Canada’s TMX to be full by 2028: Trans Mountain

Spanish Market: Crude oil
22/10/24

Canada's 590,000 b/d Trans Mountain Expansion (TMX) oil pipeline will be full within a few years, but final tolls need to be sorted before the government can sell the project, the head of Trans Mountain said this week.

"The system is performing very consistently," Trans Mountain chief executive officer Mark Maki told a federal Natural Resources committee on 21 October. "We expect volumes to increase here in the fourth quarter, and more importantly over the next couple of years," he said. "In stages, the system will be full, we think by 2028."

The expansion project roughly tripled the capacity of the Trans Mountain system connecting Alberta crude shippers to Burnaby, British Columbia, when it was put into service on 1 May. Now at 890,000 b/d in total capacity, Trans Mountain allows greater access for producers that have historically been at the mercy of refiners in the US midcontinent and Gulf coast.

Crude now more readily moves to the US West coast, Korea, India, Japan and China, said Maki, and that has translated into higher prices since the expansion was commissioned.

"It's about $10/bl better" for Canadian producers in the current fourth quarter compared to what it historically has been, said Maki.

Trans Mountain and labor union representatives were in Ottawa to explain to members of parliament how the project's cost spiraled since it was first proposed more than a decade earlier, and importantly, if Canadians can expect to recover their investment in the federally-owned line.

"In my time in the pipeline sector, there is one thing that has really stuck with me ... that is the importance of being both a disciplined buyer and a disciplined seller," said Maki, who previously spent more than 30 years with midstream operator Enbridge. "When the time is right, Canada can sell and the outcome that they should expect is recovery of the taxpayer's capital."

"You do not act in a hurry. You take your time," said Maki.

TMX is expected to cost about C$34.2bn ($24.7bn) in Trans Mountain's latest estimate, multiples of the C$5.4bn when it was first proposed in 2013 by then-owner US midstream firm Kinder Morgan. Canada stepped in and bought the existing line and the expansion project in 2018 for C$4.5bn, with the expectation the expansion would require C$7.4bn for a total investment of about C$12bn.

How to split the bill

How much revenue the new line will generate for any future owner is unclear given an outstanding tolling dispute between the midstream company and shippers. Final tolls will not be decided until the conclusion of a Canada Energy Regulator-led (CER) hearing next year.

For now, the two sides disagree over what information will be permissible in the hearing and how much Trans Mountain is required to disclose.

Shipper requests for "all" and "every" document, version or piece of information on a subject matter are unduly broad, according to Trans Mountain, which has already produced about 15,000 documents. Of these, Trans Mountain has requested roughly 4,000 be kept confidential.

Supplier pricing, commercial information and loan agreements are among the information that, if disclosed, "could harm Trans Mountain's reputation and relationship with parties it has contracts," Trans Mountain said in its 2 October request to the regulator.

It may also hamper the midstream company's ability to negotiate similar agreements in the future, it added.

Shippers in a response on 18 October want the loan information for the highly leveraged project to be scrutinized further to determine whether it is indeed to be considered confidential.

"The Participating Shippers generally remain concerned about the proposed breadth of confidentiality designations sought by Trans Mountain in this proceeding," lawyers for Marathon Petroleum Canada wrote, in concurrence with BP, Canadian Natural Resources, Cenovus, ConocoPhillips Canada and Suncor.

At issue are what have been categorized as "uncapped" costs, many of which would fall onto the shippers who made commitments on the pipeline years earlier. Trans Mountain in December 2023 estimated uncapped costs have swelled to C$9.1bn.

Interim tolls in place have the fixed costs for a heavy crude shipper moving 75,000 b/d or more over a 20-year term at about C$9.54/bl. A 19 July filing by Trans Mountain noted that a C$1bn reduction in the uncapped costs would reduce the benchmark toll by C$0.70/bl.

Collecting, organizing and analyzing documentation will continue into spring, with an oral hearing scheduled to begin on 14 May 2025.

