Images
Canada looks poised for a pipeline price war, Bloomberg reported Friday, as Enbridge (NYSE: ENB) has sharply cut the rates it charges producers to ship crude on its Mainline system before the rival Trans Mountain pipeline starts up next year.
The cost to send heavy crude from the Hardisty, Alberta, oil hub to terminals in Flanagan, Illinois, will drop ~12% to $28.80/cm on July 1, based on current exchange rates, Enbridge ( ENB) said in a regulatory filing.
Most of the 590K bbl/day of additional capacity on Trans Mountain will be reserved under long-term contracts, and its route from Alberta to the Pacific Coast near Vancouver allows producers to diversify their sales away from U.S. refiners.
By contrast, the 3M bbl/day Mainline system does not offer long-term contracts and connects to the U.S. Gulf Coast refiners that already take most of Canada's crude.
But the Trans Mountain expansion project is behind schedule and plagued by rapidly rising costs, some of which likely will be passed on to shippers via higher tolls, which have not yet been released.
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