Pipeline Profiles: Trans Mountain Pipeline

Sources: Trans Mountain Pipeline UCL, NEB

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The Trans Mountain Pipeline (Trans Mountain) transports crude oil and refined petroleum products from Edmonton, AB to refineries and terminals in both British Columbia and Washington State. Crude oil is also shipped to offshore markets in Asia and the U.S. west coast via the Trans Mountain Marine Terminal (Westridge Dock) in Burnaby, B.C. Trans Mountain is unique among the major pipelines exiting the Western Canadian Sedimentary Basin in that it ships the full spectrum of oils (from refined petroleum products to heavy crude oil) in a single line. Trans Mountain has an approximate capacity of 48 thousand cubic metres per day (300 thousand barrels per day), which varies from month to month depending mostly on the types of crude being shipped and whether there are any restrictions on the operating pressure levels.

In 2016, export domestic heavy crude oil throughput at Sumas averaged 0.67 thousand cubic metres per day (4.08 thousand barrels per day). In 2016, export domestic light crude oil throughput at Sumas averaged 29.67 thousand cubic metres per day (186.58 thousand barrels per day).

Flows measured at Sumas are exports. At the Sumas delivery point, the Trans Mountain pipeline connects with the Puget Sound Pipeline which delivers oil to four refineries on the west coast of Washington state.

In 2016, domestic light crude oil throughput at Burnaby averaged 8.25 thousand cubic metres per day (52.08 thousand barrels per day). In 2016, refined petroleum products crude oil throughput at Burnaby averaged 8.08 thousand cubic metres per day (50.75 thousand barrels per day).

Flows measured at Burnaby are intracanada flows. At the Burnaby Terminal there are connecting pipelines that enable deliveries to the Chevron Burnaby Refinery and to Suncor’s Burrard refined products marketing terminal. Note, due to confidentiality reasons, the volumes that are delivered at Kamloops are grouped into the Burnaby key point.

In 2016, export domestic heavy crude oil throughput at Westridge averaged 3.58 thousand cubic metres per day (22.42 thousand barrels per day). In 2016, export domestic light crude oil throughput at Westridge averaged 0.25 thousand cubic metres per day (1.58 thousand barrels per day).

Flows measured at Westridge are exports. The Westridge Dock is a marine terminal located approximately three kilometres from the Burnaby Terminal. The Westridge Dock facilitates marine exports from the Trans Mountain Pipeline to coastal refineries, such as those on U.S. West Coast or in Asia.

 

The physical capacity of a pipeline is based on many factors such as the product(s) being carried, direction of flow, ambient temperature, pipeline compression, and maintenance work or other pressure restrictions. The operational capacity at each key point may also reflect contracts for transportation service, and supply and demand across the system. The actual physical capacity of the pipeline may be higher than the assumed operational capacity stated here.

Open data can be freely used, modified and shared by anyone for any purpose. The data for these graphs are available here.

Key Developments

Last updated: August 2016

In December 2013 Kinder Morgan filed an application for the Trans Mountain Pipeline Expansion project (TMX) and on 19 May 2016, the project was approved by the Board. It would increase the capacity of the Trans Mountain system to 141 500 m³/d (890 Mb/d).

In January 2015, the Board approved tariff amendments which, among other things, incorporated limits for verifying shipper nominations that are based on historical deliveries (RHW-001-2013). Nomination verification was previously based on a shipper’s capability to tender and receive volumes. After an additional comment period, the Board approved a revision of the tariff amendments in April 2015. The amendments contributed to a reduction in apportionment levels on Trans Mountain, which were often above 70% during 2013-2014.

In February 2016, the Board approved the 2016-2018 Incentive Toll Settlement (ITS) for Trans Mountain.

High demand for pipeline capacity to the west coast has contributed to apportionment on Trans Mountain and triggered several applications to allocate capacity between Land Shippers (mostly B.C. and Washington State refineries) and Dock Shippers (marine exporters). Currently, approximately 26% of capacity is allocated to the Westridge Dock, including 8 600 m³/d (54 Mb/d) of firm service and 4 000 m³/d (25 Mb/d) of interruptible service which is auctioned each month. The remainder of capacity is allocated to Land Destinations. Average Land Destination apportionment was 70.2% in 2014 and 31.2% in 2015.

Regulatory Documents

Last updated: August 2016

Tolls

Last updated: August 2016

Trans Mountain currently operates under a three-year Incentive Toll Settlement (2016-2018 ITS). Figure 1 shows the Trans Mountain benchmark toll (light petroleum from Edmonton to Burnaby) along with the GDP deflator (normalized) for 2010 – 2015. Tolls have fluctuated as over or under-recoveries of revenues are transferred to future years.

Figure 1: Trans Mountain Benchmark Toll

Figure 1: Trans Mountain Benchmark Toll

Source: NEB

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This graph shows the Trans Mountain benchmark toll as a solid red line and the GDP deflator as a black dashed line. The graph shows the Trans Mountain benchmark toll rising sharply from approximately $13.00/m³ in 2010 to approximately $18.00/m³ in 2011. The toll then decreases steadily to approximately $16.00/m³ till 2013. The toll then increases in 2014 to approximately $17.00/m³ and once again decreases slightly in 2015.

Financial

Last updated: August 2016

Trans Mountain has operated under incentive toll agreements since 2013. The 2013-2015 agreement and the 2016-2018 agreement include a baseline return on equity of 9.5%. These agreements incorporate incentives to increase its return through efficiency improvements.

Credit ratings are not available for Kinder Morgan Canada, which owns Trans Mountain Pipeline ULC and represents approximately 2% of its parent company’s (Kinder Morgan Inc.) earnings. Kinder Morgan Canada’s access to debt markets is supported by Kinder Morgan Inc., which, for example, DBRS currently assigns a credit rating of BBB.

Table 1: Trans Mountain Pipeline ULC – Yearly
Trans Mountain Pipeline ULC 2010 2011 2012 2013 2014 2015
Revenue requirement (millions) $221 $270 $295 $275 $292 $293
Rate Base (millions) $1 036 $1 020 $996 $990 $994 $1 005
Deemed Equity Ratio 45% 45% 45% 45% 45% 45%
Achieved Return on Equity   10.5% 9.82% 9.5% 8.06% 8.5%

 

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