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Oil producers Canadian Natural, MEG urge regulator to back Trans Mountain request

By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canadian oil producers Canadian Natural Resources and MEG Energy are urging the country's energy regulator to approve Trans Mountain Corp's latest request for a change to building its pipeline expansion, saying timely completion is critical.

Canadian Natural and MEG hold long-term contracts to ship crude on the Canadian government-owned Trans Mountain from Alberta to the British Columbia coast.

The long-delayed expansion will nearly triple crude shipments to 890,000 barrels per day once it starts operating, expected by late in the first quarter 2024. Delay risks have pressured Canadian crude prices in recent months.

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"If the application is not approved, Canadian Natural and other shippers and in fact the entire energy industry and the governments of Canada and Alberta stand to incur significant losses caused by a delay of up to two years," Canadian Natural President Tim McKay wrote on Dec. 22 to the Canada Energy Regulator (CER).

Canadian Natural is Canada's biggest oil producer and has committed to shipping 94,000 barrels per day for 20 years on Trans Mountain, representing 10% of the expanded pipeline's capacity, McKay said.

Trans Mountain asked the CER's permission to install smaller-diameter pipe in a 1.4-mile (2.3-km) section of the pipeline's route after encountering challenging drilling conditions in a mountainous area between Hope and Chilliwack, British Columbia.

The CER denied that request Dec. 5. Trans Mountain then asked the regulator to reverse its decision by Jan. 9, warning of a "catastrophic" two-year delay and billions of dollars in losses.

The CER last week denied Trans Mountain's variance request, citing concerns about pipeline integrity and the environment. It is reviewing Trans Mountain's latest application.

In a Dec. 24 letter, Tim Takaro, Simon Fraser University professor emeritus of health sciences who has protested the project, urged the CER to take more time to make its decision. He cited risks of any pipeline leak to destroying salmon-spawning grounds in the Fraser River and to shutting down a nearby national highway.

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by David Gregorio)