By Brett Holmes

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13/01/25

Trudeau exit may spur Canadian energy growth

Calgary, 13 January (Argus) — Canadian prime minister Justin Trudeau's place in federal politics is winding down after nine years of driving change in climate policy, but those environmental advances came at a cost for the world's fourth-largest oil producer, helping to stifle foreign investment in the country's oil and gas sector. Support for Trudeau fell nationwide over the past year, as inflation and rising housing costs fueled by a relaxed immigration policy and carbon taxes became too much for many to bear. Trudeau, seemingly immune to scandal and high-profile exits on his team, was dealt his biggest blow when his deputy prime minister and finance minister Chrystia Freeland resigned in December, citing his approach to the "aggressive economic nationalism" of US president-elect Donald Trump's threatened trade tariffs, prompting his 6 January decision to step down. Canadian crude producers still managed to lift output by 30pc during Trudeau's tenure since 2015, even as major foreign players abandoned the oil sands for friendlier jurisdictions and upstream projects and pipelines were either mothballed or cancelled outright. Provincial jurisdiction over resources prompted frequent fights between Trudeau and Albertan premiers who guarded their claim to energy and the right to explore and extract within their borders. "We could've done so much more," Alberta premier Danielle Smith said hours after Trudeau's announcement, lamenting missed opportunities for Canada's oil patch over the past decade, including the failed Energy East, Northern Gateway and Keystone XL export pipelines. A tanker ban, tighter regulation and an onerous project approval process were among the tools Trudeau used to try to rein in the oil and gas sector, saying in 2017 that Canada's oil sands needed to be "phased out" before naming a former Greenpeace director as his environment minister. Smith did give Trudeau a nod for his commitment to keeping midstream giant Enbridge's Line 5 pipeline from shutting down, and for helping to get the massive Trans Mountain Expansion (TMX) pipeline and Coastal GasLink export projects from Alberta to Canada's Pacific coast across the finish line. But while Smith welcomes Trudeau's resignation, Canada now faces a period of lame duck leadership before it holds federal elections, while cross-border tensions are rising. Your new best frenemy Its largest trading partner is quickly becoming its newest antagonist, with Trump threatening a 25pc tariff on all imports from Canada and Mexico. Unencumbered movement of oil is critical on both sides of the border, with 80pc of Canada's 5mn b/d of crude production aimed at refineries in the US. Many landlocked Canadian producers have no practical alternative, like refiners in the US midcontinent connected by pipeline. As political chaos unfolds in Ottawa, Trump has lobbed insults at Trudeau and made calls for the northern neighbour to become the US' "51st state", a taunt that has struck a nerve in Canada. "There isn't a snowball's chance in hell that Canada would become part of the US," Trudeau said on X on 7 January. "Trump's comments show a complete lack of understanding of what makes Canada a strong country," wrote minister of foreign affairs Melanie Joly. Trump will have spotted Canada's weakness months ago, with support for Trudeau tumbling to the benefit of the Conservative Party and its leader Pierre Poilievre. Recent polls indicate the centre-right party would win a majority of seats in the House of Commons if an election were held today. That is likely to happen in May, assuming opposition parties bring down the government when Parliament resumes in late March. Should Poilievre win, Trump will have a partner better aligned on more policies than Trudeau was, but the suggestion that Canada could become part of the US will get the same