Energy infrastructure company Ducere has accused ExxonMobil and Enbridge of conspiring to maintain a monopoly over crude oil transportation in the Chicago area and blocking its planned terminal it said would have created a cost-effective alternative to shipping oil via pipeline.
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Register NowDucere's complaint, filed Feb. 13 with the US District Court for the Northern District of Illinois, alleges anticompetitive behavior that excluded potential rivals from entering the midstream industry, in which the transport of crude produced in North Dakota and Alberta, Canada is dominated by Enbridge's pipelines (Ducere v. Enbridge, et al, 1:24-cv-01217).
Movement of crude oil by barge was characterized as "vastly underutilized" in the antitrust lawsuit. The outcome of the case could ease entry for new shipping competitors and spur greater use of other transport methods in the oil market.
Ducere told the court that it approached Mustang Pipe Line, a joint venture of ExxonMobil and Enbridge, in early 2020 about connecting a terminal to the pipeline that would allow crude to be shipped on barges down the Chicago Sanitary and Ship Canal for eventual delivery to refineries in the southern Midwest and Gulf Coast.
Mustang was receptive of the idea leading to the execution of a confidentiality agreement with ExxonMobil in August 2020 and fully negotiated agreements with Mustang that were ready to be signed in October 2022, according to Ducere. The company said it also spent more than $11 million over three years preparing to build the terminal as it obtained consultant reports, engineering reports and market studies as well as secured permits, a right-of-way for the delivery pipeline and an option to lease the land needed for the terminal.
'Group boycott'
But in March 2023, Mustang's board, which consists of two representatives from ExxonMobil and two from Enbridge, "abruptly reneged on their agreements without explanation," deciding not to move forward with the project.
"Enbridge killed this vital project when it realized that Ducere's venture could result in Enbridge losing its monopoly power over crude oil transportation in the Chicago area," Ducere said in court documents. "It directed Mustang to thwart Ducere's planned construction of a terminal connection and improperly refused to deal with Ducere on the matter. This conduct represents anticompetitive behavior that violates antitrust laws."
ExxonMobil had not responded to a request for comment as of press time and a spokesperson for Enbridge said the pipeline operator had not yet been served or received notice of the lawsuit so declined to comment until such time. The district court docket said a summons was issued Feb. 14 to all defendants.
Among the allegations in Ducere's complaint is that Enbridge and ExxonMobil engaged in "group boycott" by contracting with each other to form Mustang "to deny others the ability to move crude oil from Alberta and North Dakota to refineries in the Midwest and Gulf Coast regions."
The company added that the defendants harmed interstate commerce by refusing to allow other competitors into the oil transportation market in Chicago. It further alleges that Enbridge "pressured and intimidated Mustang into not doing business with Ducere" in order "to end any chance that Ducere ... could compete with Enbridge."
Crude by barge
For oil that enters the Chicago area and is not refined there or sent east, there are four pipelines that can transport the fuel south to the Gulf Coast. Enbridge fully owns two to those lines, is a majority stakeholder in the third, and owns 30% of the fourth – Mustang Pipeline, of which ExxonMobil owns the other 70%.
When demand exceeds pipeline capacity, "one delivery option that is seldom used is moving crude along the US' inland waterways," with Congress directing the Transportation Department to study the economic effects of better utilizing inland waterways, Ducere said.
It added that its terminal project "would increase the capacity for crude oil transportation as well as reduce the amount of crude oil that is needed to travel by rail."
Notably, "Enbridge enjoyed overwhelming demand from customers to sign long-term contracts to ship crude oil on its pipelines south of the Chicago area" in May 2023, just months after the Mustang board killed the terminal project, Ducere asserted.
It is asking the court to award it damages of an unspecified amount for the project costs it incurred and lost future profits; disgorge revenues Enbridge receives from the Flanagan South Pipeline Expansion open season held in November for 110,000 b/d; and issue an injunction requiring Mustang to enter into and abide by the drafted agreements for the terminal.