Trans Mountain Pipeline Cuts Oil Shipment Forecasts
Canada, Wednesday, 2 April 2025.
Canada’s Trans Mountain pipeline has reduced its oil shipment forecasts, prompting concerns about potential impacts on U.S. energy prices and broader economic conditions.
Revised Utilization Projections
The government-owned Trans Mountain pipeline has significantly downgraded its utilization forecasts through 2028. The pipeline, which began operations in May 2024 with an expanded capacity of 890,000 barrels per day, achieved only 77% utilization in 2024, falling short of its 83% target [1]. New projections show a gradual increase to 84% utilization in 2025, 88% in 2026, and 92% in 2027, with full operational capacity of 96% not expected until 2028 [1]. This cautious outlook comes despite recent data showing strong overall energy production, with January 2025 marking a 9.8% increase in crude oil production to 26.7 million cubic meters [5].
Market Dynamics and Pricing Challenges
The reduced forecasts stem primarily from oil companies’ reluctance to pay higher tolls, particularly affecting the 20% capacity reserved for spot shipments [1]. This hesitancy reflects broader market dynamics, with producers showing preference for the more cost-competitive Enbridge Mainline system. The situation is particularly noteworthy given the pipeline’s total construction costs of C$34 billion, nearly five times the 2017 estimate [1]. Current market conditions show increased complexity, with export patterns shifting significantly - January 2025 data reveals a 263% increase in exports to non-U.S. markets, reaching 1.1 million cubic meters [5].
Strategic Industry Shifts
Despite reduced forecasts, some major players are expanding their presence on the pipeline. Canadian Natural Resources Ltd (CNRL) has increased its transport capacity by 75%, now controlling 164,000 barrels per day following its recent $6.5 billion acquisition of Chevron’s assets [2]. This strategic move comes as PetroChina exits its commitment to the pipeline, transferring its shipping contracts to CNRL [2]. The realignment occurs against a backdrop of robust domestic production, with oil sands output showing a 10.1% increase to 17.5 million cubic meters in early 2025 [5].
Economic Implications
The reduced utilization forecasts have broader implications for North American energy markets, particularly affecting U.S. refineries in the Midwest region, where virtually 100% of oil imports come from Canada [6]. Key facilities potentially impacted include major refineries in Illinois and Montana, which rely heavily on Canadian crude [6]. Adding to market complexity, potential new tariffs under consideration as of April 2025 could further affect cross-border energy trade [6]. Industry experts note that spot shipments will continue to be influenced by multiple factors, including Canadian crude production levels, global pricing differentials, and marine freight rates [1].