Enbridge Reduces Supply on Vital Canadian Pipeline System

(P&GJ) — The biggest operator of oil export pipeline systems in the world, Enbridge Inc., is reducing supply on its vital Canada line, creating yet another barrier for oil producers, Bloomberg reported.

Enbridge, a Calgary-based firm, said in a statement on Friday that it will allot space on a section of its Mainline system by the most since November of last year. Historically, a glut of supply has resulted from shippers reducing capacity when they perceive excessive demand on a system, leaving producers with the extra. This practice is known as apportionment.

The allocation of pipelines has already resulted in significant discounts for Canadian crude oil and now poses a danger to already low oil prices. With the release of high-sulfur oil from US strategic petroleum reserves and high natural gas prices making Canadian oil expensive to refine, the discount for Canadian heavy crude is about $30 in Alberta, practically the biggest since 2018.

The increase in allocation suggests that export lines may be beginning to fill up once more as a result of the province's record oil production and the increased demand for Canadian petroleum on the U.S. Gulf Coast.

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