Blogs & Comment

Kinder Morgan gaining in pipeline race to the Pacific

While Enbridge's Northern Gateway hearings bog down, the U.S. competitor green-lights a monster expansion of its Trans-Mountain line.

American pipeline company Kinder Morgan’s announcement that it will expand its Trans-Mountain oil pipeline to 850,000 barrels a day confirms something pipeline watchers have been quietly saying for a while: it will likely beat Enbridge in the race to build a big oilsands export pipeline to the Pacific.

Kinder has a number of advantages over Enbridge’s 550,000-bpd Northern Gateway proposal, which is undergoing a fractious regulatory hearing process. Trans-Mountain has been in the ground, operating with few incidents, for more than half a century. It runs along the well-trafficked Yellowhead corridor between Edmonton and Vancouver, not the untouched wilderness of the Gateway route. Kinder already expanded the pipe in the most environmentally sensitive section through Jasper National Park a few years ago.

Moreover tankers bound for Asia and California, though not the most efficient and modern Very Large Crude Carriers preferred by shippers, already dock at the Westshore terminal in Burnaby, B.C. The nearby Chevron refinery is threatened with closure because the competition from Asian and American refiners for the 300,000 barrels a day currently coming down the pipe has become stiff, so existing B.C. jobs are at stake.

But 850,000 barrels a day is far more than either Chevron or the refineries in neighbouring Washington state can handle, so the majority of that capacity will logically be shipped offshore. The big question then, which Kinder has so far not answered, is where the tankers will dock. Will Vancouverites tolerate a tanker a day, or will someone build a big terminal on the U.S. side of the border? From an environmental point of view it’s six of one, half dozen of the other: the risk of a spill would be shared around the Salish Sea separating Vancouver Island from the mainland. But for economic benefits to Canada, the answer is material.