About 19 Aframax ships loaded around 330,000 barrels per day of crude oil in July at Canada’s West Coast in the second full month of operations on the newly expanded Trans Mountain pipeline, slightly lower than June, vessel-tracking data showed.
The pipeline loadings are closely watched for their impact on global oil flows and freight rates. The pipeline’s success is also crucial to the Canadian government’s plan to recoup its investment by selling the $24.84 billion (C$34 billion) line.
July departures represent “pretty solid exports especially given the demand in markets such as China haven’t been performing particularly well,” said Rohit Rathod, an analyst at energy data firm Vortexa.
Besides the 19, vessel Caspian Sea on Wednesday was moored and prepared to load at the Westridge Marine terminal in Vancouver.
Trans Mountain had loaded about 350,000 barrels per day (bpd) on 20 Aframax vessels partially and one non-Aframax vessel in June, the company said last month. It has the capacity to load 34 Aframax ships a month.
The vessels, partially loaded Aframaxes able to carry about 550,000 barrels each, sailed largely to the U.S. West Coast and China.
“We now have a group of vessels (Aframaxes) relocated to America’s west coast and engaged in carrying Canadian crude either to the U.S. West Coast and even long haul to China,” Vortexa’s Rathod said.
Tanker Yuan He Wan loaded about 550,000 barrels of oil and sailed to Ulsan in South Korea, marking the first cargo to head to the Asia country since the expansion.
Refineries on the U.S. West Coast were still testing out the heavy crude barrels available on Trans Mountain, and the cost of using different-sized vessels to transport the crude was having an impact on where the oil is being shipped, said Geoff Murray, executive vice-president of commercial at shipper Cenovus Energy.
Top U.S. refiners were key buyers of the crude in July.
“Marathon Petroleum’s Los Angeles Refinery, Valero Energy’s Benicia refinery, Chevron Corp’s El Segundo refinery were the typical destinations from the legacy TMX pipeline loadings, and this remains the case as volumes ramp up, with Phillips 66’s Ferndale joining them in recent months,” said Matt Smith, an analyst at ship tracking firm Kpler.
TMX did not immediately reply to a request for comment.
Chevron and Valero also did not reply to requests for comment, while Phillips 66 and Marathon Petroleum declined to comment.
Phillips 66 said this week the pipeline was running around 650,000 to 675,000 bpd and headed toward 700,000 bpd by the end of the year.
“About two-thirds of incremental TMX barrels have gone into Asia, which has been a bit of a surprise for us,” said Brian Mandell, a Phillips 66 vice president. The refiner benefited from more barrels to the West Coast, he added.
TMX was estimated to be about 80% full, with all committed capacity being used, two traders said. One of them added TMX was running “exceptionally well.”
Canadian oil shippers would be slow to utilize Trans Mountain’s 20% of uncommitted spot capacity because it is more expensive than other pipelines, Cenovus’ Murray added.
(Reporting by Arathy Somasekhar in Houston and Nia Williams; Editing by Chris Reese)