No more pipeline rationing for Enbridge clients because of oil sands outages, low Alberta inventories

Enbridge says its customers can ship as much crude as they want to on their pipelines in August. Bloomberg photo by Ben Nelms.

Enbridge customers can ship as much product as they want next month

Calgary oil traders say oil sands supply outages, low Alberta storage inventories and steps taken by Enbridge to free up space in its system are reasons why the Calgary-based company is offering its customers ration-free shipping in August.

The move will likely give producers a break from difficulties they face in getting their crude to market, according to Reuters.

Accessing the market has always been problematic for Canadian producers located in landlocked areas. Canadian oil sands companies are situated on the world’s third largest crude reserves, but they often struggle to get their product to US markets because of limited pipeline space.

Last week, Enbridge called for a respite in pipeline space rationing on its heavy crude pipelines out of Alberta. The company says producers can ship all the barrels of crude they want to move.

Usually customers on Enbridge’s Mainline system have some of their nominated heavy crude volumes cut each month due to high volumes. During some months, companies like Suncor, Cenovus and Husky can only ship about 6o per cent of their nominated pipeline volumes.

Analysts say with new projects like Suncor’s 194,000 barrel per day (b/d) Fort Hills mine starting up later this year, production will likely outpace capacity towards the end of the year.

“The pipes will probably get full again by the end of the year and rail will be a way to get those incremental barrels out,” GMP FirstEnergy analyst Martin King told Reuters. He added that the discount on Canadian crude would likely widen as a result.

Built up stocks of Alberta crude have widened the discount on Canadian barrels in the past.