The expansion of Canada’s Trans Mountain Pipeline (TMX) has led to record U.S. imports of Canadian crude oil, reaching 4.3 million barrels per day (b/d) in July 2024. The TMX pipeline tripled its previous capacity, adding 300,000 b/d, and began commercial operation in May 2024. This expansion allows Canada to export more oil from Alberta to coastal areas, opening routes to both the U.S. West Coast and Pacific buyers, according to EIA.
Expanding market access for Alberta’s crude
Historically, Alberta’s landlocked crude had limited export options, reaching U.S. refineries in the Midwest and Gulf Coast through older pipelines and rail. Now, TMX’s expanded capacity connects directly to Canada’s west coast, providing easier access to international markets, including Asian buyers. Since TMX came online, U.S. West Coast refineries have been major buyers of Canadian crude, accounting for over half of seaborne exports from Western Canada between June and September 2024. In July, the U.S. West Coast imported 498,000 b/d, a record-breaking amount and a 115% increase compared to the same period in 2023.
The role of Western Canadian Select (WCS)
The pricing of Western Canadian Select (WCS) crude oil, a key benchmark for Canadian oil, reflects Alberta’s production but often sees a discount due to its higher sulfur content, lower API gravity, and inland location, which add transport costs to export markets. The WCS benchmark has typically traded at a discount to global prices like Brent crude. Since TMX began operations, additional offtake capacity has helped moderate WCS’s price spread to Brent. In July 2024, the Brent premium over WCS was $21 per barrel, showing an increase from the previous year, though recent months indicate a stable spread between the five-year average and last year’s levels.
Stabilizing price spreads for Canadian producers
The WCS-Brent spread typically widens in the fall when Midwest refineries undergo maintenance, affecting demand for Alberta’s oil. However, the additional capacity from TMX may provide some insulation for Canadian producers by expanding their buyer pool to West Coast refineries and Pacific markets, reducing dependence on U.S. Midwest demand. If spreads hold steady, the expanded TMX capacity may continue supporting Canadian crude exports, strengthening Canada’s position in the oil export market.
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