Wedoany.com Report-Apr. 3, Canada’s Trans Mountain oil pipeline has revised its forecasts downward for oil volumes expected to flow through its system over the next three years, according to documents submitted by the operator to the Canada Energy Regulator last month. The government-owned pipeline, which began operating its expanded 890,000 barrel-per-day (bpd) capacity in May 2024, is seeing slower uptake than anticipated. Analysts attribute this to oil companies’ reluctance to pay the higher tolls charged by Trans Mountain compared to the Enbridge Mainline system, North America’s largest crude pipeline network.
The Trans Mountain Burnaby Terminal tank farm is seen as the Canadian government-owned Trans Mountain pipeline expansion project became operational in Burnaby, British Columbia, Canada May 1, 2024.
The updated projections show the pipeline operating at 84% capacity this year, rising to 88% in 2026, and reaching 92% in 2027. It is not expected to hit the previously forecasted 96% utilization until 2028. In its first eight months of 2024, Trans Mountain recorded just 18,500 bpd of spot shipments against an expected 30,600 bpd, with total usage at 77% instead of the projected 83%. A Trans Mountain spokesperson explained: “Spot shipments vary based on market conditions, including Canadian crude production, global pricing differences, and marine freight rates.”
The pipeline, stretching from Alberta to Canada’s Pacific Coast, serves as the country’s only east-west oil route and its sole link to markets beyond the U.S., such as Asia. However, 20% of its capacity, reserved for spot shipments, remains underused due to shipping costs exceeding those of the Enbridge Mainline, which transports oil to Eastern Canada and the U.S. Midwest. This has raised concerns about Trans Mountain’s revenue potential and its appeal to private buyers, as Ottawa plans to eventually sell the asset. Lower usage also complicates efforts to diversify Canadian oil exports, with the U.S. still purchasing 90% of the country’s crude.
Construction costs for the expansion ballooned to about C$34 billion, far above the 2017 estimate, driving up tolls. Contracted shippers, including Canadian Natural Resources Ltd and Cenovus Energy, now pay nearly double the 2017 rates, while spot shippers face even higher fees. This has led to pushback, with a regulatory hearing scheduled this year to assess the tolls’ fairness. Meanwhile, the Enbridge Mainline, offering lower rates and 100% spot capacity, has seen demand outstrip supply since Trans Mountain’s expansion opened, according to an Enbridge spokesperson.
Analysts suggest a potential shift if U.S. President Donald Trump imposes tariffs on Canadian oil, which could boost Trans Mountain’s usage. Richard Masson, an energy expert at the University of Calgary, noted: “Volumes could change quickly if U.S. conditions shift.” For now, the pipeline’s revenue forecasts have been adjusted downward to $2.7 billion for 2025, $2.9 billion for 2026, and $3.0 billion for 2027, reflecting the lower expected throughput.
