HomeFutures and CommoditiesCanadian regulator makes initial ruling on tolls for Trans Mountain expansion project.

Canadian regulator makes initial ruling on tolls for Trans Mountain expansion project.

The Canada Energy Regulator to Decide on Trans Mountain’s Proposed Shipping Tolls

The Canada Energy Regulator (CER) announced that it will make a preliminary decision on Trans Mountain Corp’s proposed shipping tolls for its oil pipeline expansion project in the coming autumn. The decision aims to ensure that interim tolls are in place when the pipeline expansion becomes operational. A hearing on the tolls is scheduled for next year.

Pipeline Expansion Project and Shippers’ Concerns

The Trans Mountain expansion project (TMEP) plans to significantly increase the flow of oil from Alberta to Canada’s Pacific Coast, with an expected start date in late Q1 2024. However, shippers such as Canadian Natural Resources and Cenovus Energy are disputing the interim tolls proposed by Trans Mountain. They argue that a portion of the base toll is too high.

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Long-term shipping contracts already cover 80% of the TMEP’s capacity. The final tolls will have an impact on the pipeline’s value when the Canadian government, which acquired it in 2018 to ensure the expansion’s completion, puts it up for sale.

Canada Energy Regulator’s Hearing and Final Tolls

The CER stated that the hearing scheduled for next year will examine various aspects, including the fairness and reasonableness of existing tolling agreements with shippers and the potential repercussions on Trans Mountain’s financial standing. Once the TMEP is operational and final costs are known, Trans Mountain can request approval from the CER for the final tolls.

By ensuring transparency and fairness in determining shipping tolls, the CER aims to facilitate the smooth functioning of the Trans Mountain expansion project. This decision will have significant implications for Canada’s oil industry and the country’s efforts to transport oil efficiently and sustainably.

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