TMX: first insights

TMX marks a new chapter for Western Canadian markets, with the significant expansion unlocking new westbound capacity to Pacific Basin markets.  

With TMX operations still in the early stages, many questions remain. Fill out the form at the top of the page to download a complimentary copy of our recent TMX: First 30 Days report, or read on, as we explore the short-term and long-term effects of the TMX pipeline. 

30 days in: insights and predictions 

After months of waiting, TMX finally delivered its first barrels on 20 May.  

The pipeline expansion has now been operating for over 30 days. Our data anticipates the pipeline will achieve an expanded capacity of 890,000 bpd in H2 2024. As TMX capacity and volumes ramp up in the coming months, constraints are to be alleviated in Western Canada.  

That said, this scenario is complex, and it will not be a straightforward course for the North American crude oil market. Our Canadian Pipeline Service covers 90% of crude pipeline capacity into the US and 91% of crude pipeline capacity from the US into Canada; using this coverage, we outline what can be expected in the months ahead. 

Trade flows expected to shift  

Wood Mackenzie data suggests that increased westbound flows will moderately cut into volumes moving on other routes out of Western Canada, especially crude-by-rail and Enbridge’s Mainline system.  

TMX alleviates the Canadian bottleneck 

Wood Mackenzie forecasts overall WCSB long-haul pipeline utilisation will average around 93% in the first year after TMX comes online, compared to 99% across the past year.  

This outlook expects the marginal transportation route out of Western Canada to move from crude-by-rail to pipeline, supporting relative price strengthening for all Canadian crude grades. 

Storage inventories drain from record-high 

Canadian storage draws in the first three weeks of TMX service equated to 368,000 bpd, which is enough to supplant the westbound pull onto TMX observed in the first month of service. If that rate of storage draws persists, Western Canadian inventories will reach the operational floor within a month.  

Rail volumes expected to drop 

Recent and ongoing Canadian supply growth is expected to minimise the hit to non-TMX pipeline volumes, buoying overall pipeline utilisation above 90%. Rail volumes are expected to largely fall off in the short term.  

TMX: Long-term effects  

It is vital to remain informed of both the short and long-term effects of the TMX pipeline. Using our data North American Crude Oil Market Service, we outline some of the long-term effects of TMX. 

Return of the bottleneck  

While the expected short-term impacts of TMX coming online in Western Canada are the classic results of a market debottlenecking. Our longer-term views are defined by WCSB supply growth driving equal and opposite symptoms of a re-emerging bottleneck as we progress through the decade.  

Pacific flow surge to temporarily reduce PADD II and III volumes

Wood Mackenzie predicts that higher flows to the Pacific coast will temporarily cut into south-bound volumes to PADDs II and III. However, we expect the peak volume decrease on Mainline to be around 100,000 bpd, moderated by supply growth and declines across other egress routes (crude-by-rail and, to a lesser degree, other US-bound pipes).  

Long-haul pipeline utilisation 

Our data forecasts that WCSB long-haul pipeline utilisation will return to pre-TMX levels by 2027, driven by Western Canadian supply growth, and projects that WCSB crude production will peak in the early 2030s.  

Resurgence of crude-by-rail movements 

We expect continued regional supply growth will re-fill total expanded pipeline capacity, leading to a resurgence of crude-by-rail movements and subsequent price discounting through the late 2020s/early 2030s.  

Forecast North American crude flows through all major pipelines 

The North America Crude Markets Service provides context and crude oil analysis of the entire North American crude value chain, including TMX – from upstream production, midstream infrastructure, downstream demand centres and crude price trends. 

The service enables you to connect the dots on the rapidly evolving role US and Candadian crude production is playing in global markets so that you can make more informed operational, logistic and investment decisions. 

For more insight from our oil experts, fill in the form at the top of the page to get a complimentary copy of the full report on Canada's Trans Mountain pipeline expansion.