Trans Mountain oil pipeline just shy of target for first-month loadings

TMX

01/07/2024 08:00

By Arathy Somasekhar
       HOUSTON, July 1 (Reuters) - About 20 ships loaded crude
oil on Canada's West Coast in the first full month of operation
on the newly expanded Trans Mountain pipeline, according to
vessel-tracking data on Sunday, slightly below the operator's
forecast. 
    Loadings from the pipeline expansion are closely watched
because the Canadian government wants to sell the $24.84 billion
(C$34 billion) line. Questions about oil quality, pipeline
economics and loading challenges have swirled since its startup,
spurring concerns over demand and exports of the crude.  
    The 20 vessels loaded were less than the 22 ships that Trans
Mountain had initially expected to load for the month. 
    Total crude exports from Vancouver were around 350,000
barrels per day with the last two vessels for June-loading at
the Westridge Marine terminal, as of Sunday. 
    "This first month is just shy of the 350,000-400,000 bpd we
expected ahead of the startup. We are still in the discovery
phase, with kinks being ironed out ... but in the grand scheme
of things, this has been a solid start," said Matt Smith, lead
analyst at Kpler.
    The vessels, partially loaded Aframaxes able to carry about
550,000 barrels each, mostly sailed to the U.S. West Coast and
Asia. Some cargoes were loaded onto larger ships for delivery to
India and China, according to data providers LSEG, Kpler and
Vortexa.
    Reliance Industries  RELI.NS  bought 2 million barrels of
Canadian crude for July delivery, a deal that involved four
ship-to-ship transfers to load the oil onto a very large crude
carrier offshore California. The oil is destined for Sikka,
India, where the company operates the world's biggest refining
complex.
    Phillips 66  PSX.N  acquired a cargo for its Ferndale,
Washington, refinery, Marathon Petroleum Corp  MPC.N  for its
Los Angeles refinery, and Valero Energy Corp  VLO.N  for its
Benicia, California, refinery.
    TMX did not immediately respond ahead of a long weekend in
Canada. Phillips 66 and Marathon Petroleum declined to comment,
while Valero did not reply to a request for comments.
    The market was expecting about 17 to 18 loadings, said Rohit
Rathod, market analyst at energy researcher Vortexa.
    "Chinese demand has been below expectations, and if not for
Reliance most of the barrels in June would have remained
within the (West Coast) region," Rathod added.  
    Trans Mountain this month revised standards for accepting
crude oil on its recently expanded system, alleviating worries
about the acidity and vapor pressure of the line's crude oil.  
     Logistical constraints in a busy, narrow shipping channel
after leaving the Westridge dock in Vancouver were also expected
to impact loadings. To manage high traffic in the channel, the
Port of Vancouver has restrictions on transit times. 
    The expanded Trans Mountain pipeline is running around 80%
full with some spot capacity used. Trans Mountain forecasts 96%
utilization from next year. It has capacity to load 34 Aframax
ships a month. 
    

 (By Arathy Somasekhar in Houston; additional reporting by Nia
Williams in British Columbia; Editing by Sherry Jacob-Phillips)
 ((arathy.s@thomsonreuters.com; +1 832 610 7346; Twitter:
@ArathySom;))