One year after the Trans Mountain Pipeline expansion, why isn't it full?

The Canadian oilpatch has a brand-new pipeline, something it's pleaded for year after year, and it offers a relatively quick route to the West Coast and overseas markets.

But a year in, the newly expanded Trans Mountain Pipeline still isn't running at full capacity — though the CEO of the Crown corporation says he doesn't think it's a problem. 

The pipeline has downgraded its forecasts for the amount of oil expected to flow through the system over the next three years, according to Reuters.

That suggests some companies are unwilling to pay higher tolls, charged due to the project's costs ballooning higher than expected. The federal government initially purchased the Trans Mountain pipeline for $4.5 billion, but development and construction increased to $34 billion.

During that time, oil companies were excited about the prospect of a major new export project, while also growing concerned about the rising costs, which they'd ultimately have to shoulder, in part through tolls paid to ship their oil.

The oil companies that signed contracts more than a decade ago to use the Trans Mountain pipeline are now battling with the Crown corporation over the hefty price of tolls. The Canada Energy Regulator will hold hearings this summer into the disagreement.

If the pipeline is too expensive to use, oil companies could look to other pipeline systems to export crude. However, if tolls are too low, that could impact the profitability of the Crown corporation and the eventual multibillion-dollar amount the federal government could collect by selling the entire Trans Mountain system.

CEO Mark Maki sees the capacity issue differently. 

"It's more of a statement about how fast supply has increased in Western Canada," said Maki. "I think the producers historically have been burned by being caught short [by] pipeline capacity."

In March, the pipeline moved 790,000 barrels of oil per day, he said. And as supply creeps up, he said, it will run close to capacity around 2027 or 2028. Full capacity is 890,000 barrels per day.

Maki's comments come at a time when oil production continues to climb. Alberta set new records in the first three months of this year, according to the latest oil production data. Oil production in Alberta was around 4.19 million barrels per day in March, according to ATB Financial, up from 4.04 million barrels the same time last year.

Some analysts say despite its cost, the newly expanded pipeline — which ships oil from Edmonton to the coast of British Columbia — has already translated into benefits for the oil industry and the economy more broadly.

"In light of a much more challenging relationship with the United States, which is Canada's largest customer, having the optionality to go offshore is incredibly valuable," said Kevin Birn, an analyst at S&P Global. "It gives Canada leverage, which it has not had traditionally."

About half of the oil flowing through the Trans Mountain Pipeline is now being sent to Asia, Maki said, much of it to China along with Korea, Japan, India and Brunei.