ARCHIVED - National Energy Board Denies Application for Priority Destination Designation
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11 July 2013
National Energy Board Denies Application for Priority Destination Designation
CALGARY - In a decision issued today, the National Energy Board (NEB or the Board) announced its decision to deny Chevron Canada Limited (Chevron)’s application to designate its Burnaby Refinery a Priority Destination.
On 19 June 2012, Chevron applied to the Board for an order designating Chevron’s Burnaby Refinery a priority destination pursuant to section 1.58 of the Tariff of Trans Mountain Pipeline ULC (the Tariff).
Under section 1.58 of the Tariff, “priority destination” means a refinery, marketing terminal or other facility connected to and capable of receiving petroleum from the Trans Mountain Pipeline system (the Pipeline), and so designated by the Board by reason that it is not capable of being supplied economically from alternative sources.
This is the first time the NEB has had to consider an application for Priority Destination Designation (PDD). As part of this hearing process, the Board considered the role of PDD as well as the criteria in order to qualify.
The Board determined that PDD may be granted if a refinery:
- i. is unable to meet, or is at substantial risk of not meeting, its minimum run rate; and
- ii. cannot reasonably ensure its long-term viability.
Based on the evidence provided, the Board found that Chevron’s Burnaby Refinery did not satisfy the criteria for PDD and therefore should not be designated a Priority Destination. Among other reasons, the Board observed that Chevron had consistently met its 40,000 bpd minimum run rate using the existing options in its supply portfolio. The Board was of the view that it is the responsibility of Chevron to design a portfolio of supply options that will best mitigate its supply risk and ensure the long-term viability of the Burnaby Refinery.
During the hearing, the Board also considered submissions from parties about the potential implications of PDD on Chevron, pipeline shippers, workers at the Burnaby Refinery, the local economy and refined product markets.
Furthermore, the Board noted that nomination and capacity allocation procedures are likely contributing to apportionment on the Pipeline. As a result, the Board directed Trans Mountain to submit revised nomination or capacity allocation procedures to address the current apportionment issue or an explanation of why the procedures in place at that time are adequate, for Board approval on or before 30 September 2013.
The National Energy Board is an independent federal regulator of several parts of Canada's energy industry with the safety of Canadians and protection of the environment as its top priority. Its purpose is to regulate pipelines, energy development and trade in the Canadian public interest. For more information on the NEB and its mandate, please visit www.neb-one.gc.ca.
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For further information:
Telephone (toll free): 1-800-899-1265
- Reasons for Decision MH-002-2012 [Filing A52851]
- 2012-06-19 - Application by Chevron Canada Limited for a Priority Destination Designation [Folder 825769]
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