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Pipeline Allocation Spat Highlights Concerns over Oil Export Constraints

Posted August 27, 2014

Under Economic Issues, International Trade Issues

(Jeff Lewis – Globe & Mail)

Spectra Energy Partners LP is facing blowback from a group of major oil companies over plans to rejig the way it allocates capacity on its Express pipeline system amid renewed anxiety over export constraints that have weighed on prices for Alberta’s heavy crude.

The moves would force oil company shippers to bid on spot capacity – which is not covered by firm contracts – when orders to move crude exceed available space on the pipeline, a phenomenon known as apportionment.

The changes, set to take effect Sept. 1, have led to flak from big oil players – including affiliates of Suncor Energy Inc. and Marathon Petroleum Co. LP, as well as Husky Energy Inc., CNOOC Ltd. – controlled Nexen Energy ULC and Phillips 66 – concerned about paying hefty premiums for capacity at a time when the industry is desperate for new export routes. Read more here.