Oil to be stored in pipeline network


Canadian pipeline operator Enbridge Inc. plans to temporarily store crude oil in one of its largest oil pipelines across North America starting in June. The firm has storage facilities in Cushing but the deal involves housing crude oil in the pipeline.

The company said this week it has reached agreement with shippers as crude prices took a major drop due to the coronavirus pandemic and slumping demand for fuel.

“Given the impacts of the pandemic and the collapse in crude oil prices, demand for incremental crude petroleum storage throughout North America and even more urgently in Western Canada is high,” the company said in a May 1 filing with the Canadian Energy Regulator according to Reuters.

The Mainline, Canada’s longest oil pipeline system, has capacity for nearly 3 million barrels per day, moving western Canadian oil to U.S. refiners.

Enbridge last month said it would not ration capacity for May on the network, a sharp reversal from restrictions that have dogged Canadian producers for years.

The company is offering about 900,000 barrels of storage, equivalent to about four standard-sized tanks, for an eight-month term, a spokeswoman said. It would use an older portion of its Line 3 pipeline in Canada before the line is decommissioned next year.

Enbridge is also working with provincial and the Canadian federal governments “to support producers’ goal of more storage,” spokeswoman Tracie Kenyon said in an email, without providing details.

“This temporary storage, along with the further maintenance optimizations to our storage tank program will create more than two million barrels of additional storage capacity for 2020,” she said.

Alberta Premier Jason Kenney has repeatedly warned that storage levels are in danger of reaching capacity.

Cuts to Alberta’s oil production have been large enough to avoid filling storage completely but levels could still spike to tank-top capacity of 43 million barrels, Canadian producer Cenovus Energy Inc <CVE.TO> said last week.