Trans Mountain Pipeline Seeks to Reserve More Space for Long-Term Contracts

Trans Mountain Corp., the federal Crown corporation that owns Alberta's only pipeline to the Pacific Ocean, is seeking permission from the Canada Energy Regulator to reserve more space for companies with long-term contracts. Currently, the pipeline can carry 890,000 barrels a day, and Trans Mountain wants to set aside 90% of this capacity for shippers who have signed long-term contracts.

This would reduce the available space for other companies from about 178,000 barrels a day to around 89,000. The change is not unusual, as about 94% of South Bow Corp.'s Keystone system is under contract.

Trans Mountain has already filled up more than half of its capacity this year, with demand increasing since the Strait of Hormuz was disrupted in February. Asian buyers who can no longer count on Persian Gulf oil are turning to Canada instead.

Patrick O'Rourke, managing director of equity research at ATB Cormark Capital Markets, noted that securing direct pipeline capacity requires significant financial strength, which is why larger producers dominate the contracted space.