The Trans Mountain Expansion pipeline is in the eye of a political storm as the British Columbia government vows to restrict diluted bitumen shipments from Alberta, while Prime Minister Justin Trudeau promises the 525,000 barrel per day (bbl/d) project will be built. At the center of the controversy are arcane and poorly understood constitutional principles that could determine the fate of the oil and gas industry’s quest for much expanded market access.
The Canadian pipeline system is already seriously constrained. A mid-November leak in the Keystone line that shut down the system for several weeks backed up delivery and left producers and traders scrambling to find rapidly disappearing storage.
Then came news that rail, always the Canadian industry’s fall back option even though it is $2 to $4 more expensive per barrel, was not available in needed quantities because railroads were busy moving grain and other commodities for which they had long-term contracts, something oil companies are reluctant to sign.