Canadian Crude Hits 4-Year High in LA as Trans Mountain Start Nears

Canadian crude shipments to Los Angeles are surging, a possible preview of how a Trans Mountain expanded pipeline that’s nearing startup may redraw flows along the Pacific Coast.

In March, three tankers carrying a total of 1.74 million barrels have sailed from Vancouver to Los Angeles, marking the highest volume in at least four years, according to Vortexa tanker data. At least two of the shipments of heavy Cold Lake crude from the oil sands went to Marathon Petroleum Corp., which operates a refinery in LA.

Source: Vortexa

This surge in shipments could be indicative of future trends once the Trans Mountain pipeline’s expansion - which will nearly triple the capacity of the line running from Alberta to the Pacific Coast to 890,000 barrels a day - starts operating in the second quarter.

While the first two cargoes off the Trans Mountain expanded system are expected to go to China, some analysts argue that U.S. West Coast refineries may become the preferred market due to the proximity and the relatively small Aframax tankers that are able to access Vancouver.

Canadian crude may displace oil from Iraq, Saudi Arabia or Latin America, Erik Broekhuizen, tanker researcher for Poten & Partners, said in a note last Friday.

“The short shipping distance from Vancouver gives the Trans Mountain pipeline expansion (TMX) crude competitive transportation costs,” he said.

Source: Moomoo. As of March 27, 2024

Source: Bloomberg, CNBC