Chevron filed an application with the National Energy Board today to try to secure a more stable oil supply for the Burnaby refinery from the Kinder Morgan Trans Mountain pipeline.
"Since late 2010, recurrent and ongoing apportionment on the pipeline has repeatedly reduced and continues to threaten the supply of crude required by the Burnaby refinery," said Chevron's Ray Lord in a company statement.
Each month, all of the shippers who use Kinder Morgan's Trans Mountain pipeline put forward the volume of oil products they want from the line, which ships oil from Alberta to Burnaby. If the total volume of all the shippers' requests exceeds the pipeline's maximum capacity, all of the shippers' requested volumes are reduced and equally proportioned - a process called "apportionment" in the industry.
"This means that all of the shippers who use the pipeline to move products to the West Coast receive only a portion of what they request," Lord said.
"We have had occasions where it's been up to 70 per cent less than what we asked for."
Chevron, which runs one of two remaining refineries left in B.C., applied for "priority destination designation" with the National Energy Board, which would give the refinery prioritized access to the oil coming down the pipeline. To be eligible for the designation, the company has to show that it's already connected to the pipeline, which it is, and that it's not economically feasible to bring in oil using other methods, (by ship, rail, or truck, for example), which is also the case for the refinery.
"It's another step to try to secure a reliable, predicable supply for the refinery," Lord said.
Lord also said the company's move was not related to Kinder Morgan's plan to expand the pipeline.
"We need this even if the pipeline doesn't get expanded," he said.
Even if Kinder Morgan receives National Energy Board approval to more than double capacity on the Trans Mountain, the expansion would not necessarily solve Chevron's supply issue, according to Lord.
"Everybody wants access to those resources in Alberta, Canadian crude is in tremendous demand right now," he said.