Hearing Order OH-001-2013 OF-FAC-Oil-101-2012-08 02 Response to NEB IR No.1 Enbridge Pipelines Inc. Application for Edmonton to Hardisty Pipeline Project Hearing Order OH-001-2013 OF-Fac-Oil-E101-2013 Enbridge Pipelines Response to NEB IR No. 1 Page 1 of 71 Markets 1.1 Rail Movements Reference: i) Application, Volume I, Appendix 10-2, Appendix Table I: Disposition of Heavy Crude Oil Transiting the Hardisty Hub, page 28 (PDF page 87 of 88, A3E2W6); ii) Application, Volume I, Appendix 10-1: Canadian Association of Petroleum Producers’ Crude Oil Forecast, Markets and Pipelines, Section 4.8, page 29 (PDF page 45 of 88, A3E2W6). Preamble: Reference i) illustrates the disposition of heavy crude oil transiting the Hardisty Hub. Reference ii) discusses how rail is starting to provide a larger proportion of the crude oil transportation market than it has held historically. Request: a) Please explain the underlying assumptions as to why there are no adjustments in reference i) for rail movements: a.1) to the U.S. East Coast from 2015 to 2022, and a.2) to the US Gulf Coast from 2015 to 2026. b) Alternatively, if there are adjustments for rail movements for the above, please provide the data, in digital form, capable of computation. c) Please explain the underlying assumptions as to why there are negative figures in the adjustments in reference i) for rail movements: c.1) to the U.S. East Coast from 2023 to 2030, and c.2) to the US Gulf Coast from 2027 to 2030. Response a.1) and a.2): Any adjustments, for either rail or conventional heavy crude oil delivered to the Rockies, are to account for crude oil shipments to the indicated submarkets that do not transit Hardisty. The heavy crude oil demand in each of the indicated submarkets is total demand, irrespective of the transportation mode by which it reached the submarket. For the period 2015 to 2022, the Muse Crude Market Optimization Model indicates that heavy crude oil shipments via rail to the U.S. East Coast are not required (and, thus the adjustment is zero). That is, shipping Canadian heavy crude oil to the U.S. East Coast via rail prior to 2023 would be sub-optimal, in that the Western Canadian heavy crude oil producers are projected to have sufficient access to markets with higher netbacks than the U.S. East Coast and, Hearing Order OH-001-2013 OF-FAC-Oil-101-2012-08 02 Response to NEB IR No.1 therefore, rail shipments to the U.S. East Coast are not desirable. It is a similar situation for the U.S. Gulf Coast, in that rail shipments are not economically attractive until 2027. b): There are no adjustments for rail movement, and consequently, there is no data to provide. c.1) and c.2): Absent additional pipeline construction, rail shipments to the U.S. East Coast are projected to begin in 2023. Because the indicated volume of Canadian heavy crude oil demand in the submarkets includes shipments via all transportation modes, the rail shipments must be subtracted (or a negative number added) from the total U.S. East Coast heavy crude oil demand to determine the volume of heavy crude oil that transits Hardisty via pipeline. Similarly, the volume of Canadian heavy crude oil that is shipped to the U.S. Gulf Coast via rail post-2027 must also be subtracted from the total U.S. Gulf Coast demand for Canadian heavy crude oil to estimate the volume that is transiting Hardisty via pipeline. Transportation 1.2 Table 10-3 v. Table 11-2 Reference: Application, Volume I, Section 10.2.3 Pipeline Capacity ex-Edmonton and ex-Hardisty, pages 10-300 to 10-301 (PDF pages 6 and 7 of 88, A3E2W6). Preamble: Table 10-3 of the above reference provides a summary of current capacity and destination of pipelines exiting Edmonton and Hardisty. Enbridge, in the above reference, indicates that TransCanada’s Keystone XL pipeline is not captured in Table 11-2. Request: Please confirm that the table referenced should be "Table 10-3" and not "Table 11-2". If the table referenced is, in fact, Table 10-3, please confirm that the Keystone XL pipeline’s projected takeaway capacity of 111 000 m3/d is not captured in the analytical results presented. Response Confirmed. The appropriate reference is Table 10-3, not 11-2. The Keystone XL capacity is not included in Table 10-3, which summarizes current ex-Edmonton and ex-Hardisty pipeline capacity. 