The Trans Mountain pipeline expansion project, aimed at accessing Asian markets for Canadian oil, will likely redirect its barrels to the U.S. West Coast as Russian oil dominates Asian markets.
Analysts and traders attribute this shift to the rising demand for cheaper Russian oil in Asia due to Western sanctions following Moscow's invasion of Ukraine.
With Asia's heavy crude refining market being nine times larger than California's, Canada's attempt to reduce reliance on its top oil customer, the United States, is facing obstacles.
Although the $23.5 billion (C$30.9 billion) TMX project, purchased by the Canadian government in 2018, is finally approaching completion after more than a decade since its proposal as an expanded gateway to Asia, Western sanctions on Russian crude have disrupted these plans.
TMX will transport 590,000 more barrels of crude per day from Alberta to British Columbia's Pacific Coast for export via tankers next year, with industry experts predicting a significant portion of these volumes will be redirected to the U.S. West Coast instead of reaching Asian markets.
Regulatory delays, environmental opposition, and competition from Russia and Middle Eastern countries have diminished the profitability of TMX for Canadian producers.
The original Trans Mountain pipeline currently ships around 300,000 bpd of light crude to the U.S. West Coast, primarily serving refineries such as B.P.'s Cherry Point and HF Sinclair Corp's Puget Sound. The expanded pipeline will focus on transporting heavy oil, with refineries in southern California expected to generate the highest demand.