OTTAWA: Canada should hold onto ownership of the Trans Mountain oil pipeline long term because of the asset’s strategic nature, according to the head of the Crown corporation that manages Trans Mountain Corp.
The sole conduit to a port in British Columbia for crude oil from the Alberta oil sands has opened up significant exports to Asian markets since the capacity of the system was tripled to 890,000 barrels a day in 2024.
Countries including China and South Korea are also seeking alternative supplies to those from the Middle East due to the Iran War.
The Canadian government bought the pipeline in 2018 after the previous owner Kinder Morgan Inc threatened to cancel the planned expansion amid fierce opposition in British Columbia.
The government pledged to eventually turn the system over to the private sector, with a stake included for Indigenous communities.
“It has incredible value,” Elizabeth Wademan, chief executive of Canada Development Investment Corp (CDEV), said at a lunch event in Toronto.
“I think it’s even more strategic now given the global dynamic, but it’s about getting market access for Canadian oil. So I think there’s absolutely a case to be a long-term holder.”
The expansion of Trans Mountain has given Canadian producers a rare surplus of export pipelines, helping raise the price they receive for their oil.
Because of the amount of pipeline capacity out of Canada, Trans Mountain hasn’t filled all of its non-contracted space.
That is changing as oil production grows in Western Canada and demand overseas becomes stronger.
The line ran at more than 95% capacity in April, shipping 850,000 barrels a day, said Mark Maki, Trans Mountain’s chief executive.
The company is planning to expand capacity of the system to almost 1.2 million barrels a day within the next couple of years and final tolls are still being negotiated between Trans Mountain, companies that ship on the line and the Canada Energy Regulator.
Energy Minister Tim Hodgson said late last year that a sale of the system to private owners, including indigenous communities, will probably have to wait until final tolls are settled and the capacity is expanded.
The government had begun exploring selling a stake in Trans Mountain to indigenous ownership in 2023, but the process stalled.
Indigenous participation in Trans Mountain “is important and it will happen, but there’s other strategic pieces that I think have to be sorted out to make sure it’s the right timeline and being very thoughtfully progressed,” CDEV’s Wademan said.
The delay has drawn criticism from some indigenous groups interested in buying a stake in the system.
Canada is earning money from Trans Mountain and therefore can and should sell as much as 30% of the company to First Nations along the route, Joe Dion, chief executive of the Western Indigenous Pipeline Group, said last month.
His organisation represents 36 communities along or near the line.
Dion said an indigenous stake would help facilitate the oil pipeline’s expansion, including a potential tripling of the line to a new deep water port at Roberts Bank in Canada’s southern British Columbia. — Bloomberg
