WINNIPEG, Manitoba, April 4 (Reuters) - Trans Mountain's

expanded oil pipeline system will start commercial operations on

May 1, the Canadian government-owned company said late on

Wednesday, surprising analysts with an earlier than expected

commencement on the long-delayed C$34-billion ($25.2 billion)

project.

Trans Mountain previously said startup would happen in the

second quarter.

WHY IT'S IMPORTANT

Canada is the fourth-largest oil producer but output has

been capped by full pipelines. Expanding Trans Mountain will

increase shipments from the British Columbia (B.C.) coast to

Asia and the U.S. West Coast.

KEY QUOTE

May 1 is ambitious considering Trans Mountain needs to

complete line fill and receive regulatory approvals, said Dylan

White, North American crude analyst for Wood Mackenzie, adding

that late May or early June is more realistic.

"Pretty well everyone with whom I've spoken regarding

start-up was anticipating June 1," said Commodity Context

analyst Rory Johnston on X.

"It takes away the (price) volatility we've seen in the

recent past because of egress capacity being tight," said Eight

Capital analyst Phil Skolnick.

CONTEXT

Trans Mountain ran into numerous problems during

construction, most recently installing pipe in hard rock in B.C.

The expansion will nearly triple the flow of crude from

Alberta to Canada's Pacific Coast to 890,000 barrels per day.

Volumes will increase gradually. The pipeline will be highly

utilized as early as next year and run full in 2025-26, Trans

Mountain said in March.

MARKET REACTION

Western Canada Select (WCS) oil initially traded little

changed from the previous day, a market participant said.

Skolnick expects the WCS discount to West Texas Intermediate

to drop this quarter to single digits, from about $12 per barrel

currently, as the expanded system starts.

WHAT'S NEXT

The expanded pipeline raises competition with Enbridge's ( ENB )

Mainline and TC Energy's ( TRP ) Keystone pipeline,

which take Canadian crude to U.S. refineries.

Enbridge ( ENB ) expects Trans Mountain's impact on its volumes to

be modest.

($1 = 1.3494 Canadian dollars)