<article><p class="lead">Canadian producers are eyeing increased access to the Asia-Pacific market as a new crude pipeline to the Pacific coast inches closer to becoming reality.</p><p>The Trans Mountain expansion (TMX) will add 590,000 b/d of pipeline capacity from western Canada and is expected on stream in December 2022. The project, catering for heavy crude, will nearly triple the capacity of the present 300,000 b/d line, which runs from Edmonton, Alberta, to Burnaby, British Columbia, on Canada's west coast. It will be the first pipeline in decades to offer meaningful access for Canadian producers to new markets without needing to go through the US and could enable a near 600,000 b/d increase in Alberta heavy crude shipments to the coast and then to China — assuming that the crude is available and demand from west coast refiners has been satisfied.</p><p>The 1,150km project is owned by the federal government, after it bought the line from Kinder Morgan in 2018.</p><p>Over half the flows shipped along Trans Mountain at present go to refineries in Washington state by way of the Puget Sound System, with the balance going to a refinery in Burnaby and the Westridge Marine Terminal and small quantities sent to terminals throughout British Columbia. </p><p>Capacity at the Westridge Marine Terminal is due to increase from one berth to three, enabling it to accommodate up to 34 tankers a month, although it will still only be able to handle Aframax-size vessels, as larger tankers are not allowed in the Port of Vancouver. The cost of shipping heavy crude from Vancouver to China at current rates derived by Argus is just over $2/bl, comparable to a voyage from the US Gulf coast to China albeit on a smaller vessel than a 2mn bl very large crude carrier (VLCC). Shipments from Vancouver take 16 days to get to China, compared with 45 days for a VLCC departing from the US Gulf coast. </p><p>The extra crude for the pipeline will be available, producers say. Around 10 prominent Canadian crude producershave already committed to ship crude on TMX for 15 or 20 years, accounting for 80pc of the line's capacity. These include Canadian Natural Resources, Suncor, Cenovus and Imperial, and make up nearly 80pc of Alberta's 3.6mn b/d of production. PetroChina is also signed up as a shipper as is MEG Energy, which is 12pc owned by CNOOC.</p><h3>Capacity constraints</h3><p class="lead">Aside from Trans Mountain, Canadian crude is exported along Enbridge's 2.85mn b/d Mainline system, TC Energy's 590,000 b/d Keystone line, Enbridge's 310,000 b/d Express system and by rail, mainly to the US. These pipelines are running at capacity — export line congestion has been a feature of the Canadian crude market for some time. Enbridge had to reject 54pc of requests for space on its heavy crude pipelines in August, and inventories in Alberta remain near record highs as producers finish maintenance programmes. </p><p>Some relief is on the way, with Enbridge close to completing its Line 3 Replacement Project, raising capacity along the line to Wisconsin to 760,000 b/d from 390,000 b/d. The project is on track to start up in the fourth quarter. Enbridge expects the expanded Line 3 and TMX to fill up "relatively quickly" as western Canadian producers have been waiting for more pipeline space and are ready to boost output by 400,000-500,000 b/d when that happens, Enbridge chief executive Al Monaco says. There is "a significant amount of heavy crude wanting to come to market" from producers that has not started up yet, he says.</p><p>More expensive crude-by-rail shipments could ease as the new capacity comes on stream, although these deliveries will still play a role in markets without pipeline connectivity and for undiluted bitumen that cannot go by pipeline.</p><p class="bylines"><i>By Brett Holmes</i></p></article>
