From Bloomberg via Yahoo Finance, September 21:
Canada, home to the world’s third-largest crude deposits, is poised to reshuffle global oil flows next year.
The nearly completed expansion of the Trans Mountain pipeline promises to vault Canada into a new role in global markets by transporting an additional 600,000 barrels a day — on par with the daily output of Azerbaijan — from the country’s vast oil sands to a port on the Pacific Coast.
For Canada’s producers, the government-owned project offers a chance to break their almost total dependence on exports to the US and win higher prices for their crude. For global markets, the Trans Mountain expansion represents a new source of the heavy, sludgy oil that advanced refineries in India and China crave for producing transportation fuels and asphalt.
The project — which essentially twins an existing 1950s-era pipeline — had been expected to start operating the first quarter of next year, but technical challenges in tunneling along a 1.3-kilometer (0.8-mile) stretch have forced the company to seek changes that could delay the startup. A postponement would be an unwelcome development for a project that already has been delayed for years — and seen its costs balloon — because of opposition from environmentalists and indigenous groups.
Here’s a look at the mega pipeline as the in-service date approaches, whenever that may be.
1. What is the Trans Mountain pipeline?Trans Mountain is a 715-mile pipeline that runs through the Canadian Rockies’ vast swathes of pine trees on its route from landlocked Alberta to the west coast city of Vancouver. The original line, Canada’s only pipeline to the Pacific, is 70 years old and supplies oil mainly to refineries in British Columbia and Washington State. Twinning the line will boost capacity to 890,000 barrels a day from about 300,000 barrels currently.The project faced multiple setbacks in the seven years since it was first approved amid opposition from environmental groups concerned about the effect of increased ship traffic on killer whales and indigenous communities that worry that the line could sully their land.
In 2018, original owner Kinder Morgan Inc. threatened to cancel the expansion, prompting Prime Minister Justin Trudeau to buy the system for C$4.5 billion ($3.3 billion) to save it from the scrap heap. Since then, floods, worker shortages and fatalities, as well as the Covid-19 pandemic, have caused the project’s cost to quadruple to almost C$31 billion and delayed the startup by about two years.
2. Where will the oil go?It remains to be seen whether Trans Mountain will fulfill its goal of breaking Canada’s dependence on US buyers for its oil.While the expansion was intended to bring Canadian crude to Asia, some traders and analysts say the natural destination for the crude are the dozen refineries along the US Pacific Coast owned by the likes of Chevron Corp., BP Plc and Marathon Petroleum Corp. Those facilities currently source much of their feedstock from Saudi Arabia or Iraq, which takes 30 days to arrive on the ocean, versus about four days of sailing from Vancouver, where Trans Mountain ends....
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