Canada’s energy regulator approves Trans Mountain tolls settlement

The Canada Energy Regulator (CER) announced this week that it had approved the tolls settlement for the Trans Mountain oil pipeline system, which carries crude from Alberta’s oil sands to the British Columbia coast for export to Asia.

The regulator said in a September 28 statement that this means a new framework can be established for the management of tolls, tariffs and transportation services on the Trans Mountain system. The Commission of the CER found that the tolls were “just and reasonable”.

This resolves a long-running dispute between the Crown corporation that owns Trans Mountain and companies that ship crude on the pipeline, including Cenovus Energy (TSE: CVE), Canadian Natural Resources Ltd (CNRL, TSE: CNQ) and ConocoPhillips Canada. The parties had been in disagreement over how to share the cost of the expansion project that nearly tripled capacity on the system from 300,000 barrels per day to around 890,000 bpd when it came online in 2024.

The Globe and Mail noted that the dispute had deterred usage of Trans Mountain, as well as hindering the Canadian government’s plan to sell the pipeline.

Now, though, the CER Commission has found that the agreement reached by Trans Mountain and shippers on the pipeline meets the criteria outlined in its guidelines for negotiated settlements. The approved settlement resolves the disagreements between Trans Mountain and its shippers.

The decision also allows Trans Mountain to contract up to 90% of the pipeline’s capacity to shippers, representing an increase from the previously approved allocation of 80%, the CER said.

Negotiated settlements are a way for pipeline companies to resolve traffic, tolling and tariff matters with commercial parties without resorting to a hearing, the CER noted.

The approval of the settlement comes amid rising oil exports from Canada to Asian markets, bolstered by the disruption of supplies from the Middle East. Trans Mountain flowed at full capacity earlier this year for the first time since the expansion came online. The company that operates Trans Mountain is also proposing to further boost capacity on the system by a third through optimisation projects by the end of 2028.

Meanwhile, the Canadian government is advancing plans to build an additional oil pipeline from Alberta to the BC coast. While NewsBase Horizon believes that this project is still a long way away from being realised, geopolitical and market conditions mean that it looks more likely to go ahead now than any new major Canadian oil pipeline proposal has done in years.