UPDATE 2-US rejects Enbridge's plan for Sandpiper oil pipeline
WASHINGTON, March 22 (Reuters) - U.S. regulators on Friday rejected a proposed toll plan for Enbridge Inc's $2.5 billion expansion of its Sandpiper project that would move oil from North Dakota to refineries in the Midwest.
The Federal Energy Regulatory Commission (FERC) turned down the Enbridge plan, saying the company's proposed rate structure to fund system upgrades was not supported by existing regulations.
Enbridge, which is seeking to bring Sandpiper into service in early 2016, had sought to recover the costs of the expanded pipeline from North Dakota to Minnesota and Wisconsin through surcharges added to existing rates.
Refiners including Flint Hills Resources and St. Paul Park Refining Company had protested the surcharges. Flint said Enbridge did not get shipper commitments to pay rates that would cover the cost of expansion, evidence that the expansion plan was not viable.
In issuing the ruling, FERC said it "must ensure that, in addressing Enbridge North Dakota's cost recovery mechanisms, shippers are protected from risks that should appropriately be assigned to the pipeline."
Sandpiper is an important part of Enbridge Energy Partners' plan for overall expansion in its Canadian and U.S. oil pipeline network aimed at moving surging volumes of light oil from the Bakken formation. Enbridge Energy Partners, the U.S. affiliate, is footing part of the bill for the expansion.
The program also includes expansions and new pipelines in Illinois, Indiana, Southern Ontario and Quebec. The so-called Light Oil Access plan would add a total of 400,000 barrels a day of capacity to the system. Enbridge Energy Partners is expected to foot slightly more than half the total bill.
FERC encouraged Enbridge to submit a new rate plan.
Enbridge spokesman Graham White said the 2016 timeline of the project had not changed and it was reviewing FERC's decision and assessing its next steps.
- Nurse defies Ebola quarantine with bike ride; negotiations fail |
- Suspect in Pennsylvania police ambush captured after seven-week manhunt
- Japan shares soar, yen skids after BOJ stuns with new easing steps
- Oil price declines have small-cap shale investors scrambling
- China says nets 180 graft suspects in overseas manhunt