More than 55% of the oil in the expanded pipeline is first sent south to California, where it is transferred to tankers.
Canada’s newest oil pipeline is a major boost to the country’s heavy oil exports to Asia, and the change in route through California makes the journey longer but potentially cheaper.
Since the expanded Trans Mountain pipeline began operating in May, nearly 3 million barrels of oil have flown from Vancouver to China or India, nearly tripling the capacity of the only system connecting ports in Alberta and Canada. According to Vortexa vessel tracking data, more than 55% of this oil is first shipped south to Southern California, where the oil is offloaded onto very large carriers (VLCCs).
These changes address one of the major disadvantages of Canadian crude oil exports from the West Coast compared to Canadian crude oil exports from the U.S. Gulf: the Port of Vancouver can only accommodate Aframax tankers or smaller tankers with less than half the VLCC deadweight. As a result, the daily cost of a barrel shipped directly from Western Canada to distant markets is typically nearly twice that of a VLCC, according to a ship broker familiar with the rates, who requested anonymity because he was not authorized to discuss the information. However, the rerouting to California lengthens the route to Asia, reducing a key advantage of Canadian West Coast oil exports over the U.S. Gulf.
The practice is expected to become more common as Aframax tankers are redeployed to shorter voyages, the broker said. Others are less sure.
“Shipping an Aframax tanker directly to China is expensive, as is making multiple return trips on a VLCC tanker off the coast of California,” Kpler chief analyst Matt Smith said in an email. because China will get more sales.” Delivery to India using VLCC is more likely, but India is increasingly dependent on Russia. Crude oil cuts Canadian oil imports from the US Gulf.
Another advantage of transporting oil on a VLCC is that shippers can ship other grades of oil from other parts of America at the same time. For example, the Eagle Varona, which sailed to China earlier this month, was carrying two Canadian crudes, Cold Lake and Access Western Blend, as well as Castilian crude from Colombia, according to Vortexa.
More than a record 7 million barrels of oil, mostly Cold Lake crude, have shipped out of Vancouver this month, the first full month of operation of the 890,000-barrel-per-day Trans Mountain system. The US West Coast, especially Los Angeles, was the largest recipient in June with 3.9 million barrels, followed by China, India and Ecuador, according to Vortexa.
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Post time: Jun-29-2024