1.3 Table 10-3 Footnote and Source Information Reference: i) Application, Volume I, Section 10.2.3, Table 10-3: Current Capacity and Destination of Pipelines Exiting Edmonton and Hardisty, footnote 18, page 10-300 (PDF page 6 of 88, A3E2W6); ii) Application, Volume I, Section 10.2.3, Table 10-3: Current Capacity and Destination of Pipelines Exiting Edmonton and Hardisty, source, page 10-301 (PDF page 7 of 88, A3E2W6). Preamble: Reference i) shows that footnote 18 indicates the source for Table 10-3 is "ERCB ST98." Reference ii) indicates the source for Table 10-3 is "ERCB ST98, Enbridge." Hearing Order OH-001-2013 OF-FAC-Oil-101-2012-08 02 Response to NEB IR No.1 Request: a) Please specify which version of ERCB ST98 was used to create Table 10-3, and also provide the link to the applicable ERCB ST98 version. b) Confirm if Enbridge was also used as a source to create Table 10-3, as indicated in reference ii); if so, specify its source of information. c) Further, specify which data in the table was derived from each of the sources. Response a) Enbridge used the 2012 ST98 report (http://www.ercb.ca/sts/ST98/ST98-2012.pdf). Table 3.12 from the ST98 report summarizes the capacity of export pipelines. b) Confirmed. Enbridge sourced capacity information from the document included as Attachment 1.3 and posted on its website at the following link http://www.enbridge.com/DeliveringEnergy/OurPipelines/LiquidsPipelines.aspx. c) Enbridge and Alberta Clipper data was sourced from the reference in the above response to IR 1.3 b). All other information was sourced from the reference in the above response to IR 1.3 a). 1.4 Current Enbridge Mainline Capacity from Hardisty Reference: i) Application, Volume I, Section 10.2.3, Table 10-3: Current Capacity and Destination of Pipelines Exiting Edmonton and Hardisty, pages 10-300 and 10-301 (PDF pages 6 and 7 of 88, A3E2W6); ii) Application, Volume 1, Appendix 10-1, Table 4.1: Major Existing Crude Oil Pipelines and Proposals Exiting the WCSB, page 22 (PDF page 38 of 88, A3E2W6). Preamble: Reference i) illustrates the current Enbridge Mainline capacity from Edmonton as 296.4 thousand m³/d, and Enbridge Mainline capacity from Hardisty as 296.4 thousand m³/d, for a total Enbridge Mainline capacity of 592.8 thousand m³/d. Reference ii) illustrates CAPP’s data for the current total Enbridge Mainline capacity as 2,327 thousand b/d (that is, 1,081 b/d light crude plus 1,246 b/d heavy crude), which is equivalent to approximately 369.3 thousand m³/d. Request: Please clarify the discrepancy between the two figures and provide the underlying data and assumptions with respect to Table 10-3, including Enbridge Mainline’s capacity figures from both Edmonton and Hardisty. Response The Enbridge Mainline capacity leaving Edmonton and Hardisty is the same, totalling 296.4 thousand m³/d and should not be summed. As shown in Table 10-3, Application, Volume 1, Section 10.2.3, the incremental 71.5 thousand m³/d of pipeline capacity ex-Hardisty is the Alberta Clipper pipeline. The total capacity of Alberta Clipper and the Enbridge Mainline together is 367.9 thousand m³/d (2.3 million bpd) which is approximately the same volume identified in the CAPP report (2.327 million bpd). Hearing Order OH-001-2013 OF-FAC-Oil-101-2012-08 02 Response to NEB IR No.1 1.5 Notification of Commercial Third Parties Reference: Application, Volume I, Section 4.4 Notification of Commercial Third Parties, page 4-105 (PDF pages 12-13 of 16, A3E2V2). Preamble: In the reference, Enbridge indicates that it has had discussions with industry and hosted a commercial information session in Calgary on 3 December 2012 in order to provide all commercial parties an opportunity to hear more about the Project and raise any questions with Enbridge representatives. Request: a) Please specify whether industry or commercial third parties have expressed any concerns in relation to the Project. b) If concerns have been expressed, please elaborate on the nature of these concerns, and whether these concerns have been resolved. Response Following the December 3rd commercial information session, Enbridge prepared and distributed a Q&A document that addressed all of the matters raised by parties at the open house and in subsequent discussions. The Q&A document is included as Attachment 1.5. The matters raised that specifically deal with the Edmonton to Hardisty Pipeline Project primarily relate to batch sizes and pipeline connectivity at Hardisty. Enbridge did not receive any follow-up requests on the matters in the Q&A document, and no industrial or commercial third parties have raised any other concerns specifically related to the Edmonton to Hardisty Pipeline Project. Engineering 1.6 Isolation Valves Reference: i) CSA-Z662-11 Oil and Gas Pipeline Systems, Clause 4.4.8 ii) Application, Volume I, Chapter 7 Engineering, Table 7-3 and Appendix 7-1 (PDF pages 4, 5 and 17 of 18, A3E2W1); iii) Application, Volume II, Section 5.1.3 Surface Water Quantity, pages 5-10, 5-11 and 5-20 (PDF pages 38, 39 and 48 of 129, A3E2X9).