Canada’s Trans Mountain eyes future growth in pipeline capacity

The operator of the Trans Mountain oil pipeline is considering launching a formal process later this year to guage interest in further expanding the pipeline's capacity.

The operator of the Trans Mountain oil pipeline may launch a process this year to formally gauge commercial interest in the first of a series of potential projects to increase the system’s capacity, CEO Mark Maki said on Wednesday.

The process, known as an “open season,” would determine whether there is enough shipper interest to go ahead with introducing chemical additives that reduce pipeline friction, allowing for increased flows.

Maki said adding these drag-reducing agents could enhance daily delivery volumes on the 890,000 barrels per day pipeline by 5 per cent to 10 per cent and would be relatively inexpensive, withan estimated capital cost between $10 million and $20 million.

The Trans Mountain pipeline, which is owned by the Canadian government, ships oil from Edmonton, Alberta to Burnaby, on British Columbia’s west coast, where it can be shipped to overseas markets including China.

A $34 billion expansion was completed last year, tripling the pipeline’s capacity.

The pipeline is currently about 84 per cent full, but Trans Mountain forecasts growing production from Canada’s oil sands industry and says the system could be maxed out as early as 2027-2028.

“(Canadian oil shippers) want capacity and they want certainty – they don’t want to be caught in a position where we’re short barrels,” Maki said in an interview.

Canadian oil shipments to the U.S. are currently exempt from tariffs, but ongoing trade tensions with its neighbor to the south have caused Canada – the world’s fourth-largest oilproducer – to seek to diversify its exports.