By Arathy Somasekhar
HOUSTON (Reuters) – About 20 ships loaded crude oil off Canada’s West Coast in the first full month of operation of the newly expanded Trans Mountain pipeline, according to ship tracking data released on Sunday, slightly below the operator’s forecast .
Shipments from the pipeline expansion are closely monitored because the Canadian government wants to sell the US$24.84 billion (C$34 billion) line. Questions about oil quality, pipeline economics and loading challenges have arisen since its inception, raising concerns about oil demand and exports.
The 20 ships loaded were fewer than the 22 ships Trans Mountain initially expected to load for the month.
Vancouver’s total crude oil exports were about 350,000 barrels per day, with the last two ships being loaded in June at the Westridge Marine terminal, starting Sunday.
“This first month is a little below the 350,000-400,000 bpd we expected before startup. We’re still in the discovery phase, with kinks being worked out… but in the grand scheme of things, this has been a solid start,” said Matt Smith , chief analyst at Kpler.
The ships, partially loaded Aframaxes capable of carrying about 550,000 barrels each, sailed mainly to the U.S. West Coast and Asia. Some cargo has been loaded onto larger ships for delivery to India and China, according to data providers LSEG, Kpler and Vortexa.
Reliance Industries bought 2 million barrels of Canadian oil for delivery in July, a deal that involved four transfers between ships to load the oil onto a major crude carrier off the coast of California. The oil is destined for Sikka, India, where the company operates the largest refining complex in the world.
Phillips 66 purchased a cargo for its Ferndale, Washington refinery, Marathon Petroleum Corp for its Los Angeles refinery and Valero Energy Corp for its Benicia, California refinery.
TMX did not immediately respond ahead of a long weekend in Canada. Phillips 66 and Marathon Petroleum declined to comment, while Valero did not respond to a request for comment.
The market was expecting around 17 to 18 shipments, said Rohit Rathod, market analyst at energy research firm Vortexa.
“Chinese demand has been below expectations and, if not for Reliance, most of the barrels in June would have remained in the region (West Coast),” Rathod added.
Trans Mountain this month revised standards for accepting crude oil into its recently expanded system, easing concerns about the acidity and vapor pressure of the line’s crude oil.
Logistical constraints in a narrow and busy shipping channel after leaving Vancouver’s Westridge dock were also expected to impact shipments. To manage the high traffic on the canal, the Port of Vancouver has restrictions on transit times.
The expanded Trans Mountain pipeline is running at about 80% capacity, with some spot capacity utilized. Trans Mountain predicts 96% utilization next year. It has the capacity to load 34 Aframax ships per month.
(Reporting by Arathy Somasekhar in Houston; Additional reporting by Nia Williams in British Columbia; Editing by Sherry Jacob-Phillips)
