On The Hunt – Trans Mountain Expansion Will Pose a Test for U.S. Refiners in

The impending startup of Canada’s government-owned Trans Mountain Expansion Project, better known as TMX, will add exit capacity for Western Canadian crude oil production and is expected to redirect at least some of Alberta’s output toward California and Asia and away from its traditional North American markets, including complex refiners in Eastern Canada and the U.S. Midwest and Gulf Coast. Among them, Gulf Coast refiners, who have become the “price-setting” consumers of heavy Western Canadian crude, are expected to be the hardest hit. In today’s RBN blog, we examine the Gulf of Mexico production and imported grades that might become stand-ins for the “lost” Canadian barrels. 

The TMX project aims to add 590 Mb/d of egress capacity for heavy crudes emerging from Western Canada after twinning the existing Trans Mountain Pipeline (TMP). As discussed at length in West Coast Pipe Dreams, the Trans Mountain system’s former owner, Kinder Morgan, had promoted the TMX project to the industry more than a decade ago, but only began construction after getting regulatory approvals from the National Energy Board (the predecessor of the Canada Energy Regulator, or CER) in May 2016; Canada’s federal government gave its blessings later that year (see One is the Loneliest Customer).

Figure 1. Major Crude Oil Pipelines Linking Canada to the U.S. Gulf Coast. Source: RBN