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Canadian oil sands producers are in a rush to boost production as the Trans Mountain expansion comes online, providing an additional 590,000 bpd in capacity.
Bloomberg reports that Canadian Natural Resources and Cenovus are among the producers planning on output boosts in the coming months.
Canadian Natural Resources plans to increase production by some 40,000 bpd in the current quarter, while Cenovus will take longer, starting a new production site in 2025.
“This industry has a great habit of expanding to fill pipeline capacity,” Cenovus COO Jonathan McKenzie said, referring to the Trans Mountain extension, as quoted by Bloomberg. “That’ll be filled, I think, in relatively short order over the coming years.”
The Trans Mountain project drew a lot of controversy, at one point pitting the provincial governments of Alberta and British Columbia against each other.
Eventually, amid the strong environmentalist push against the expansion, operator Kinder Morgan quit the project, and the Canadian federal government bought it and started looking for buyers.
Initially, the pipeline expansion was set to help Canada export its heavy crude oil to Asia via tankers from the Canadian West Coast. But as the expansion project took years to clear permitting, financial, and construction hurdles, the global crude oil flows changed with the Russian invasion of Ukraine and the consequent Western sanctions. Now, almost all Russian oil for exports is going to Asia and not Europe, like before.
As a result, earlier this year, traders told Reuters that additional Canadian crude volumes that will be transported from Alberta via the expanded Trans Mountain are likely to stay in North America and end up on the U.S. West Coast instead of in Asia, as planned years ago when the project was designed.
Trans Mountain should be technically completed at the end of this year and enter into operation next year.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com