Ontario oil producers back Enbridge line reversal

Proposed reversal of an Enbridge Inc. pipeline segment would open needed new markets for Ontario light oil producers, a spokesman for the Ontario Petroleum Institute told Canada’s National Energy Board in Toronto.

Large increases in North American oil production have resulted in dramatic changes in the market and specifically to the prices received by Ontario producers, said Jim McIntosh, a petroleum engineering consultant and member of OPI’s board of directors.

“Oil prices have been discounted up to 20% lower than the benchmark set for oil by the price of West Texas Intermediate and Brent crude oils,” McIntosh said. “The approval of Line 9B provides an option that enables oil produced in Ontario to be transported to Canadian refineries outside of the Sarnia region at a cost differential superior to road, rail and water.”

Having Enbridge’s Line 9B as a transportation choice would help remove any bottleneck created by oversupplies at Sarnia, Ont., McIntosh said. Additional refinery options for oil volumes at Sarnia will firm up the price, which would encourage exploration and production in Ontario, a permanent goal of the institute, he added.

“The logical and practical choice for an alternative market for Ontario oil production would be to refineries in Montreal and Saint John. This option is practical only if pipeline delivery is available. The reversal of Line 9B provides that availability to Montreal,” McIntosh said.

Ontario produces 1,900 b/d of oil from about 1,200 active oil wells. Ontario regulators had approved permits to drill about 90 oil and gas wells in the first 10 months of 2013.

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