Trans Mountain’s Expanded Oil Pipeline to Start Operations on May 1st

After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the same-name state-owned company said this week.

Trans Mountain has yet to obtain some approvals from the Canadian Energy Regulator, the company said.

The expansion project sought to boost the capacity of the Trans Mountain pipe to 890,000 bpd. Oil producers welcomed the plan as they were expanding their output while markets for it remained limited to the U.S.

Environmentalists, however, were very much not on board with the expansion project and staged protests that enjoyed the support of some politicians, including the former government of British Columbia where the expanded pipeline would end, opening up international markets to Canadian oil drillers from the port of Vancouver.

The radical difference in positions among interested parties almost pushed Alberta and British Columbia into a trade war at one point and ended up forcing Kinder Morgan, the original owner of the pipeline, to quit and sell it to the Canadian federal government.

Notorious for its antagonistic stance on oil and gas, the government nevertheless recognized the need for more pipeline capacity and took it upon itself to make the expansion project work. It took years and a sharp jump in the price tag from $33 billion when it bought the pipeline to $53 billion by 2023.

What’s more, some analysts warn that drillers won’t really have time to enjoy the extra capacity because production is rising fast. The TMX expansion will add 590,000 bpd to the pipe’s capacity, but production from the oil sands alone is set to rise by 375,000 bpd this year and next, per a recent Reuters report. And production growth will continue in the coming years, too, analysts note, quickly filling up the available pipeline capacity.

By Irina Slav for Oilprice.com

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