Canadian pipeline operator Enbridge said on Friday it was postponing the 250,000-barrel-per-day second phase of its Mainline crude pipeline network, partly due to Canadian oil producers not committing to significant output increases.
The project would have increased exports of Canadian crude to U.S. refineries.
But Enbridge CEO Greg Ebel said the company will focus first on its 100,000 bpd Flanagan South Expansion and its 50,000 bpd Southern Access Extension, which will add capacity to two secondary pipelines that connect to the Mainline in Illinois and transport crude to multiple U.S. refining centers and the Gulf Coast.
Ebel said Canada is facing a generational opportunity to expand its oil output, thanks to recent federal government policy changes and the rollback of some environmental rules.
But he said while a recent agreement between the federal government and Alberta aimed at accelerating oil sands growth could have a dramatic impact, most of the proposed changes remain non-binding and have not been enshrined into law.
Enbridge does not expect Canadian oil sands companies to meaningfully boost production until there is more policy and regulatory certainty, said Colin Gruending, the company’s president of liquids pipelines.
“Nor do we expect producers to be making binding FID-able commitments to new pipelines until then,” Gruending said, referring to final investment decisions.
A company spokesperson confirmed the decision to prioritize the secondary pipeline projects means a delay for the Mainline phase two project, which Enbridge had previously said could be in service by the end of 2028.
(Reporting by Amanda Stephenson in Calgary Editing by Rod Nickel)