response. "We will never be the 51st state. Period," Poilievre said. His primary ambitions are to undo Trudeau's work, with the federal carbon tax being the first to go. Rescinding the tanker ban, killing proposed emissions caps and promoting pipeline construction are also on the agenda. Poilievre plans to "take back control" of Canada's resources through permitting and cutting taxes on pipeline and LNG projects to become less reliant on the US. "Canadians will give me a mandate to take the country in a completely opposite direction," Poilievre said on the Jordan B Peterson Podcast earlier this month, describing how vanquishing Trudeau's energy policy will "cause a massive resource boom in our country." The lengthy exchange touched on minimising government, artificial intelligence and immigration, and was shared by Trump's ally, Tesla chief executive Elon Musk, who called it a "great interview". Priming for another Pacific pipeline Canada's energy industry has returned to profit and received a much-needed boost from the federally owned 590,000 b/d TMX pipeline, but rising oil sands production means the newly commissioned system is destined to fill up soon. The prospect of an industry-friendly federal government reinvigorating a relatively dormant midstream sector is positive for investment in Canada, and the US could play an unintended role in deciding where any pipelines are proposed. Enbridge and the Alberta government are teaming up to find ways to expand pipeline capacity. Smith singled out the US as a customer she wants to enhance ties with amid looming tariff threats, but those threats may prompt a revival of pipeline projects to Canada's west coast to reduce dependence on the US market. Enbridge's Northern Gateway pipeline was approved in 2014, but a Liberal Party led by Trudeau came to power in 2015 with sweeping changes for the oil and gas sector, including a tanker ban on the country's Pacific coast, effectively killing the project. The C$7.9bn ($7.3bn) Northern Gateway was not in the interest of local communities, Trudeau said in late 2016, when he officially reversed the previous government's approval. The pipeline would have shipped 525,000 b/d of diluted bitumen westward and 193,000 b/d of imported condensate eastbound to the oil sands region for blending. Construction would have avoided large populations and was seen as the most practical option for getting more Canadian crude to Asia-Pacific. Its northern terminal may not have had the same tanker limitations as TMX faces at Vancouver, and could have seen reduced voyage times. Enbridge now has added support from the Alberta government by way of crude volumes the province collects as tax from some oil companies in lieu of cash payments. These in-kind barrels would be the first to backstop a major pipeline expansion by Enbridge, giving both the midstream company and other producers something to latch onto to advance a future project. This is a new approach for Alberta, after sacrificing C$1.5bn it paid in a last-ditch effort to keep the doomed 830,000 b/d Keystone XL project to the US alive. Outgoing US president Joe Biden revoked that troubled line's permit in 2021. Like Keystone XL, Northern Gateway is no more. Reviving such a project would still require significant stakeholder engagement along any route, and face substantially higher construction costs than a decade ago. The C$34bn TMX put into service in May 2024 was originally pegged at C$5.4bn in 2013, even less than Northern Gateway as TMX was the twinning of an existing system. This would be a big hurdle to clear, even if governments were to allay regulatory concerns. But with an unpredictable Trump returning to the White House, the prospect of shipping more Canadian crude west might soon hold a heightened appeal. By Brett Holmes Canadian oil production Canadian upstream investment Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US issues 45Z tax guidance for low-carbon fuels

