May 1 (UPI) -- Provincial disputes over plans to expand the capacity of the existing Trans Mountain oil pipeline could have U.S. consequences, analysis shows.
A Kinder Morgan-led consortium planned to expand the Trans Mountain network to the western coast of Canada, tripling its design capacity to 890,000 barrels per day. But after spending more than $800 million (USD) on the project since petitioning the federal government in 2013, the group said opposition to the pipeline was creating risk to its shareholders and it may shelve the plan.
That opposition, the consortium added, has led to increased provincial tensions. British Columbia has filed legislation that could limit the flow of Alberta's oil, while Alberta proposed its own legislation that could block exports of oil, natural gas or fuels to its neighbors. Saskatchewan has sided recently with Alberta.
"The trouble is that as much as 60 percent of the 300 million barrels of oil per day traveling on the existing Kinder Morgan Trans Mountain Express crude pipeline from Edmonton to Vancouver is diverted via a lateral in Sumas, British Columbia, to feed U.S. refineries in Washington state," Sandy Fielden, the director of oil and products research for Morningstar, said in a report emailed to UPI.
Canada is by far the largest crude oil exporter to the United States, accounting for about 40 percent of all the oil sent into the country. The four-week moving average for Canadian exports, at 3.4 million bpd, is up 3 percent from last year. The same four-week moving average for Saudi Arabia, the second-largest exporter, was 753,000 bpd.
For refineries in the Pacific Northwest, Canadian crude oil meets about 30 percent of the demand and if Alberta decides to block oil shipments to British Columbia, the flow would also slow for five regional refineries in the United States.
While the United States is among the largest crude oil producers in the world, many of its own refineries are configured for the heavier type of oil found in Canada. Fielden said Pacific Northwest refineries could get supplies from the Bakken shale in North Dakota, but most of that oil goes south.
That would leave Washington looking to foreign suppliers, but the Organization of Petroleum Exporting Countries is limiting its own production, with help from Russia, so spare Middle East oil capacity is limited.
"The same is true for Latin American crudes -- that are in short supply these days," Fielden said.
Washington Gov. Jay Inslee in March signed executive action protecting maritime species in a move that Greenpeace said could complicate Kinder Morgan's plans.