Concerns have arisen among some shippers involved in Canada’s Trans Mountain expansion project regarding the potential delay in achieving full service by the projected start date of May 1. According to a letter addressed to the Canada Energy Regulator (CER) on Tuesday, certain sections of the pipeline are still awaiting authorization to open, leading to uncertainties about the pipeline’s ability to deliver contracted crude volumes from the specified date.
Trans Mountain Corp informed Reuters via email that all shippers will be subject to the expanded system’s tolls and tariffs from May 1, with line fill on the expanded pipeline anticipated to be completed in early May. However, shipper Suncor Energy SU.TO, in a letter to the CER, expressed reservations about the pipeline’s readiness to provide Firm Service by May 1, potentially affecting the obligation to pay tolls from the start of the following month. The letter, also representing other shippers such as BP BP.L and Marathon Petroleum MPC.N, highlighted the possibility of the facilities not being fully capable of providing Firm Service by the specified time.
The C$30.9 billion ($22.62 billion) project, acquired by the Canadian government in 2018 to ensure its progression, aims to transport an additional 600,000 barrels per day (bpd) of oil from Alberta to Canada’s Pacific coast. Despite facing regulatory delays and cost overruns, the project holds significant importance for Canadian oil producers as it promises access to export markets on the U.S. West Coast and Asia, potentially reducing the price discount on Canadian heavy crude compared to the U.S. benchmark oil.
Furthermore, a number of contracted shippers are currently engaged in disputes with Trans Mountain over tolls on the expanded system, citing concerns about substantial cost increases. The company is also contending with several complaints from its shippers, who have secured 80% of the expanded pipeline’s volume.
In a separate filing on April 12, Canadian Natural Resources Ltd CNQ.TO, backed by Suncor and Imperial Oil IMO.TO, raised objections to the vapor pressure limit on the expanded pipeline, arguing that it would negatively impact the sales price of the crude.
Additionally, Trans Mountain stated that the first ship carrying crude from the pipeline expansion is expected to load in the latter half of May. The Westridge Marine Terminal in the Port of Vancouver, the pipeline’s termination point, is equipped with three berths capable of loading vessels with oil, with a maximum capacity of 630,000 bpd or 34 partially laden Aframax-sized tankers per month.
“On average, we anticipate one empty tanker in, one partially laden tanker out every day with variability throughout the year,” a Trans Mountain spokesperson mentioned in an email on Tuesday.