10/01/25

US issues 45Z tax guidance for low-carbon fuels

Washington, 10 January (Argus) — US producers of low-carbon fuels can start claiming the "45Z" tax credit providing up to $1/USG for road use and $1.75/USG for aviation, following the US Treasury Department's release today of proposed guidance for the credit. The guidance includes proposed regulations and other tools to determine the eligibility of fuels for the 45Z tax credit, which was created by the Inflation Reduction Act to replace a suite of incentives for biofuels that expired at the end of last year. Biofuel producers have been clamoring for guidance from the US Treasury Department so they can start claiming the tax credit, which is available for fuels produced from 1 January 2025 through the end of 2027. "This guidance will help put America on the cutting-edge of future innovation in aviation and renewable fuel while also lowering transportation costs for consumers," US deputy treasury secretary Wally Adeymo said. "Decarbonizing transportation and lowering costs is a win-win for America." The creation of the 45Z tax credit has already prompted a change in US biofuels markets by shifting federal subsidies from blenders to producers. Because the value of tax credit increases for fuels with the lowest lifecycle greenhouse gas (GHG) emissions, it could encourage refiners to source more waste feedstocks such as used cooking oil, rather than conventional crop-based feedstocks. While the guidance is still just a proposal, taxpayers are able to "immediately" use the guidance to claim the 45Z tax credit, until Treasury issues additional guidance, an administration official said. The guidance on 45Z released today affirms that only the producer for the fuel is eligible to claim the credit, not blenders. To be eligible for the tax credit, the fuel must have a "practical or commercial fitness for use in a highway vehicle or aircraft" by itself or when blended into a mixture, Treasury said. Marine diesel and methanol suitable for highway or aircraft use are also eligible for 45Z, as is renewable natural gas that can be used as a transportation fuel. Treasury also released an "annual emissions rate table" offering providers a methodology for determining the lifecycle GHG of fuel. Treasury said a key emissions model from the US Department of Energy, called 45ZCF-GREET, used to calculate the value of the 45Z tax credit is anticipated to be released today, although industry officials said it may be delayed until next week. Treasury said it intends to propose regulations at "a future date" for calculating the GHG emissions benefits of "climate smart agriculture" practices for "cultivating domestic corn, soybeans, and sorghum as feedstocks" for fuel. Those regulations could lower the calculated lifecycle emissions of fuel from those crop-based feedstocks and increase the relative 45Z tax credit. US biofuel producers said they are still awaiting key details on the 45Z tax credit, including the update to the GREET model. Among the outstanding questions is if the guidance released today provides "enough certainty to negotiate feedstock and fuel offtake agreements going forward", said the Clean Fuels America Alliance, an industry group that represents the biodiesel, renewable diesel and sustainable aviation fuel industries. It is unclear how president-elect Donald Trump intends to approach this proposed approach for the 45Z credit, which will be subject to a 90-day public comment period. Trump has promised to "rescind all unspent funds" from the Inflation Reduction Act. But outright repealing 45Z would leave biofuels producers and farmers without a subsidy they say is needed to sustain growth, after the expiration last year of a $1/USG blender tax credit and a tax credit of up to $1.75/USG for sustainable aviation fuel. Biofuel and soybean groups were unsuccessful in a push last year to extend the expiring biofuel tax credits. The 45Z credit is likely to be debated in Congress this year, as Republicans consider repealing parts of the Inflation Reduction Act. House Republicans have already asked for input on revisions to the 45Z credit, signaling they could modify the incentive. In a tightly divided Congress, farm-state lawmakers may hold enough leverage to ensure some type of biofuel incentive — and potentially one friendlier to agricultural producers than 45Z — survives. By Chris Knight and Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Opec+ aims to reverse output falls in 2025

