Canada’s Pipeline Problems Continue

1 Jun 2018: This week, the Canadian federal government announced that they are buying the Trans Mountain pipeline system and its expansion project from current owner Kinder Morgan for C$4.5 billion. The expansion itself (if it goes ahead) is expected to cost an additional C$7.4 billion. It is the latest chapter in a story that has taken many twists and turns. At this moment, the Trans Mountain system expansion project (TMEP) has received a lifeline from the Canadian government, which became necessary after Kinder Morgan strongly considered pulling out of the project. The Trans Mountain pipeline is the only Canadian pipeline that moves domestic crude to the country’s coastline for exports. While its capacity is 300,000 b/d, some 74% (221,000 b/d) of the throughput of the Trans Mountain pipeline is allocated to refineries with connections in British Columbia and Washington State. Only about 80,000 b/d is allocated to the Westridge Terminal in Burnaby, British Columbia (near Vancouver). This is enough to load one Aframax (the maximum vessel size for this facility) per week. This is only a trickle when compared to Canada’s oil production which, in March 2018, held steady near a record 5.2 million b/d (IEA). Even if the Trans Mountain expansion goes ahead, tanker exports will remain relatively small.

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