Enbridge’s Mainline proposal to allow long-term contracts is approved

The National Energy Board has given a nod to Enbridge’s proposal to allow shippers to decide whether they want to carry long-term contracts under long-term service agreements (LSAs). This follows a recent hearing where the CTA ruled last year that shippers would be able to decide whether they wanted to have contracts with Enbridge. Under this new proposal, shippers will still have to sign some sort of contract before taking on capacity in the Mainline.

What is a LSA? It’s a contract between Enbridge and a shipper. The Enbridge contract would include infrastructure, service, and other details between each shipper and Enbridge. For a shipper to have access to the Mainline system, it would need to enter into an LSA.

The NEB has approved the Enbridge proposal as part of its review of proposals for the Mainline to allow for LSA contracting. However, the CTA struck down the proposed contracts with Alberta’s two largest producers: bitumen pipelines, which would begin up to 250 km east of Fort McMurray. The previous ruling ruled that no contracts could enter into on a project if there is not currently a live pipeline to serve the system.

The B.C. government initially attempted to exclude the pipeline shipments from the jurisdiction’s authority in order to impede its construction, arguing that opening up new pipelines would have a detrimental effect on B.C.’s own economy. Despite this ruling, Enbridge’s proposal does not have to gain the support of all shippers, as each shipper can veto a contract.

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