[All] The rising costs of Line 9 and NEB hearing re: Tolls

[Louisette Lanteigne]

Hi folks

I was reviewing Enbridge's Annual 2014 report and it states the following which shows how NEB conditions bumped up costs and the fact there is an upcoming Line 9 hearing regarding tolls in May. It states: 


In 2013, Enbridge also completed the reversal of Line 9A in western Ontario to permit crude oil movements eastbound from Sarnia, Ontario as far as Westover, Ontario. Enbridge is also undertaking a reversal of its 240,000 bpd Line 9B from Westover, Ontario to Montreal, Quebec to serve refineries in that province. The Line 9B reversal was initially expected to be completed at an estimated cost of approximately $0.3 billion. Following an open season held on the Line 9B reversal project, further commitments were received that required additional delivery capacity within Ontario and Quebec, resulting in the Line 9 capacity expansion project. The Line 9 capacity expansion will increase the annual capacity of Line 9 from 240,000 bpd to 300,000 bpd at an estimated cost of approximately $0.1 billion.   The Line 9B Reversal and Line 9 Capacity Expansion Project was approved by the NEB in March 2014 subject to 30 conditions. In October 2014, the NEB requested additional information regarding one of the conditions imposed on the Line 9B Reversal and Line 9 Capacity Expansion Project. On October 23, 2014, Enbridge responded to the NEB describing the Company’s rigorous approach to risk management and isolation valve placement. On February 6, 2015, the NEB approved Conditions 16 and 18, the two conditions in the NEB’s order requiring approval, and the Company filed for a Leave to Open, which is a prerequisite to allowing the operation of the project. Subject to NEB approval for the Leave to Open application, Enbridge expects to place the Line 9B Reversal and Line 9 Capacity Expansion Project into service in the second quarter of 2015. In its February approval, the NEB also imposed additional obligations on Enbridge that direct the Company to take a “life-cycle” approach to water crossings and valves, requiring the Company performs ongoing analysis and rationale to ensure optimal protection of the area’s water resources. The conditions previously imposed by the NEB, including costs associated with additional NEB mandated integrity testing, increased the total expected cost of the projects to $0.7 billion, inclusive of costs related to the previously discussed Line 9A reversal. Enbridge has recently reached an agreement with shippers to recover a portion of the incremental cost of additional valves ordered by the NEB through a toll surcharge. Total expenditures to date on the Line 9A and Line 9B projects are approximately $0.6 billion. On July 31, 2014, Enbridge filed an application for tolls for Line 9. After objections from shippers on Line 9 were filed with the NEB with respect to the inclusion of mainline surcharges in the Line 9 toll, Enbridge requested that the NEB approve the tolls on an interim basis to allow for time to engage shippers in further discussions to attempt to resolve the outstanding issues. The NEB established interim tolls, which remain in effect and in late 2014, Enbridge and shippers filed letters with the NEB requesting that it establish a process to consider the issues. The NEB has set a written hearing with oral reply argument to be heard on May 28, 2015.
Lulu  


  

   

  
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