Canada’s ambitious Trans Mountain Pipeline expansion project is inching towards completion, with reports indicating that over 95% of the work has been accomplished. The venture, owned by the Canadian government and overseen by the Trans Mountain Corporation (TMC), seeks to significantly amplify the current pipeline’s capacity from 300,000 barrels per day (b/d) to an impressive 890,000 b/d. This strategic move aims to facilitate the transportation of crude oil from the oil sands in Alberta to Canada’s Pacific Coast, opening new avenues for exports to Asia and the U.S. West Coast.
Originally anticipated to be operational early this year, the project faces potential setbacks, with a recent ruling posing a threat of up to a two-year delay, as communicated by the project’s ownership.
The existing Trans Mountain Pipeline currently serves as a crucial channel for waterborne crude oil exports from Canada, traversing from Edmonton in Alberta to the port of Burnaby near Vancouver in British Columbia. The expansion project, aligning with the existing pipeline’s route, has encountered legal challenges from environmental activists and Canadian First Nations groups.
In 2018, the Canadian government acquired the Trans Mountain Pipeline from Kinder Morgan for CA $4.5 billion, establishing the Trans Mountain Corporation to manage both the existing pipeline and the expansion project. Despite legal hurdles, the project has made substantial progress, driven by the necessity to accommodate the growing crude oil production in Canada.
Canada’s crude oil production has experienced a steady rise over the past 13 years, reaching an average annual production of nearly 2.0 million b/d between 2009 and 2019. The COVID-19 pandemic temporarily disrupted this trend in 2020, causing a decline in crude oil prices and production. However, as of 2022, Canada’s crude oil production has rebounded, surpassing pre-pandemic levels and averaging 4.9 million b/d, according to data from the Canada Energy Regulator (CER).
The epicenter of this production surge is Alberta, a landlocked province that contributed 82.7% to Canada’s total crude oil production in 2022, up from 76.1% in 2012. Notably, the majority of Canada’s crude oil exports currently flow to the United States, with imports averaging around 3.7 million b/d since 2020. This constitutes approximately 79% of Canada’s total crude oil production during this period. The U.S. Midwest and Gulf Coast refineries are the primary recipients of these crucial imports.
Despite the substantial progress, a recent decision by the Canada Energy Regulator (CER) on December 5 to deny a variance request from Trans Mountain threatens to delay the project’s start date. In response, Trans Mountain has indicated that the potential delay could extend up to two years, underscoring the complex landscape of legal and regulatory challenges facing this critical energy infrastructure endeavor.