About 20 ships loaded crude oil on Canada’s West Coast during the first full month of operation of the newly expanded Trans Mountain pipeline, according to ship tracking data released Sunday, slightly lower than forecasts by the operator.
Loadings from the pipeline expansion are being closely watched as the Canadian government seeks to sell the $24.84 billion (C$34 billion) line. Questions about the quality of the oil, the economics of the pipeline and loading difficulties have been raised since it was put into service, raising concerns about demand and crude exports.
The 20 loaded vessels were fewer than the 22 vessels Trans Mountain had originally planned to load for the month.
Total crude exports from Vancouver were about 350,000 barrels per day, with the last two ships for June loading at the Westridge Marine Terminal on Sunday.
“This first month is just below the 350,000-400,000 bpd we were expecting before the start-up. We are still in the discovery phase, with some kinks being ironed out… but overall it’s a good start,” said Matt Smith, principal analyst at Kpler.
The ships, partially loaded Aframaxes that could carry about 550,000 barrels each, mainly sailed to the U.S. West Coast and Asia. Some cargoes were loaded onto larger ships for delivery to India and China, according to data providers LSEG, Kpler and Vortexa.
Reliance Industries purchased 2 million barrels of Canadian crude for delivery in July, an operation that required four ship-to-ship transfers to load the oil onto a very large crude carrier off the coast of California. The oil is destined for Sikka, India, where the company operates the world’s largest refining complex.
Phillips 66 acquired a cargo for its Ferndale (Washington) refinery, Marathon Petroleum Corp for its Los Angeles refinery and Valero Energy Corp for its Benicia (California) refinery.
TMX did not immediately respond due to 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 was expecting around 17 to 18 shipments, said Rohit Rathod, market analyst at energy researcher Vortexa.
“Chinese demand has been lower than expected and without Reliance, most of the June barrels would have remained in the (west coast) region,” Rathod added.
Trans Mountain this month revised crude acceptance standards on its newly expanded system, easing concerns about the acidity and vapour pressure of the line’s crude.
Logistical constraints in a narrow and busy shipping channel after departing Vancouver’s Westridge Dock are also expected to impact cargoes. To manage the high traffic in the channel, the Port of Vancouver is imposing restrictions on transit times.
The expanded Trans Mountain pipeline is approximately 80% utilized, with some spot capacity. Trans Mountain expects a utilization rate of 96% starting next year. It can load 34 Aframax vessels per month.
