Trans Mountain Pipeline Expansion To Increase Crude Cost for US Refiners

Canadian crude is expected to get more expensive for US Midwest refiners when the Trans Mountain crude pipeline expansion (TMX) starts next year according to industry consultant Turner, Mason & Co. The project is expected to start shipping oil in the first quarter of 2024.

• The pipeline expansion will enable Asian customer to compete for crude shipments forcing higher bids from US refiners for the heavy crude.
• TMX is designed to enable heavy crude flows from Alberta to Canada’s Pacific Coast opening up opportunities for more exports to Asia. The pipeline will increase the nominal capacity of the system from approximately 300kbpd to 890kbpd.
• Within a year or so of the startup, the discount at which Canadian heavy oil trades to the benchmark could shrink by roughly 4$/bbl according to industry consultant Turner, Mason & Co.
• Heavy crude demand is already increasing with new refining capacity in Asia and the Middle East able to process the crude grade. Canadian production of heavy oil is not expected to grow substantially in the short term.