Canada's Trans Mountain Expansion (TMX) pipeline is driving competition on the country's west coast and supporting domestic prices, according to oil sands giant Cenovus Energy, which has already filled its own capacity on the line.
"TMX shipments have gone well and we have successfully ramped up to full contracted rates," Cenovus chief executive Jon McKenzie said on Thursday, only six months after the 590,000 b/d expansion was put into service on 1 May.
The line nearly tripled capacity of the existing 300,000 b/d system linking Alberta crude producers with the docks at Burnaby, British Columbia, providing access to more customers and higher prices.
"We continue to see really robust competition at the dock," said Cenovus' commercial executive vice-president Geoff Murray, adding that pricing realized has been reflective of global value.
Murray envisions a time when the uplift in prices covers not only the variable costs but also the fixed costs of being a committed shipper on the line, of which Cenovus has about 144,000 b/d of capacity.
"We're seeing things that are covering our costs of full investment in the very near future," said Murray, who says the operational performance of Trans Mountain has been "really solid".
Those fixed tolls are still being determined with shippers and Trans Mountain scheduled for a regulator-led hearing in May 2025. 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 ($6.84)/bl.
Demand for the line will surely remain robust, with McKenzie anticipating "material growth" in the oil sands business over the next two years because of development activities at the company's Sunrise and Foster Creek steam-assisted gravity drainage (SAGD) assets. They could boost production by 20,000 b/d and 30,000 b/d, respectively.
Elsewhere in the oil sands, the 17 kilometre (11 mile) Narrows Lake tie-back to Christina Lake is now 93pc complete and will add 20,000 b/d of output to Cenovus' production profile, starting in mid-2025.
Cenovus executives still anticipate local heavy crude differentials to start to widen in "the next two to three years," which would coincide with when Trans Mountain may reach capacity.
Cenovus produced 771,300 b/d of oil equivalent (boe/d) in the third quarter, down from 797,000 boe/d in the same quarter 2023.
