A drone view of three berths able to load vessels with oil after their construction at Westridge Marine Terminal, the terminus of the Trans Mountain pipeline expansion project in Burnaby, B.C., on April 26.Chris Helgren/Reuters
After billions of dollars and multiple court challenges, setbacks and delays, May 1 was “a great day for Canada” as the expanded Trans Mountain oil pipeline system marked its official commencement date.
That’s according to Jon McKenzie, the chief executive of Cenovus Energy Inc. CVE-T, Trans Mountain’s largest shipper. The Calgary-based company is set to move 144,000 barrels a day to the West Coast on the line.
“The people of Canada are going to see the benefit for a long period of time, in terms of increased taxes and royalties and the like,” Mr. McKenzie told investors Wednesday on an earnings call.
The goal of the Trans Mountain expansion (TMX) is to open up lucrative overseas markets for Canadian oil and remove a price discount that had existed for years because of an overreliance on exports to the United States. Plans for the $34-billion project, which runs 1,150 kilometres from Edmonton to Burnaby, B.C., launched more than a decade ago.
That’s far too long for a project of national importance to be built, Mr. McKenzie said, and Canada needs more pipelines if it is to properly capitalize on its enormous oil reserves.
Now that TMX is complete, Cenovus anticipates price differential to remain narrow for years, he added.
The company is already looking at when TMX might reach capacity. Analyst estimates put that at anywhere from two to five years, though Mr. McKenzie suspects it will be closer to the upper range of that timeline.
But with pipelines becoming “increasingly difficult to build” in Canada, he said he wouldn’t be surprised if TMX is the last one.
“I think as a nation, we suffer – and I don’t think I’m saying anything that people don’t already know – from lower and decreasing productivity, and we need to find ways to get major projects built, to get infrastructure built, to the benefit of all Canadians.”
TMX saw numerous court challenges and protests, including many around environmental concerns. Those critiques have not disappeared – particularly when it comes to concerns about vastly increased numbers of oil tankers steaming past Vancouver’s busy harbour into the Georgia Strait and the Pacific Ocean.
The pipeline was still being filled on Wednesday, a process that began on April 16 and is expected to be completed within the next few weeks, according to Trans Mountain Corp. As of April 30, the expanded pipeline was 70 per cent full by volume, and 69 per cent complete by distance.
The final, so-called “golden weld” of TMX was on April 11, in B.C.’s Fraser Valley between Hope and Chilliwack. The region has some of the most difficult terrain, rugged conditions and sensitive areas along the entire pipeline route, the corporation said in a statement Wednesday.
Trans Mountain received its final Leave to Open approval from the Canada Energy Regulator on Tuesday afternoon. The applications required various testing results, inspections and safety information to demonstrate the pipeline and associated facilities could be safely opened for operation. The receipt of the last one officially marked mechanical completion.
Cenovus has been preparing for TMX for quite some time, said Drew Zieglgansberger, the company’s chief commercial officer, with production pumping and teams working with buyers as it prepares to start shipping from the coast in May.
“There’s a pretty vast market out there, which is exciting,” he told investors Wednesday. “We are anticipating a little bit of bumpiness, but the teams are taking that into account.”
As of Wednesday, all deliveries on the line were subject to new tariffs and tolls; tankers in B.C. will be able to receive oil from the line by mid-May.
Tolling is between US$7.50 and US$9.50 a barrel, according to Cenovus. But Mr. Zieglgansberger said that’s a discussion he expects will continue through the rest of the year, potentially drifting into 2025.
Trans Mountain president and CEO Dawn Farrell said in a statement Wednesday that the TMX proves that challenging infrastructure can be built in Canada.
In a joint statement, Alberta’s Premier, Danielle Smith, and its Energy Minister, Brian Jean, called the completion of TMX monumental in its ability to get oil from the province to various Pacific U.S. markets, including Washington State and California, and Asian markets such as Japan, South Korea, China and India.
“For Alberta this is a game-changer,” they said.