Trans-Northern Pipelines to Increase Pipeline Capacity

On August 7, 2003, Trans-Northern Pipelines Inc. (TNPI) was granted approval from the National Energy Board (NEB) to increase the pipeline capacity on its petroleum products pipeline system from Montreal to Farran’s Point, Ontario, and to reverse the direction of the flow between Farran’s Point and Clarkson Junction in Mississauga, Ontario. The estimated cost of the project is $85.58 million.

TNPI made the application because the existing pipeline was underutilized. The need for the reversal was demonstrated by the fact that two shippers were prepared to financially backstop the project by means of long-term ship-or-pay commitments from Montreal to Toronto. In its decision the NEB noted: (a) the consensus among shippers that the reversal would increase usage; (b) the impact of impending sulphur in fuels regulations; (c) Petro-Canada’s evidence that it would close the Oakville refinery should the project proceed; and (d) Ultramar Ltd.’s refinery expansion plans. The NEB concluded that the project should allow the Ontario market to continue to be adequately served.

The NEB was satisfied that the open season conducted by TNPI granted all shippers an equal opportunity to obtain capacity on the new pipeline. In considering the priority access arrangements, the NEB concluded that TNPI operates in a sophisticated market and that potential shippers could have entered into discussions about short-term contracts or arrangements different to those set out by TNPI in the open season communications.

Also at issue was whether TNPI would meet its common carrier obligations under the National Energy Board Act if approval of the requests for priority access were granted. The NEB was satisfied that TNPI is meeting its common carrier obligations under the Act and that an order exempting TNPI from the provisions of s. 71 would not be necessary in the circumstances.

Therefore, the NEB granted Petro-Canada and Ultramar priority access from Montreal to Toronto for 7,280 cubic metres per day and 1,820 cubic metres per day respectively for the terms set out in the PAAs with TNPI. Based on the evidence, the NEB was satisfied that the project is and will be required by the present and future public convenience and necessity and therefore approved TNPI’s application.

TNPI was represented by John Campion and Alyson D’Oyley of Fasken Martineau DuMoulin LLP. Petro-Canada was represented by in-house counsel George Fraser; and by Richard Neufeld and Greg Moores of Fraser Milner Casgrain LLP. Shell Canada Products was represented by James Smellie of Osler, Hoskin & Harcourt LLP. Suncor Inc. was represented by Loyola Keough and Lauren Bell of Bennett Jones LLP. Ultramar was represented by in-house counsel Jennifer Overend; and by Gowling Lafleur Henderson LLP, with a team led by Alan Hollingworth and assisted by Nadine Berge. Imperial Oil Ltd. was represented by in-house counsel B. Clark. The Procureur Général du Québec was represented by J. Brisson and R. Richard. The NEB was represented by Margery Fowke and J. Denis Saumure.