Pipeline Profiles: Trans-Northern Pipeline

Sources: Trans-Northern Pipelines Inc., NEB

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The Trans-Northern Pipeline transports refined petroleum products west from Montreal, QC to Toronto, ON, and from Imperial Oil Limited's refinery at Nanticoke, ON east to Toronto. There are delivery points along both stretches, including a branch line that services the Ottawa area. The pipeline operates bi-directionally between Toronto and Oakville, ON. Capacity varies across each segment of the pipeline. For example, from Montreal to Farran’s Point the capacity is 21 thousand cubic metres per day (132 Mb/d); from Farran’s Point to Belleville the capacity is 11.4 thousand cubic metres per day (72 Mb/d); and, from Belleville to Toronto the capacity is 10 thousand cubic metres per day (63 Mb/d).

In 2016, throughput (as measured by total receipts) of refined petroleum products averaged 31.1 thousand cubic metres per day (195.61 thousand barrels per day).

The Trans-Northern Pipeline has multiple receipt and delivery points, is bi-directional, and has different capacities for each segment. Total receipts is used as a measure of the system’s throughput.

The physical capacity of a pipeline is based on many factors such as the product(s) being carried, direction of flow, ambient temperature, pipeline compression, and maintenance work or other pressure restrictions. The operational capacity at each key point may also reflect contracts for transportation service, and supply and demand across the system. The actual physical capacity of the pipeline may be higher than the assumed operational capacity stated here.

Open data can be freely used, modified and shared by anyone for any purpose. The data for these graphs are available here.

Key Developments

Last updated: August 2016

In October 2010, the Board ordered a system-wide pressure reduction to 80% of the maximum operating pressure after assessing Trans-Northern’s integrity management plan. As of June 2016, the restriction remained in effect on parts of the system.

Regulatory Documents

Last updated: August 2016

Tolls

Last updated: August 2016

The toll settlement (RHW-3-96) established a starting point for the revenue requirement in 1996, and a mechanism to adjust costs each year. Tolls are submitted annually to the Board and are regulated on a complaint basis. Figure 1 shows the Trans-Northern benchmark toll (Nanticoke to North Toronto) and the GDP deflator (normalized) for 2010-2015. The benchmark toll increased by 18% in 2011, mainly due to a $6.5 million integrity allowance and a $4.5 million expense to cover cleanup costs related to events in 2010. It remained steady between 2012 and 2014 after which it increased by 19% due in part to a Non-Routine Adjustment for Pipeline Integrity.

Figure 1: TNPI Benchmark Toll

Figure 1: TNPI Benchmark Toll

Source: NEB

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This graph shows the Trans-Northern benchmark toll as a solid red line and the GDP deflator as a black dashed line. The graph shows the Trans-Northern benchmark toll rising steadily from approximately $2.70/m³ in 2010 to approximately $3.37/m³ in 2014. The toll then increases to approximately $4.00/m³ in 2015.

Financial

Last updated: August 2016

Trans-Northern Pipelines Inc. earns a return on equity equivalent to the RH-2-94 formula rate plus 25 points additional return for risk. Its financial ratios have improved in recent years due to stable cash flows and continued reduction of debt. Its credit rating, as assessed by DBRS, remains investment grade.

Table 1: Trans-Northern Pipelines Inc. – Yearly
Trans-Northern Pipelines Inc. 2010 2011 2012 2013 2014 2015
Revenue Requirement (millions) $56.3 $66.2 $65.1 $65.8 $69.1 $81.1
Interest and Fixed-Charges Coverage Ratio 3.83 3.47 4.83 6.41 5.52 Table Note a
Cash Flow-to-Total Debt and Equivalents Ratio 14.1% 23.9% 29.7% 24.1% 37.8% Table Note a
DBRS Credit Rating A (low) A (low) A (low) A (low) A (low) A (low)

 

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