The Canadian oil industry has eagerly awaited the completion of the Trans Mountain expansion, which would add 590,000 bpd to capacity, opening up international markets to Canadian crude from the country’s west coast.1)
There are no other oil pipeline projects in the works in Canada and even the progress of the Trans Mountain expansion is something of a miracle after a series of delays and legal challenges from activists. These delays and challenges led to a sixfold increase in the project’s cost, from an original $3.4 billion to as much as $23 billion.2)
The pipeline, whose new total capacity will be close to 900,000 barrels daily, is slate to be put into operation later this year, with producers hoping this will help shrink the discount that Canadian crude has been suffering from to WTI because of transportation challenges.3)
For those not familiar, Trans Mountain is a pipeline that transports Canadian crude oil to the Pacific Coast port near Vancouver. The Canadian government twinned the existing line, which effectively amplifies overseas access to landlocked oil from Alberta. The first cargo from the line was sold this week.
The drillers are asking Trans Mountain to lower the vapor pressure and acid levels of the crude it will allow to pass through the line, saying that the current limits are reducing the value of the oil that’s shipped and restricting where it can be refined. Trans Mountain, which is owned by the Canadian government, didn’t immediately respond to an email seeking comment.4)
Chevron, a buyer of crude off the line, said in a letter filed with the Canada Energy Regulator Friday that the vapor pressure limit exceeds US Environmental Protection Agency caps on storage tanks at California refineries.5)
Oil-sands giant Suncor said in a regulatory filing that the high vapor pressure limit means companies will blend lower value hydrocarbons with the crude that is injected into Trans Mountain, reducing the value of the oil shipped on the line, .6)