The expansion of the Trans Mountain oil pipeline (TMX) has led to a competitive shift in the Canadian crude oil transportation market, prompting rival pipelines to reduce their rates and adjust their strategies. With TMX now operational, transporting up to 890,000 barrels per day (bpd) to Canada’s Pacific Coast, U.S. imports of Canadian crude reached record levels in July.
In response to increased competition, Enbridge announced an 11% reduction in tariffs for September on heavy crude transported via its Mainline system, which is a major competitor to TMX. This marks the first time in over a year that Enbridge will not ration pipeline space, indicating sufficient capacity to accommodate all nominated barrels.
As TMX volumes grow, analysts predict that other pipelines, such as Enbridge’s Spearhead and Flanagan South, may experience reduced flows, particularly as Canadian oil output is expected to rise significantly. Despite this, the Seaway pipeline, which transports oil from Cushing to the U.S. Gulf Coast, remains well-utilized.
The TMX expansion, delayed previously, has allowed Canadian producers to ramp up supply, with projections indicating an increase of about 500,000 bpd in output by 2025, which could offset the additional capacity provided by TMX. Analysts suggest that excess pipeline space will soon be filled as production continues to rise.