10/01/25

Opec+ aims to reverse output falls in 2025

London, 10 January (Argus) — Opec+ production cuts in 2024 saw the alliance reduce its crude output to lower than even in the pandemic-hit years of 2021 and 2022. And while Opec+ plans to start unwinding some of these cuts this year, it is far from clear that there will be sufficient room in the market for this additional supply. Opec+ members subject to targets reduced crude output by 1.66mn b/d to 33.96mn b/d in 2024, Argus estimates. This was an even bigger decrease than 2023's 1.44mn b/d and means that the alliance has taken 3.1mn b/d off line over the past two years — equal to about 3pc of global oil supply. Saudi Arabia cut production by 650,000 b/d to 8.96mn b/d last year, the lowest since 2010. Russian production fell by 430,000 b/d to 9.15mn b/d, the lowest since at least 2010. Other big falls came from Kuwait, whose output dropped by 190,000 b/d to 2.43mn b/d, and Iraq, where production declined by 160,000 b/d to 4.13mn b/d — although this was still well above its 4mn b/d target. Opec+ can at least claim that it has so far achieved its stated objective of ensuring oil market stability — average prices for Atlantic basin benchmark North Sea Dated in 2024 were only around $2/bl lower than in 2023 at around $80/bl. But this has come at a cost. While Opec+ has capped its output, countries outside the alliance have continued to boost production — eating into Opec+ market share. Whether Opec+ will stick to this approach is a key factor to watch in 2025. Pressure has been building from some members who want to increase output as soon as possible. As things stand, Opec+ members are set to start unwinding 2.2mn b/d of voluntary crude production cuts starting in April over an 18-month period. But this is not certain, given that most forecasts show a market surplus this year. Opec+ continues to stress that the return of 2.2mn b/d — one of three cuts it is implementing — will depend on market conditions. For now, the alliance is in wait-and-see mode, particularly given the uncertainties associated with the return of Donald Trump as US president and its impact on the global economy. As always, the extent to which Opec+ members complied with their individual output targets was a big issue in 2024. But on balance, the alliance's output last year was 40,000 b/d under its collective target. While serial overproducers such as Iraq, Kazakhstan and Russia attracted a lot of scrutiny and pledged to compensate for exceeding their targets, members such as Azerbaijan, South Sudan and Nigeria produced well below their own targets. Without target Another key development in 2024 was growing production from members of the group that do not adhere to targets — Iran, Libya and Venezuela. Iran boosted output by 380,000 b/d to 3.32mn b/d, the highest since 2018, despite the continuation of US sanctions on its oil exports. Similarly, sanctions-hit Venezuela increased production by 110,000 b/d to a six-year high of 870,000 b/d. Libya saw its production fall by 60,000 b/d to 1.11mn b/d — mostly owing to politically motivated shutdowns — but it ended the year at 1.4mn b/d, the highest in over a decade. On a monthly basis, members subject to cuts saw very little change in their collective output in December, with production edging up by 10,000 b/d to 33.57mn b/d. This was 270,000 b/d below the group's target for the month. Notable changes included a 50,000 b/d increase from Nigeria, which saw its output climb to 1.54mn b/d — the highest since July 2020 — while Kuwaiti output increased by 40,000 b/d to 2.44mn b/d. But these increases were almost entirely offset by a drop from the UAE, whose production fell by 120,000 b/d to 2.85mn b/d owing to maintenance at one of its onshore fields. Opec+ crude production mn b/d Dec Nov* Dec target† ± target Opec 9 21.23 21.22 21.23 +0.00 Non-Opec 9 12.34 12.36 12.62 -0.28 Total 33.57 33.58 33.85 -0.28 *revised †includes additional cuts where applicable Opec wellhead production mn b/d Dec Nov* Dec target† ± target Saudi Arabia 8.91 8.93 8.98 -0.07 Iraq 3.99 3.98 4.00 -0.01 Kuwait 2.44 2.40 2.41 +0.03 UAE 2.85 2.97 2.91 -0.06 Algeria 0.91 0.91 0.91 0.00 Nigeria 1.55 1.50 1.50 +0.05 Congo (Brazzaville) 0.27 0.25 0.28 -0.01 Gabon 0.24 0.22 0.17 +0.07 Equatorial Guinea 0.07 0.06 0.07 +0.00 Opec 9 21.23 21.22 21.23 +0.00 Iran 3.40 3.36 na na Libya 1.31 1.24 na na Venezuela 0.90 0.88 na na Total Opec 12^ 26.84 26.70 na na *revised †includes additional cuts where applicable ^Iran, Libya and Venezuela are exempt from production targets Non-Opec crude production mn b/d Dec Nov* Dec target† ± target Russia 8.97 8.97 8.98 -0.01 Oman 0.75 0.75 0.76 -0.01 Azerbaijan 0.48 0.49 0.55 -0.07 Kazakhstan 1.44 1.45 1.47 -0.03 Malaysia 0.36 0.36 0.40 -0.04 Bahrain 0.18 0.18 0.20 -0.02 Brunei 0.08 0.08 0.08 -0.00 Sudan 0.02 0.02 0.06 -0.04 South Sudan 0.06 0.06 0.12 -0.06 Total non-Opec 12.34 12.36 12.62 -0.28 *revised †includes additional cuts where applicable Opec+ crude production* Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Next Canadian PM to be chosen on 9 March

