As the Trans Mountain Expansion (TMX) project anticipates its operational commencement next year, an intriguing shipping opportunity has emerged that might reduce the export costs for Canadian crude oil bound for the Asia-Pacific. Utilizing Very Large Crude Carriers (VLCCs) anchored off Panama's Pacific coast could potentially be the most economical method to transport this crude to Asian destinations.
Argus has presented fascinating figures on the matter. As of 28 August, the expense of transporting crude from the Westridge Marine Terminal near Vancouver, which is limited to Aframax, and then transferring it onto a VLCC in Panama for delivery to China stood at about $6.70/bl for heavy sour Cold Lake. This is comparatively cheaper than the $7.14/bl cost of sending the same crude directly from Vancouver to China via an Aframax. Since 5 July, the VLCC route consistently proves to be 39¢/bl more affordable than its Aframax counterpart.
Analytics firm Vortexa’s data unveils that VLCCs have been transporting around 135,000 b/d of primarily Latin American crude from the western coast of Panama to the Asia-Pacific. Interestingly, western Canadian crude can be combined with these Latin American varieties for Asian delivery.
Canada's TMX Project Set to Revolutionize Crude Oil Export Capacity by 2024
Canada's TMX project twins the existing 1,150-km pipeline between Strathcona County, Alberta, and Burnaby, BC.
It promises a significant amplification in pipeline capacity. From Alberta to Vancouver, capacity will surge by 590,000 b/d, resulting in a total of 890,000 b/d. This will also mean the Westridge Marine Terminal will have its Aframax berths increased from one to three. As of 9 August, these berth constructions were nearing completion, with 94% of the work done.
The TMX project is projected to be commercially operational in early 2024. The primary vision behind this expansion is to cater more efficiently to refiners in the Asia-Pacific. However, some of the additional crude might initially find its way to the US west coast or other North American locations. Recent data from Vortexa underscores this trend. A staggering 93% (about 23,000 b/d) of the crude exported from Vancouver was directed to the US west coast this year, while China received a mere 2,000 b/d.
Canadian Crude Oil: Navigating the Future of Energy
In recent times, Canada has emerged as a significant player in the global oil market. With vast reserves, cutting-edge technologies, and strategic trading partnerships, the nation has positioned itself as an energy superpower. But what lies ahead for Canadian oil, and how does its evolution affect the world at large?
Alberta, known for its sprawling landscapes, is also home to the third-largest oil reserves in the world. The oil sands, a mixture of sand, water, clay, and bitumen, are the crown jewel of Canada's energy sector. With the right technologies, this thick, sticky substance can be converted into synthetic crude oil, positioning Canada as a valuable contributor to the world's energy needs.
Trade dynamics also play a pivotal role in the Canadian oil narrative. The US, being its southern neighbor, is the largest consumer of Canadian crude. But with recent global shifts, especially in Asia, Canada is keen on diversifying its trading partnerships. Pipelines, shipping routes, and geopolitical strategies are under constant revision to ensure the nation remains competitive and resilient in the global market.
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