On June 19, Chevron applied to the National Energy Board to designate its Burnaby refinery as a priority destination. The designation would have meant it would have first call on oil flowing through the Trans Mountain Pipeline system.
The request was denied on July 11. “The (board’s) decision will see Canadian oil flow to the U.S. when a Canadian refinery is being starved of supply,” said Dave Coles, Communications, Energy and Paperworkers Union president, in a media release. “The (board’s) decision will allow large U.S. refiners to continue (jamming) the system at the expense of a Canadian refinery that has been relying upon the pipeline as its primary source of supply for 60 years.”
The union says Chevron’s refinery is running out of crude to process because of increased direct exports to Washington, “which uses their large size to overbid for pipeline capacity.”
“The board’s denial of Chevron’s request for priority access to pipeline flows puts 250 value-added Canadian refining jobs in jeopardy,” Cole states. “The (board) has created a distorted market to the prejudice of the only Canadian refinery receiving oil from the Trans Mountain Pipeline.”
But, the National Energy Board maintains that the Chevron refinery did not prove it was unable to meet its minimum run rate and that it could not reasonably ensure its long-term viability, according to a media release.
“Based on the evidence provided, the board found that Chevron’s Burnaby refinery did not satisfy the criteria for (priority destination) and therefore should not be designated a priority destination,” according to the board’s media release. “Among other reasons, the board observed that Chevron had consistently met its 40,000 (barrels per day) minimum run rate using the existing options in its supply portfolio.”
According to the board, it’s Chevron’s responsibility to design a portfolio of supply options that will best mitigate its supply risk and ensure long-term viability of the refinery.
The board also noted that nomination and capacity allocation procedures are likely contributing to allocation issues on the pipeline and that Trans Mountain should submit a revised nomination or capacity allocation procedure to address the issue by Sept. 30.
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