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Canadian oil flows to Los Angeles as Trans Mountain start nears

Canadian crude shipments to Los Angeles are on the rise, hinting at potential shifts in oil flows along the Pacific Coast as the Trans Mountain pipeline expansion nears completion.

In March alone, three tankers carrying a combined 1.74 million barrels departed from Vancouver to reach the largest city on the U.S. West Coast. This surge marks the highest volume in at least four years, according to data from Vortexa, a tanker tracking firm. Notably, a significant portion of these shipments consisted of heavy Cold Lake crude sourced from Alberta's oil sands, with at least two deliveries destined for Marathon Petroleum Corp., an operator of a refinery in Los Angeles. When approached for comment, the U.S. refiner opted not to respond via email.

The increased intake of Canadian crude by Marathon Petroleum Corp. may serve as a precursor to future trends once the Trans Mountain pipeline expansion comes online in the second quarter. This expansion project is set to significantly augment the pipeline's capacity, nearly tripling it to 890,000 barrels per day. Notably, Marathon Petroleum Corp. holds a contract as a shipper on the expanded pipeline.

Although the initial shipments from the expanded Trans Mountain system are anticipated to be directed towards China, analysts speculate that U.S. West Coast refineries could emerge as the primary market. This forecast is underpinned by factors such as geographical proximity and the feasibility for relatively smaller Aframax tankers to access Vancouver.

Erik Broekhuizen, a tanker researcher at Poten & Partners, highlighted the potential for Canadian crude to displace oil imports from regions like Iraq, Saudi Arabia, or Latin America. He emphasized the competitive advantage offered by the shorter shipping distances from Vancouver, translating into favorable transportation costs for Trans Mountain Expansion (TMX) crude.

As the energy landscape evolves, the dynamics of oil flows between Canada and the U.S. West Coast are poised for significant adjustments. With the Trans Mountain pipeline expansion on the horizon, Canadian crude producers are eyeing expanded access to international markets, with Los Angeles emerging as a pivotal destination. As Marathon Petroleum Corp.'s increased intake illustrates, the stage is set for a transformative shift in the regional oil trade, with Canadian oil poised to play a central role in meeting the energy demands of the U.S. West Coast.



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