Houston, 8 October (Argus) — Granting Chevron priority access on a west Canadian crude line may violate North American trade agreements and cost northwest US refiners millions, a US independent refiner has told Canada's energy regulators.

Chevron applied in June to receive priority designation on Kinder Morgan's TransMountain pipeline for its 57,000 b/d Burnaby refinery in British Columbia. Over-apportionment on the line has left the refinery short by as much as 70pc of the refinery's crude demand, and pushed Chevron to develop trucking and rail alternatives for its feedstock needs.

But giving Chevron priority status would unfairly reduce crude availability for Tesoro's 120,000 b/d refinery in Anacortes, Washington, Tesoro said in a filing with the National Energy Board (NEB). Approving the application would benefit Chevron by an estimated $150mn a year and cost five US refining operations an estimated $191mn more, Tesoro said in its filing.

Because US refineries would be treated differently, the proposed arrangement would also violate North American Free Trade Agreement regulations, the refinery said. Because the dispute may involve NAFTA issues, the NEB could be precluded from considering Chevron's request, Tesoro argued.

Tesoro requested the NEB halt any further consideration on the priority designation until it can settle NAFTA's applicability to the application.

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