In May 2024, the long-awaited Trans Mountain pipeline expansion (TMX) was put into service. The 590-Mb/d expansion mirrored an existing 715-mile pipeline that runs from Edmonton, AB to Burnaby, BC. The expansion was expected to bring incremental crude to the Pacific seaborne export market. BTU Analytics previously published an Insight highlighting our expectation that flows on Enbridge Mainline and Keystone would decrease following the start of the TMX project. As expected, between May and September 2024, flows on Enbridge Mainline decreased 50 Mb/d on average compared to the 2023 average, but Keystone flows increased 17 Mb/d on average versus the 2023 average, with utilization now running near full. The TMX project didn’t expand U.S.-Canadian cross-border capacity, but it did allow for more seaborne crude to be imported into U.S.
While the TMX expansion’s intended target was Asian markets, U.S. importers also took advantage of new supply on the market. PADD 5 imports hit a record of 498 Mb/d in July 2024 as the U.S. imported more seaborne crude, driving total U.S. imports of Canadian crude to a record of 4.4 MMb/d in the same month. Total Canadian exports to the U.S. from May–October 2024 averaged 300 Mb/d above the five-year average, though these levels may decrease by YE25, as Phillips 66 plans to close its 136-Mb/d Los Angeles refinery, and Valero’s 3Q24 earnings highlighted it is considering closing both its Benicia and Wilmington refineries in California, which have a combined capacity of 305 Mb/d. As for Asian markets, Chinese import data show an average increase of 31 Mb/d YoY to average 171 Mb/d in 2024. Chinese imports of Canadian crude peaked at 302 Mb/d in September 2024.
The TMX project was also expected to provide support for Canadian crude prices with its exposure to the Brent market and commanding a greater netback than Enbridge Mainline or Keystone. To compete with TMX, Enbridge Mainline tariffs were cut in August 2024, with the uncommitted rate for heavy crude from Edmonton to Texas lowered by 9% to $9.8261/bbl. The latest tariff, which came into effect on February 1, 2025, saw rates largely hold flat, but the uncommitted rate for heavy crude increased slightly to $9.8380/bbl. Enbridge was the only one of the main shippers to lower rates since the start of the Trans Mountain Expansion project.
Lastly, the Western Canadian Select (WCS) differential has tightened since the startup of TMX. Between January 2023 and April 2024, the discount of WCS to WTI averaged ($17.87)/bbl, but that same discount has averaged ($13.87)/bbl since the pipeline expansion started in May 2024. BTU Analytics expects the WCS-WTI differential to remain stable through the end of the decade, barring any additional reductions in pipeline tariffs.
Be sure to check back in for more Energy Market Insights covering TMX and other Canadian pipelines, as BTU Analytics will continue to monitor the currently shifting U.S.-Canadian energy landscape.
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