Trans Mountain Pipeline restart still a 'few days' away

The Trans Mountain crude oil and products pipeline in Western Canada will remain shut for a "few days" longer after record rainfall 17 days ago triggered severe flooding and landslides in British Columbia, resulting in the longest shutdown in the pipeline's nearly 70-year history, officials said Dec. 1.

The plan originally was to resume partial service by Nov. 26, but Trans Mountain officials said the outage would last until the beginning of December, and now that timeline has been extended again. The combination of the 330,000 b/d of oil equivalent pipeline closure and since-resolved rail shutdowns has caused oil and fuel shortages in parts of British Columbia, especially in the Victoria area. The pipeline was shuttered on Nov. 14.

"Provided there are no additional setbacks from the latest round of rainstorms, Trans Mountain will soon complete work that needs to be done before a restart can take place," the company said in a statement. "Based on current conditions and the amount of progress we have been able to make, we are only a few days away from restarting the pipeline at a reduced capacity."

Trans Mountain said work has been done to shore up banks, as well as conducting berm fortification. In some areas of flooding, the pipeline was left completely exposed, required extra work to shore up pipeline protections. Trans Mountain said it is using rock, gravel and hundreds of sandbags to assist with shoring-up banks in flooded areas. Work previously was interrupted on Nov. 28 due to high water or lack of access, causing additional delays.

In the meantime, Trans Mountain has utilized its connected Puget Sound Pipeline across the border in Washington to move some crude oil held in tanks at Trans Mountain's Laurel Station in Washington to BP's nearby Cherry Point Refinery for processing.

Total combined flows through Trans Mountain have averaged 326,000 b/d in the first half of 2021, of which 302,000 b/d was crude and 24,000 b/d was refined products, according to Parker Fawcett, analyst with S&P Global Platts Analytics. Roughly 90% of the crude transported is light crude, of which 58,000 b/d has been used for local refining while 214,000 b/d is exported to refineries primarily in Washington.

The five refineries in Washington have total crude processing capacity of 651,700 b/d, according to Energy Information Administration data. Western Canada is a key crude supplier to the region which imported 4.47 million barrels of medium sour and 1.6 million barrels of light sweet crude in July 2021, according to EIA data. The pipeline shutdown created crude supply gaps for the Washington refineries. Roughly 90% or about 214,000 b/d of the crude transported on the 330,000 b/d pipeline is exported to their five plants.

Some progress was made last week when Canadian Pacific and Canadian National railways restored services to the corridor between Kamloops and Vancouver, resuming shipments of grain, fuel, coal and more.

Prompt prices for November barrels of Western Canadian crudes previously were heard offered at steep discounts to the WTI benchmark as traders searched for alternative outlets amid the shutdown of the Trans Mountain pipeline. The pipeline outage has widened Western Canadian crude price discounts. Prompt prices for crude can often reflect real-time market disruptions as traders look to either store or find new buyers for crude that was destined to be transported by a pipeline that has been shut.