Smooth Sailing

Oct 11th, 2024:Taking stock of the TMX expansion The Trans Mountain Expansion (TMX) pipeline exported its first crude oil cargo from the Westridge terminal in Burnaby, British Columbia, in May of this year. Now, some 5 months later, it is time to take a preliminary look at the impact that this important new export outlet on the west coast of the Americas is having on the oil and tanker markets in the Pacific. Did the oil flows change the way we anticipated, i.e. is the crude going where we thought it might go or have we seen unexpected developments? Let’s dig into the details and see what patterns have emerged so far. A quick primer for those readers that are not familiar with the TMX pipeline. This pipeline has been around for a long time. The Trans Mountain Pipeline Company was established in 1951 after significant oil deposits were discovered in Alberta in the late 1940s. Construction of the pipeline began in February 1952 and the first shipment reached the terminal in Burnaby in October 1953. The initial capacity of the pipeline was 150,000 b/d. Over the decades, the pipeline was expanded serval times and by 2008, the capacity had grown to 300,000 b/d. However, oil production in Alberta continued to grow and in 2012, Kinder Morgan Canada announced plans to expand TMX to 890,000 b/d. The project ran into significant delays due to opposition from indigenous and environmental groups. Faced with massive cost overruns, Kinder Morgan sold TMX to the Canadian government. In May 2024, the project was finally completed. Infrastructure constraints restrict the export terminal to the use of Aframax tankers. These restrictions were expected to have an impact on the competitiveness of Canadian crudes in long-haul markets such as China and India, relative to short-haul destinations on the U.S. West Coast. Please fill below form to continue read.