Canadian TMX pipeline further delayed on environmental violations
Quantum Commodity Intelligence – The Trans Mountain Expansion (TMX) pipeline is set for a further delay, with flows unlikely before June after work was stopped by Canada's regulator over environmental breaches on the final stretch of work, reported local media.
The Canada Energy Regulator (CER) has ordered a halt to all activity activities associated with TMX on land close to Abbotsford, British Columbia, after an inspection on 12 March found company contractors working without the necessary authorisations near a known and active nesting site of a Red-tailed hawk.
Canada's Western Standard news said inspection officers had issued an order mandating the cessation of all activities, with the company ordered to carry out an internal investigation and provide assurances over contractor work crews in future.
The pipeline, which is already years behind schedule, had been set to start operations in March but this was pushed back until the second quarter after the company said it had faced "technical issues" in the final stages of tunnelling.
Earlier this month, Canada's MEG Energy Corp said that TMX had contracted the company to supply 2.1 million barrels of sour crude in April and the same volume again for May, indicating the west coast terminal would be ready to commence exports in April.
Delays
The controversial pipeline - which will supply heavy crude oil for export from Canada's Pacific coast - has been the subject of numerous legal and environmental battles, causing multi-year delays to the pipeline, which was taken over by the government in 2018.
TMX will add around 540,000 bpd of mostly heavy crude, with refiners on the US West Coast and Asia-Pacific likely to compete for the mostly heavy barrels.
The crude will come from Alberta's oil sands, where production in the fourth quarter topped 4 million bpd for the first time.
Western Canadian Select (WCS) crude basis Hardisty, Alberta, has been trading at steep discounts of NYMEX WTI minus $20/b to $16/b for much of this year but had ticked up recently on hopes of TMX opening and this week's restart of the 450,000 bpd BP Whiting refinery in Chicago, a major Canadian crude user.
Discounts narrowed to around -$14/b on the Whiting news, the narrowest since last August, but traders said prices could come under pressure again pending news on TMX.
