Crude oil tankers docked at the Trans Mountain Westridge Marine Terminal, where crude oil from the expanded Trans Mountain Pipeline is loaded onto tankers, in Burnaby, B.C., in June, 2024.DARRYL DYCK/The Canadian Press
As Alberta, Saskatchewan and the oil and gas industry push for a new pipeline to transport fossil fuels to coastal ports for export, a new analysis from the Canada Energy Regulator shows there is still excess capacity on the expanded Trans Mountain system.
Over all, however, oil export pipeline capacity from Western Canada continues to be highly utilized, the CER says. And oil production from the oil sands is only projected to increase.
Shippers with long-term contracts make up the bulk of Trans Mountain’s customers. Numbers from the CER show they have taken advantage of the newly opened capacity, filling roughly 99 per cent of their allotted space each month.
The Trans Mountain expansion, the most expensive infrastructure project in Canadian history, began as an attempt to provide a simple transport route to the West Coast for growing oil production. A dozen years and $34-billion later, the government-owned pipeline can carry an additional 590,000 barrels a day from Edmonton to Burnaby, B.C.
Since the taps for Trans Mountain were turned on in May, 2024, the space crunch has eased on all of Canada’s largest export pipelines. And Canadian crude oil exports to countries other than the United States have more than tripled, with most of it headed to Asia.
Meanwhile, crude-by-rail exports have fallen to levels not seen in more than a decade – and even so, there is still spare pipeline capacity, according to the CER.
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Still, the system has been more than three-quarters full every month since it came online, aside from the ramp-up period in May, 2024. From the next month through to this June, utilization averaged 82 per cent, ranging from a low of 76 per cent in December, 2024, to a high of 89 per cent in March.
Roughly 80 per cent of Trans Mountain’s capacity is reserved for committed shippers with long-term contracts. The rest is available on a monthly basis for uncommitted (also known as spot) shippers.
While Trans Mountain historically transported mostly light oil before its expansion, heavy oil is now close to matching light oil volumes, according to the CER.
Light oil and refined products are being delivered to Burnaby, mostly to serve Parkland Corp.’s PKI-T refinery there and Suncor Energy Inc.’s SU-T Burrard Products Terminal. The system’s Sumas delivery point in Abbotsford, B.C., which connects with the downstream Puget Sound Pipeline for deliveries of crude oil to Washington State refineries, has continued to be at capacity, the CER said.
The Trans Mountain system has also boosted Canadian crude prices, relative to international benchmarks, with the value of Western Canadian Select rising by about US$6.70 a barrel.
The difference between the price of West Texas Intermediate (a North American benchmark) and heavy Canadian oil has narrowed significantly by about US$12 a barrel since the expanded pipeline system came online, the CER said.
Despite the “significant economic benefits” provided by the expanded system – including revenues for government coffers – a further reduction in the differential would be unlikely with a new pipeline, according to a recent report by the research arm of Alberta Central, the central banking facility and trade association for the province’s credit unions.
Thus, “it would be a mistake to suppose that another pipeline would provide benefits in the same order of magnitude,” that report noted.
“WCS will always sell at a discount relative to WTI because of the difference in grade. The main benefit of the new pipeline would be to prevent a rewidening of the oil price differential, as oil production increases.”