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Canadian Heavy Oil Prices Jump as Trans Mountain Nears Start-Up






Trans Mountain Corporation will start filling the expanded Trans Mountain pipeline will oil in February and expects to have first crude loaded from Vancouver in April, company executive Jason Balasch said, after the project cleared earlier this month its last big hurdle to start-up.

Trans Mountain Corporation, the government-owned entity managing and executing the project, expects the expanded pipeline to start operations in the second quarter of the year, Balasch, senior director of business development, said at the Argus Crude Summit in Houston.

The news sent the price of Western Canadian Select higher on Wednesday, to the narrowest discount to West Texas Intermediate since August 2023.

The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.

The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).

The expansion project has also faced continuous delays over the years. The latest roadblock emerged in December when the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.
The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.

“Additional pipeline capacity to move oil out of the province next year is expected to support Alberta oil prices and narrow the discount between WTI and the Western Canadian Select (WCS). The completion of TMX in the second half of 2024 will help bring the differential to around US$14-15/bbl in the next two fiscal years,” Alberta’s government said in its 2023-24 Mid-year Fiscal Update and Economic Statement in November.

“Increased takeaway capacity will help propel Alberta’s crude oil production from nearly 3.8 million barrels per day (bpd) in 2023 to over four million barrels bpd by 2026,” the provincial government said.

By Tsvetana Paraskova for Oilprice.com



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