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Canadian crude exports from US Gulf Coast fall only slightly despite TMX startup
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Canadian crude exports from US Gulf Coast fall only slightly despite TMX startup
Jul 19, 2024 3:24 AM

By Arathy Somasekhar

HOUSTON, July 19 (Reuters) - About 150,000 barrels per

day (bpd) of Canadian crude were exported from the U.S. Gulf

Coast in June, slightly lower than average, despite the

expansion of the Trans Mountain pipeline (TMX), which pulled

some barrels west to Vancouver, shipping tracking data showed.

The $24.84 billion (C$34 billion) expansion started

operations in May, adding 590,000 bpd of capacity for crude

deliveries to Canada's Pacific Coast, where it can be loaded

onto tankers, giving Canadian producers more access to U.S. West

Coast and Asian markets.

TMX has the potential to impact global oil flows and freight

rates - if more oil from Canada's West Coast heads to Asia, it

could cut shipments from the U.S. Gulf Coast to India, China and

South Korea. TMX could also displace shipments of some Latin

American grades to Asian countries, which would then have to

hunt for a new market.

Two supertankers and two smaller vessels loaded Canada's

Access Western Blend and Cold Lake crude grades from the U.S.

Gulf Coast in June for delivery to refineries in India, China,

Spain and Peru, data from ship tracking services Kpler and

Vortexa showed.

The 150,000-bpd exported in June compared with monthly

average volumes of about 170,000 bpd in the last 12 months,

according to data from Vortexa.

The ease of loading very large crude carriers (VLCCs), which

can carry up to 2 million barrels of oil, at the Gulf Coast has

helped maintain high levels of Canadian exports from the U.S.

Gulf Coast, said Vortexa analyst Rohit Rathod.

In comparison, Aframaxes that typically transport up to

800,000 barrels are limited to loading only about 550,000

barrels at Vancouver because of port draft restrictions.

Those vessels have to sail to California to transfer the

crude to a VLCC before traveling to Asia, whereas U.S. Gulf

Coast VLCC loadings often occur just off Galveston.

Reliance Industries, for example, shipped 2

million barrels of Canadian crude in May from Vancouver to its

refinery in Jamnagar, India. The following month, the Indian

refiner loaded a supertanker off the coast of Texas for August

delivery to India.

COMPETITORS

Westbound volumes of Canadian crude on the Trans Mountain

system have already ramped up by more than 300,000 bpd since TMX

deliveries began in late May, energy data provider Wood

Mackenzie said.

However, pipeline monitoring showed that utilization on

Enbridge's ( ENB ) competing Mainline remained largely

unchanged from pre-TMX levels through June and early July,

buoyed by draining storage inventories in Western Canada, Wood

Mackenzie analyst Dylan White said. The Mainline pipe moves

crude from Canada's Alberta to the U.S. Midwest.

July has already seen two loadings of 500,000 barrels of

Cold Lake Blend from the U.S. Gulf Coast, according to Kpler's

ship tracking data. However, weak Chinese demand may hinder

those flows, analysts noted.

"We expect a decrease in Canadian flows to Midwest and Gulf

Coast will materialize in the months to come as TMX continues to

ramp up and the inventory cushion in Western Canada is

depleted," White noted.

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