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Trans-Mountain Pipeline to Squeeze Flows to US Refiners

OIL

Canada’s Trans-Mountain pipeline (TMX) expansion will almost triple the flow of crude to Canada’s Pacific coast from 2024, diverting crude from refiners in the US mid-west and Gulf Coast, according to Reuters.

  • This could add as much as $2/b to prices paid by U.S. Midwest oil refineries that sit along Canada's existing main oil-export route according to Reuters.
  • "They will be competing for barrels that no longer transit through their region," a Calgary-based oil trader told Reuters. "The market will have to reshuffle."
  • Pipeline operator Enbridge expects flows on its Mainline system drop by 300k b/d once TMX operations begin.
  • Once operational, Canada could ship an extra 590k b/d to Pacific ports for delivery to U.S. West Coast and Asia refiners, where long-term demand for heavy sour crude is expected to grow.
  • TMX will make Canadian crude "re-exports" from the Gulf Coast less viable. Over 200k b/d of Canadian crude has been re-exported from the USGC so far in 2023, compared to 73k bpd in 2019, Kpler data showed.

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