Exports from the expansion of Canada's TransMountain pipeline expansion project that launched on Wednesday may come in at only half of what the federal government is projecting, Canadian media have quoted traders and shippers as saying, citing loading restrictions and pilot and tub boat availability.
The Canadian government has projected that the TransMountain pipeline expansion project, which cost nearly $23 billion to complete, 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.
After a series of delays, cost-overruns, and legal challenges, the Canada Energy Regulator (CER) on Tuesday issued the final permits for the launch of operations for the Trans Mountain Expansion Project (TMEP), authorizing the pipeline to carry crude oil from Trans Mountain's Edmonton Terminal in Alberta to its Westridge Marine Terminal in Burnaby, British Columbia.
With first exports from the project starting on May 1, traders and shippers have told Reuters that logistical challenges at the Port of Vancouver could cut this guidance in half, with unnamed sources saying that Trans Mountain's capacity to load 34 Aframax ships a month may be unrealistic.
Ship brokers told Reuters that due to the lack of availability of pilot and tub boats, combined with loading restrictions, the more likely ship volume will be around 20 Aframaxes, which will be restricted to loading 550,000 barrels instead of their 800,000-barrel capacity.
"Theoretically they can handle the volumes, but auxiliary or secondary services are not ready for huge volumes," Reuters cited Rohit Rathod, senior oil market analyst at ship tracking firm Vortexa, as saying on Wednesday.
Loading restrictions include daylight-hour-only tanker loadings and tidal current schedules.
The government's projections, which are now being challenged by traders, analysts and ship brokers interviewed by Reuters, are against the backdrop of major cost overruns since Canada reacquired the pipeline expansion project from Kinder Morgan in 2018 for $3.3 billion, with project costs bloating another $20 billion since then.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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