Vol. 26, No.3 Week of January 17, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

TMX coming to a boil

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Climate and Indigenous activists mull road, rail blockages in British Columbia

Gary Park

for Petroleum News

Expansion of Trans Mountain’s oil pipeline across British Columbia is being dragged into the spotlight to face what could be the ultimate test of its hopes to start pumping an extra 590,00 barrels per day of oil sands bitumen to a Vancouver export terminal by late 2022.

While attention on the C$12.6 billion tripling of capacity on the Trans Mountain system has been obscured over the last 10 months by the preoccupation with COVID-19, a period of relative quiet for the pipeline contractors is about to be overtaken as work advances into the hot zone where thousands of protesters are expected to blockade road and rail links serving TMX this spring and summer.

Climate activists are threatening “non-violent” efforts to stop construction as they join forces with some Indigenous land defenders.

Moderately upbeat view

In delivering a moderately upbeat view of the outlook, Ian Anderson, chief executive officer of the Canadian-government owned Trans Mountain system, said TMX is advancing despite threats.

“We’ve got some major elements of the project to still do, but they’re all on track and there’s no critical path items that I’m worried about at this point,” he said, noting that TMX is expected to be 50% complete within a year.

Calgary-based Cenovus Energy used Trans Mountain last summer to deliver Alberta crude to the long-established Vancouver shipping terminal, fill an oil tanker and send it through the Panama Canal to an Irving Oil refinery at Saint John, New Brunswick.

Anderson said there is no current plan to duplicate that feat, but the success of the trial shipment to open up a new market for Alberta oil illustrates what is possible for TMX’s 13 contracted shippers, who currently account for 80% of TMX’s capacity of 590,000 bpd.

“We will increasingly see movements to China and Southeast Asia as those markets open up. Right now, producers have very limited access to Asia because we’ve got such limited capabilities of moving oil on to tankers (destined for that region),” he said.

Anderson said the existing Trans Mountain line ended 2020 on a high note, operating at its capacity 300,000 bpd after a year when the flow averaged 231,700 bpd for export markets and 62,900 bpd for Canadian destinations during one of the most challenging periods on record for Canadian production.

“I fully expected to lose some volume, but we didn’t,” he told the Canadian Broadcasting Corp.

Accidents kill one

There was, however, a grim ending to 2020 for TMX, with one contract worker killed in October at a pipeline site in British Columbia and another getting seriously injured at the Burnaby terminal, prompting TMX to shut down operations for two weeks. Although not directly linked to TMX, a late-December accident at Suncor’s Fort Hills mine in Alberta killed two workers. Suncor is one of the major shippers on Trans Mountain.

For now, Anderson is not concerned about the threat by incoming U.S. President Joe Biden to rescind Keystone XL permits.

“I don’t think there is a material direct effect of Keystone XL (or Enbridge’s Line 3 across Minnesota) on Trans Mountain,” he said. “The markets we’re serving are different. And I think the attractiveness of those markets is what our shippers are looking for.”

Indigenous ownership

In the meantime, the Canadian government is engaging with more than 120 Indigenous communities on future ownership of Trans Mountain, or some other form of economic participation, but both Trans Mountain and the federal Department of Finance say the pipeline hasn’t been “derisked” with only 20% of the project complete, so no sale is likely in the near term.

Canadian Prime Minister Justin Trudeau said his government spent C$4.5 billion in 2018 to acquire Trans Mountain with one over-riding objective - ending Canada’s reliance on the United States as its only oil export market.

“We cannot simply remain prisoners of the American market,” he said.

Dale Swampy, president of the National Coalition of Chiefs, said the communities will decide among themselves if they want to acquire a “certain percentage or a large percentage” of Trans Mountain equity.

That decision will give the Canadian government “some headway about how they are going to deal with us,” he said.

Opponents gearing up

But opponents of Trudeau’s commitment to Trans Mountain are gearing for a showdown with the TMX, with a group of climate activists known as Extinction Rebellion taking its initial step by briefly disrupting rail traffic in the Burnaby area in late November.

“We are responding to calls to action from Indigenous peoples,” said a spokesperson, Solene Tessier.

“Indigenous peoples have been on the front lines protecting land and water for a long time. Extractive and fossil fuel projects that lack and ignore scientific and traditional knowledge put our future in grave jeopardy.”

Grand Chief Stewart Phillip, president of the Union of British Columbia Indian Chiefs and a long-time opponent of Trans Mountain, insisted there is no way TMX “is anywhere near viable or feasible,” given COVID-19’s impact on the economy.

He said the Trudeau government is “waiting for the expansion to collapse under its own weight of economic uncertainties.”

Phillip said opposition to TMX will swell as work crews move into the British Columbia Interior and trigger a repeat of 2014 when barriers were erected in the Burnaby area, lading to 100 arrests.

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