theglobeandmail.com
Trans Mountain Pipeline: Excess Capacity Despite High Utilization
Despite the recent expansion of the Trans Mountain pipeline, which increased capacity by 590,000 barrels per day, a Canada Energy Regulator analysis reveals excess capacity exists, although overall oil export pipeline capacity from Western Canada remains highly utilized, with oil sands production projected to increase.
- How has the Trans Mountain expansion impacted Canadian crude oil prices and the export market?
- The Trans Mountain expansion has narrowed the price differential between Western Canadian Select (WCS) and West Texas Intermediate (WTI) by approximately US$12 per barrel. This is due to increased export capacity, primarily to Asian markets, resulting in a significant increase in Canadian crude oil exports outside the U.S. Crude-by-rail exports have also fallen to levels unseen in over a decade.
- What is the current utilization rate of the expanded Trans Mountain pipeline, and what are the immediate implications?
- Since its May 2024 launch, the Trans Mountain pipeline's utilization has averaged 82 percent (excluding the initial ramp-up period), ranging from 76 percent to 89 percent. This indicates available capacity despite high overall utilization of Western Canadian oil export pipelines. The eased space crunch has led to a more than tripling of Canadian crude oil exports to countries outside the U.S., primarily Asia.
- Considering the existing excess capacity, what are the potential economic consequences of building another pipeline to the West Coast?
- A new pipeline would likely yield minimal additional economic benefits, according to a report by Alberta Central. While preventing a widening of the oil price differential as oil production increases would be beneficial, the existing WCS discount relative to WTI due to grade differences would persist, meaning substantial additional benefits are unlikely. Therefore, constructing another pipeline might be a costly endeavor with limited returns.
Cognitive Concepts
Framing Bias
The article presents a balanced view of the Trans Mountain pipeline expansion, acknowledging both the increased capacity and continued high utilization. While it highlights the arguments for a new pipeline from proponents like Alberta, Saskatchewan, and the oil and gas industry, it also presents data from the Canada Energy Regulator showing existing excess capacity and the economic analysis suggesting limited additional benefits from a new pipeline. The headline, "Opinion: Canada's new pipeline push will turn out to be a costly blunder", presents a clear opinion, but the article itself provides counterpoints and data to support a nuanced perspective.
Language Bias
The language used is largely neutral and factual, relying on data and quotes from reports. There is some use of potentially loaded terms like "costly blunder" in the headline, but this is clearly presented as an opinion and the article itself maintains an objective tone.
Bias by Omission
The article could benefit from including perspectives from environmental groups or Indigenous communities regarding the pipeline's impact on the environment and Indigenous lands. However, given the focus on economic analysis and pipeline capacity, the omissions may not be significantly misleading.
Sustainable Development Goals
The expansion of the Trans Mountain pipeline, despite easing a space crunch on oil export pipelines and increasing Canadian crude oil exports, will likely increase greenhouse gas emissions associated with fossil fuel extraction, transportation and consumption. This contradicts efforts to mitigate climate change and reduce carbon emissions, as outlined in the Paris Agreement and SDG 13 targets. The article highlights the continued increase in oil production from the oil sands, further exacerbating the negative impact on climate action.