Canada's Trans Mountain pipe expansion to disrupt oil flow to US, boost prices

investing.com:

By Nia Williams and Stephanie Kelly

CALGARY (Reuters) — Canada's Trans Mountain oil pipeline expansion (TMX), which will nearly triple the flow of crude from Alberta to Canada's Pacific Coast beginning early next year, will shake up North America's supply by diverting barrels now mainly delivered to refiners and exporters in the U.S. Midwest and Gulf Coast.

Its startup could add as much as $2 per barrel to prices paid by U.S. Midwest oil refineries that sit along Canada's existing main oil-export route. Plants that benefited from discounted oil include those operated by BP (NYSE:BP), Citgo Petroleum, Exxon Mobil (NYSE:XOM) and Koch Industries' Flint Hills Resources, analysts said.

«They will be competing for barrels that no longer transit through their region,» said a Calgary-based oil trader. «The market will have to reshuffle.»

The long-delayed and controversial Canadian government-owned C$30.9 billion ($22.81 billion) TMX project is set to begin shipping crude early next year, although it could face up to nine months delay due to a last-minute proposed route change.

Once it starts operating, Canada will be able to ship an extra 590,000 barrels per day (bpd) to Pacific ports for delivery to U.S. West Coast and Asia refiners, where demand for heavy sour crude is expected to climb in the longer-term.

FEWER BLOWOUTS

Canada has supplied the Midwest with all of its crude imports since 2019, according to a Reuters analysis of Energy Information Administration data. That has left Canadian oil producers vulnerable to deep price discounts or «blowouts» whenever pipelines become congested or rupture.

Pipeline operator Enbridge (NYSE:ENB), which ships the bulk of Canada's 3.8 million bpd of crude exports to the U.S., expects to