By Arathy Somasekhar
HOUSTON (Reuters) – About 20 ships loaded on the newly expanded Trans Mountain pipeline on Canada’s west coast in its first full month of operation, according to tracking data on Sunday, slightly below the operator’s forecast.
Cargoes from the pipeline expansion are being closely watched as the Canadian government seeks to sell the US$24.84 billion ($34 billion) line. Questions about oil quality, pipeline economics and loading issues have swirled since the company’s inception, raising concerns about crude oil demand and exports.
The 20 ships loaded were fewer than the 22 ships Trans Mountain had initially expected to load this month.
Total crude oil exports from Vancouver were approximately 350,000 barrels per day, with the last two ships loading at the Westridge Marine terminal as of Sunday in June.
“This first month is still just shy of the 350,000-400,000 barrels per day we expected prior to launch. We are still in the discovery phase, ironing out the kinks… but in the grand scheme of things, this is a off to a solid start,” said Matt Smith, chief analyst at Kpler.
The ships, partially loaded Aframaxes that could carry about 550,000 barrels each, sailed mainly to the west coast of the US and Asia. According to data providers LSEG, Kpler and Vortexa, some cargoes were loaded onto larger ships for delivery to India and China.
Reliance Industries bought 2 million barrels of Canadian crude for delivery in July, a deal that included four ship-to-ship transfers to load the oil onto a very large crude tanker off the coast of California. The oil is destined for Sikka, India, where the company operates the largest refinery complex in the world.
Phillips 66 (NYSE:) acquired a cargo for its Ferndale, Washington refinery, Marathon Petroleum Corp (NYSE:) for its Los Angeles refinery, and Valero Energy Corp (NYSE:) for its refinery in Benicia, California.
TMX did not immediately respond ahead of a long weekend in Canada. Phillips 66 and Marathon Petroleum declined to comment, while Valero did not respond to a request for comment.
The market expected about 17 to 18 loads, 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 the standards for accepting crude oil on its newly expanded system, easing concerns about the acidity and vapor pressure of the line’s crude oil.
Logistical constraints in a busy, narrow shipping channel after leaving Vancouver’s Westridge dock were also expected to impact cargo. To manage the heavy traffic on the canal, the Port of Vancouver has restrictions on transit times.
The expanded Trans Mountain pipeline is approximately 80% full and some spot capacity is being used. Trans Mountain predicts a 96% occupancy rate from next year. It has a capacity to load 34 Aframax vessels per month.
(By Arathy Somasekhar in Houston; Additional reporting by Nia Williams in British Columbia; Editing by Sherry Jacob-Phillips)
