NOVA Chemicals joins fight against US pipeline toll hike

24 February 2010 15:04  [Source: ICIS news]

TORONTO (ICIS news)--NOVA Chemicals has joined a fight against a toll surcharge on an Enbridge pipeline system that supplies its chemical production in southern Ontario province in Canada with feedstock, according to regulatory filings on Wednesday.

The chemicals major said it was seeking intervener status on a petition before the US Federal Energy Regulatory Commission (FERC) for exemption from toll increases on the Enbridge Energy and Lakehead pipeline systems.

NOVA sources crude oil and other hydrocarbon feedstocks for its flexi-cracker at Corunna, near Ontario’s Sarnia petrochemicals hub, through the pipelines, and as such, it had a “substantial interest” in the outcome of the proceedings, it said without detailing what the financial impact could be.

Other firms, including Suncor and Flint Hills Resources, were also opposing the toll increase, NOVA noted.

However, pipeline firm Enbridge said in its filing with FERC that the toll hike was needed to help pay for the $1.24bn (€918m) US portion of its 450,000 bbl/day “Alberta Clipper” oil pipeline from Alberta to Wisconsin. 

That pipeline project was based on cost recovery through tariff surcharges, it said.

Clipper, which would form part of Enbridge’s existing US and Canadian pipeline systems, was prompted by growing supplies from Alberta's oil sands sector, the company said. It is almost complete and due to go into service on 1 April.

Enbridge noted the petitions by NOVA and others, but said it believed them to be without merit and requested FERC to dismiss them.

Canadian industry analysts said the case may also hinge on whether Enbridge can show that the pipeline was really needed in the first place - a difficult case to make, given the slowdown in Alberta’s oil sands sector amid the recession.

A NOVA spokesperson said the company could not immediately provide additional comment. Enbridge’s legal counsel in charge of the pipeline case also did not return a call requesting additional comment.

($1 = €0.74)

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By: Stefan Baumgarten
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