Released May 01, 2024 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Almost 11 years and US$24.9 billion after original owner Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) applied to Canada's National Energy Board to build a complement to the original Trans Mountain Pipeline, the Trans Mountain Expansion (TMX) is expected to begin transporting oil to the Westridge Marine Terminal in the Port of Vancouver, British Columbia on May 1. Kinder Morgan submitted its original application on June 18, 2013, and the last weld was performed April 16 this year.
Its capacity of 590,000 barrels per day (BBL/d) won't likely be reached right away, said Industrial Info's senior director, Energy Market Intelligence, Hillary Stevenson, who cautioned, "Flows will be constrained by downstream shipping logistics." Indeed, it is expected to be the second half of May before any ships actually load crude oil from the line.
When operating at full capacity, it will more than double Trans Mountain's exports to Canada's West Coast, adding to the existing line's 300,000-BBL/d flow. TMX is expected to carry primarily heavy oil sands crude, while its older twin carries lighter crude.
Where Will the Crude Go?
West Coast Canadian exports largely go to China and California. In fact, the first two tankerloads are scheduled to head toward the former. But due to the difference in shipping costs between China and California, many barrels are expected to be California bound, said Stevenson.
Buyers are already lined up in India as well, said Industrial Info's Geoffrey S. Lakings. He cited reports that Indian refiner Reliance Industries Limited (Mumbai) has purchased 2 million barrels for delivery in July, at a discount of US$6 per barrel compared to September Brent.
To make room for more Canadian oil in California, other imports will need to be adjusted down, and Stevenson said she believes imports from Ecuador will be shifted from there to the U.S. Gulf Coast. There is concern that the opening of TMX could reduce the amount of oil available to existing midwestern carriers like Keystone, which deliver crude as far as the U.S. Gulf Coast. So diverting Ecuadoran crude there instead could make up for a loss in pipeline deliveries.
In the long run, having enough to go around may not be an issue, some believe, because in the 11 years since the pipeline's first application was filed, Canadian production has increased, and that growth has previously been somewhat stymied by pipeline backlogs.
In 2023, Canada's oil production reached an all-time high for the third consecutive year, and analysts at TD Bank expect that growth to continue in 2024, especially with the opening of TMX. As a result, many have said that there will be plenty of Canadian oil to go around to all pipelines and rail transports.
Canada is by far the largest oil exporter to the U.S., sending more than 3.5 million barrels stateside the first week of April this year--mostly by pipeline. Ecuador came in fourth that week, at 231,000 barrels.
Selling the Pipeline Itself
In 2018, after already seven years of delays due to regulatory, environmental, and the concerns of Indigenous peoples, the Canadian government bought the pipeline from Kinder Morgan for C$4.5 billion.
Just two days after the last weld was completed, Canadian Finance Minister Chrystia Freeland announced the government's plan to sell the line in the near future. Because it is likely to command a much smaller price than what the government paid to purchase and complete it, analysts feel the process could be about as complicated as negotiating a Middle East ceasefire.
While almost no one wants the government to own a crude oil pipeline, the terms of the sale will be debated by a number of competing interests, analysts say. Those in the above list--regulators, environmental organizations, Indigenous peoples, along with taxpayers who'll foot the bill for the expected sales price deficit--are among those likely to have clear expectations of the sale and of the buyer.
At least, once it begins operating, there should be a significant revenue stream to begin a return on investment for the buyer.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipeline Project Database can click here for a list of detailed TMX-related projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Its capacity of 590,000 barrels per day (BBL/d) won't likely be reached right away, said Industrial Info's senior director, Energy Market Intelligence, Hillary Stevenson, who cautioned, "Flows will be constrained by downstream shipping logistics." Indeed, it is expected to be the second half of May before any ships actually load crude oil from the line.
When operating at full capacity, it will more than double Trans Mountain's exports to Canada's West Coast, adding to the existing line's 300,000-BBL/d flow. TMX is expected to carry primarily heavy oil sands crude, while its older twin carries lighter crude.
Where Will the Crude Go?
West Coast Canadian exports largely go to China and California. In fact, the first two tankerloads are scheduled to head toward the former. But due to the difference in shipping costs between China and California, many barrels are expected to be California bound, said Stevenson.
Buyers are already lined up in India as well, said Industrial Info's Geoffrey S. Lakings. He cited reports that Indian refiner Reliance Industries Limited (Mumbai) has purchased 2 million barrels for delivery in July, at a discount of US$6 per barrel compared to September Brent.
To make room for more Canadian oil in California, other imports will need to be adjusted down, and Stevenson said she believes imports from Ecuador will be shifted from there to the U.S. Gulf Coast. There is concern that the opening of TMX could reduce the amount of oil available to existing midwestern carriers like Keystone, which deliver crude as far as the U.S. Gulf Coast. So diverting Ecuadoran crude there instead could make up for a loss in pipeline deliveries.
In the long run, having enough to go around may not be an issue, some believe, because in the 11 years since the pipeline's first application was filed, Canadian production has increased, and that growth has previously been somewhat stymied by pipeline backlogs.
In 2023, Canada's oil production reached an all-time high for the third consecutive year, and analysts at TD Bank expect that growth to continue in 2024, especially with the opening of TMX. As a result, many have said that there will be plenty of Canadian oil to go around to all pipelines and rail transports.
Canada is by far the largest oil exporter to the U.S., sending more than 3.5 million barrels stateside the first week of April this year--mostly by pipeline. Ecuador came in fourth that week, at 231,000 barrels.
Selling the Pipeline Itself
In 2018, after already seven years of delays due to regulatory, environmental, and the concerns of Indigenous peoples, the Canadian government bought the pipeline from Kinder Morgan for C$4.5 billion.
Just two days after the last weld was completed, Canadian Finance Minister Chrystia Freeland announced the government's plan to sell the line in the near future. Because it is likely to command a much smaller price than what the government paid to purchase and complete it, analysts feel the process could be about as complicated as negotiating a Middle East ceasefire.
While almost no one wants the government to own a crude oil pipeline, the terms of the sale will be debated by a number of competing interests, analysts say. Those in the above list--regulators, environmental organizations, Indigenous peoples, along with taxpayers who'll foot the bill for the expected sales price deficit--are among those likely to have clear expectations of the sale and of the buyer.
At least, once it begins operating, there should be a significant revenue stream to begin a return on investment for the buyer.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipeline Project Database can click here for a list of detailed TMX-related projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
