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Quality Concerns Could Hurt Demand for Trans Mountain Crude on US West Coast

Some U.S. West Coast refiners have flagged concerns about the high sulfur and acidity content and high vapor pressure of the initial crude flows through the expanded Trans Mountain pipeline in Canada, Reuters reported on Wednesday, citing sources with knowledge of the issue.

Demand has not been hit yet, but refiners, including Canadian Natural Resources as well as U.S. firms Valero and Chevron, filed complaints last month with the Canada Energy Regulator (CER) asking the limits to the Total Acid Number (TAN) and vapour pressure specifications on the Trans Mountain Expansion Project (TMX) be narrowed.  

The current high vapor pressure limits and acidity content are not suitable for U.S. West Coast refiners, some have told the regulator in their complaints.

The U.S. West Coast and Asian markets are expected to be the two top destinations for the crude now flowing through the expanded pipeline in Canada.

The expanded Trans Mountain pipeline is tripling the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.

The expansion of the pipeline is set to boost the price of Canada’s heavy crude oil for years to come, top executives at the major energy firms say.

Asia has also started to buy TMX crude.

Rongsheng Petrochemical, for example, became the latest refiner in China to have purchased crude oil delivered to Canada’s Pacific coast via the Trans Mountain pipeline.

While TMX provides more Canadian crude to Asia, not all of that crude can be processed at all Chinese refineries due to its high density and sulfur and acid content, traders told Reuters earlier this month.

Traders and market analysts are closely watching Asia’s appetite for Canadian crude, as TMX gives Canadian producers an outlet on the Asian markets and on the U.S. West Coast.

By Tsvetana Paraskova for Oilprice.com

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