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NEWS: Tesoro’s NAFTA challenge against Chevron’s priority destination request

Burnaby Now reports, “Chevron has been raising concerns (that its Burnaby) refinery is not getting enough supply because shippers are demanding oil in volumes beyond the (current Trans Mountain pipeline’s) capacity, and everyone’s requested volumes are cut back as a result. In an attempt to secure a more steady supply of oil, Chevron applied to the National Energy Board for ‘priority destination designation’ – or prioritized access to the line when demand is high.”

“The Trans Mountain pipeline can transport a maximum of 300,000 barrels of oil each day. Approximately 250,000 barrels are currently available for general market access, which goes to companies like Chevron that bid for volumes on a month-to month basis, while the rest is reserved for shippers with long-term contracts. Kinder Morgan wants to twin the existing line bring capacity up to 890,000 barrels a day. Only 180,000 barrels would be left for shippers who bid on a month-to month basis – that’s 70,000 barrels fewer than what’s currently allocated for general market access.”

“When asked why Chevron doesn’t sign up for a long-term contract, (Chevron spokesperson Ray) Lord pointed out that any expansion of the Trans Mountain pipeline would be in five or six years. ‘A long-term commitment is of no value if Burnaby cannot secure its access to crude during the interim period. Therefore, our application for priority destination designation remains the focus of our attention.'”

Burnaby Now has previously reported, “The Communications, Energy and Paperworkers Union of Canada is raising concerns about Tesoro, a Texas-based refining company, which has presented a motion to the National Energy Board opposing Chevron’s bid for ‘priority destination designation’. …Tesoro is one of four U.S. refineries that gets oil from Kinder Morgan’s Trans Mountain pipeline (and it) is raising concerns that prioritized access for Chevron may not be consistent with the North American Free Trade Agreement. …Tesoro’s position is that according to NAFTA, all customers should be treated equally.”

CEP President Dave Coles says, “It is outrageous that an American company is trying to use NAFTA rules to block a case that would allow Canadian crude to be treated in Canada. We have got a serious case of misplaced priorities if the National Energy Board refuses to hear Chevron’s request based on the fact that questionable NAFTA rules would take precedence on very clear Canadian interests.”

It has been reported that, “If Tesoro’s motion is successful, it may cancel the need for a National Energy Board hearing on the matter.” Most recently, Burnaby Now has noted, “Chevron’s National Energy Board hearing was set for January but has been delayed till March 26.”