A cross-border brawl between Canadian pipeline titan Enbridge Inc. and a little-known Colorado company over alleged bias in transporting heavy Canadian crude versus oil from the booming Bakken Shale is moving to the same battleground where Keystone XL stumbled.

High Prairie Pipeline LLC this week took its case against Enbridge, battered in recent days by a scathing investigation into its 2010 Michigan oil spill and a fresh leak in Wisconsin, to the State Department. Invoking the "national interest" finding that lies at the heart of greens' separate case against Keystone XL, High Prairie asked the State Department to amend the company's border-crossing permits to ensure equal access for U.S. oil shippers.

"Enbridge Energy's refusal to" allow High Prairie an interconnection to its main line at Clearbrook, Minn., "is in disregard of the U.S. national interest and the obligations that come with being a common carrier," High Prairie attorneys argued in a Tuesday petition that sought amendments to the Canadian company's State Department permits.

The increasingly political spat between High Prairie and Enbridge flared last month when the former accused the latter of reneging on a verbal agreement to allow its proposed 450-mile pipeline from the booming Bakken Shale play in North Dakota and Montana to link to a highway of pipelines currently carrying Canadian oil sands crude into the United States (Greenwire, July 12).

High Prairie contends Enbridge agreed to the interconnection earlier this year but later denied that pledge in order to save capacity after Keystone XL was delayed. Its parent company in June lined up lobbying assistance from Niels Holch, former chief of staff to Senate Minority Leader Mitch McConnell (R-Ky.).

At the heart of the dispute are several volatile questions: On what terms does "common carrier" status require pipeline operators such as Enbridge to accept outside oil shipments, how viable will the presently booming Bakken be over the decades-long life of a pipeline, and can Enbridge avoid what senior executive Mark Maki described as a "peaking phenomenon" that affects long-term oil transportation capacity?

Some of the same thorny issues initially threatened to trip up Keystone XL before Calgary, Alberta-based TransCanada Corp. agreed to reserve about 30 percent of its proposed capacity on that line for Bakken crude. Continental Resources Chief Harold Hamm, a Mitt Romney energy adviser whose firm dominates North Dakota oil drilling, told The Washington Post last month that TransCanada agreed to the Bakken carveout only after the governors of North Dakota and Montana intervened.

Paul Blackburn, an independent legal consultant to environmental groups and other nonprofits active on pipeline safety, said in an interview that High Prairie's latest appeal is "probably, mostly, an attention-gathering thing to create political pressure" given that the State Department has limited authority that stops at the U.S.-Canada border.

Blackburn added that High Prairie has a point in arguing that Enbridge hopes to keep the door open for its own connection out of the Bakken, a proposal known as Sandpiper. But he also outlined practical concerns reflected in Enbridge's responses to High Prairie, including profits lost by stopping oil flow from Canada into Minnesota in order to accept the smaller company's crude and the need to predict long-term Bakken production.

"We have not denied a connection" to High Prairie, Enbridge spokeswoman Lorraine Little said via email. "However, we would need to build additional facilities and we need assurance that the capital will be recovered through a commitment that [its parent company] will in fact use the facilities once they are in place."

Blackburn questioned what he described as an industrywide treatment of Bakken producers as "the poor stepchild" of the heavy Canadian oil sands crude producers, whose emissions-intensive fuel has drawn stinging resistance from environmentalists.

"Instead of planning ahead, asking, 'How do we integrate Bakken flows with Canadian flows?' it's done by whoever has most power and/or money," he said.

Jurisdictional brawl

High Prairie and Enbridge are also embroiled in a larger fight over which agency, if any, has the authority to force the Bakken interconnection.

High Prairie asked the Federal Energy Regulatory Commission and the Forest Service earlier this year to force Enbridge to eradicate the alleged discrimination. FERC should act to create a "level playing field" for all market participants, the company said, arguing that the agency has clear authority to address "discriminatory" behavior.

Enbridge, on the other hand, said its 1,900-mile main line won't have the capacity to accommodate the U.S. crude by the time the proposed pipeline is built. The company has also dismissed claims it is holding capacity for crude derived from Canadian oil sands, charging that a link between the High Prairie pipeline to its system would constrain capacity on its pipelines between Clearbrook and Superior, Wis.

That section of its system ships mainly Bakken crude and Canadian oil sands crude.

North Dakota oil producers, American Indian tribes and refiners have also lined up to support High Prairie's request and are demanding that FERC force Enbridge to comply.

The issue is also gaining attention on Capitol Hill. Rep. Collin Peterson (D-Minn.) last month asked FERC Chairman Jon Wellinghoff to ensure producers of Bakken crude have sufficient pipeline capacity and can link up to Enbridge's system (Greenwire, July 20).

But FERC has indicated it may not have the authority to weigh in on the issue. In a related tariff proceeding, the commission said it was not authorized to force Enbridge to connect with High Prairie's proposed pipeline and High Prairie is not a current or prospective shipper that would be protected by the anti-discrimination provisions of the Interstate Commerce Act.

Even so, Greg Ward, High Prairie's vice president and general counsel, said he is hopeful FERC will reverse that decision. If not, the High Prairie pipeline could be delayed past its projected in-service date of 2013 or scrapped completely. High Prairie is also involved in ongoing discussions with the Forest Service, he said.

"With all the paperwork that's now come out, all the support ... I'm anticipating now that FERC sees the big picture, we'll get a different review," he said.

Click here to read High Prairie's petition to the State Department.