10/01/25

Next Canadian PM to be chosen on 9 March

Calgary, 10 January (Argus) — Canada's next prime minister will be chosen on 9 March after a leadership race among the governing Liberals, the party announced late 9 January. Prime minister Justin Trudeau announced on 6 January that he would resign from his roles as head of the federal government and party but stay on until a successor was found. Canada's governor general, at Trudeau's request, delayed a return to Parliament by two months, buying his party time before elected officials return to session, now scheduled for 24 March. Opposition parties have vowed to bring down the government and trigger a general election at first opportunity, prompting the Liberals to expedite the leadership race. With the process now set, candidates will need to declare their participation by 23 January. At least two high profile Liberal cabinet members have said they are not planning to run for the top job. Minister of foreign affairs Mélanie Joly and minister of finance and intergovernmental affairs Dominic LeBlanc both said the threat of tariffs and economic pressures from US president-elect Donald Trump require their full attention at their current posts. Recent polls indicate the centre-right Conservatives would win a majority of seats in the House of Commons if an election were held today, ending the Liberal's reign that began in 2015. Conservative leader Pierre Poilievre has focused efforts on criticising potential Liberal leadership candidates, leaning into their connection to Trudeau, the state of immigration and the Canadian economy, and the carbon tax. This includes Trudeau's former finance minister Chrystia Freeland; the Liberal's chair of economic growth Mark Carney who is a former governor of both the Bank of Canada and Bank of England; and former British Columbia premier Christy Clark. "They're all Justin Trudeau. They're all just like Justin," said Poilievre on 9 January. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Maduro claims Venezuelan presidency, sanctions build

10/01/25

Maduro claims Venezuelan presidency, sanctions build

Caracas, 10 January (Argus) — Nicolas Maduro took the oath of office for a third term as Venezuela's president today in a small ceremony, prompting more condemnation from countries that reject his claim to the title. Cuban president Miguel Diaz-Canel arrived in Venezuela ahead of the 45-minute ceremony, held in a side room at the national assembly. Maduro promised a "term of peace" in brief comments. Only state media was allowed to film the event, which was much smaller than his past two inaugurations. Opposition leader Edmundo Gonzalez, who has international support for his claim that he won the July presidential election, had said he would try to enter Venezuela from forced exile to claim the office. The outgoing administration of President Joe Biden marked Maduro's inauguration by upping the bounty on him to $25mn, related to a criminal case filed by US federal prosecutors for the Venezuelan leader's alleged involved in drug trafficking. "It is clear to the Venezuelan people, the United States and most of the world that Edmundo Gonzalez should be sworn in today as Venezuela's next president," a senior US official said. But the Biden administration will not formally recognize Gonzalez as his country's legitimate leader — a decision that could have given him a say in managing some of Venezuela's foreign assets, including in the US. "At this juncture, the US currently recognizes the democratically elected 2015 National Assembly as a legitimate government of Venezuela," the US official said. The US also imposed sanctions on PdV president Hector Andres Obregon — another complication for PdV's foreign partners. To constrain foreign revenue sources for Maduro's government, the US administration would continue to approve requests to seize Venezuelan sovereign assets in foreign countries to satisfy Caracas' debts, the US official said. The most prominent of those cases is moving through a US federal court in Delaware, where Venezuela's creditors are close to finalizing the sale of PdV-owned US refiner Citgo. But the Biden administration is not looking to revoke a license it granted in 2022, allowing Chevron to import into the US cargoes of oil produced in its joint venture with PdV — some 200,000 b/d last year. Chevron's authorization "is a policy that we have been reviewing here at the highest levels for some time," the US official said. "One of the things that has driven our policy all along is a commitment to use strategic pressure on Maduro and his authorities when that is appropriate and will have proportionate impact." The Biden team has held discussions with the incoming administration of president-elect Donald Trump on Venezuela, the official said. "Depending on the events that we see unfold in the next 10 days, we are ready to make a set of recommendations to the incoming administration with respect to the future of" licenses granted to Chevron and for some other foreign companies to operate in Venezuela. Terms of peace The inauguration drew other international actions. Israel recognized Gonzalez as president of Venezuela today, describing Maduro as an "ally of Iran", adding its name to the long list of countries that do not recognize Maduro as president. The EU also announced it was sanctioning another 15 Venezuelan nationals, including supreme court head magistrate Caryslia Rodriguez, who attended the ceremony today. There are now 70 Venezuelans, including military and civilian, present and former officials, under EU sanction. Venezuela's response to the condemnation has been to increase military and policy control in Caracas, arrest protesters and threaten to "neutralize" any aircraft carrying Gonzalez in its airspace. Opposition leader Maria Corina Machado was also briefly held on Thursday after emerging from several months of hiding to lead an anti-Maduro rally, her allies said. By Carlos Camacho and Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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