Tens of billions of dollars in new revenue would flow to Canadian oil producers and government with an expanded Trans Mountain Pipeline system creating greater access to international markets. Scott Stoness, Kinder Morgan Canada’s Vice-President for Finance and Regulatory Affairs, explains some of the numbers in this Q&A.

What are ‘shippers’ and why are they supporting the Trans Mountain Expansion Project (TMEP)?

A shipper is a company that contracts to move oil on the Trans Mountain Pipeline. The shipper can move oil using a month-to-month contract or a long-term take-or-pay contract. (Take-or-pay means the shipper uses the capacity it has contracted for or pays a penalty for contracted capacity not used).

How much oil would TMEP move?

Pre-expansion, the pipeline capacity is 300,000 barrels per day or bpd. Post-expansion the pipeline capacity would be 890,000 bpd. A barrel is a standard unit of volume for oil, equivalent to 42 US gallons or 159 litres.

On a long-term basis, we’ve contracted with shippers for 80 per cent of capacity (712,000 bpd) on an expanded pipeline as take-or-pay. After expansion, Trans Mountain could move up to 52 billion litres of oil per year.

Where would that additional oil go?

Trans Mountain does not decide where the oil goes. It ships through its pipeline to either Washington or Burnaby and shippers decide what to do with it.

At present the 300,000 bpd capacity of our existing pipeline is oversubscribed. We expect some of the oil moving through the line as a result of increased capacity will go to Washington, some will go to Chevron Burnaby, some will go to oil terminals in the Burnaby area and some will go to Asia.

Why not just keep selling into the US as we do now?

Canada is running at near maximum capacity of its pipelines to the US and the US president has vetoed a new pipeline to the US (Keystone XL). Some of the oil on an expanded Trans Mountain system may be moved through the Panama Canal to the Houston area and some may move to California. However, the majority of the new capacity is expected to be used for oil export to Asia or to increased usage in Burnaby or Washington.

How much value would TMEP add to the price of Canadian oil?

Muse Stancil (our external oil pricing expert) has calculated that oil producers will benefit by $73.5 billion with the Trans Mountain Expansion Project.

What are the benefits for oil producers, Canadians, people in BC and Alberta?

The Conference Board of Canada (our external economic experts) conservatively estimates the Project will result in:

  • $28.2 billion increased taxes in Canada
  • 123,000 person years of employment
  • $73.5 billion in increased profits for oil producers

The estimates for these benefits are conservative because they do not assume any increase in investment in the Western Canadian oil industry or economic benefits associated with increased tanker traffic.