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I hear (via CBC& #39;s morning news) that TMX is in the news today with "new" (read: zombie) speculation that the additional capacity is not "needed."
So, a short thread starting with a graph.
So, a short thread starting with a graph.
Shippers nominate volumes for the existing Trans-Mountain pipeline monthly. When these nominations exceed capacity, everyone gets a prorated portion of their nomination (this is called apportionment).
From the figure, TMPL has been oversubscribed regularly since 2010 or so. Even in the most recent months, we have only seen 1 month since 2010 where nominations did not exceed capacity. That was in May 2020.
But, there was still no excess capacity.
The pipe remained full.
But, there was still no excess capacity.
The pipe remained full.
Now, one might be forgiven for looking at this figure and concluding that the post 2015 drop in nominations means we no longer need the full TMX expansion, but, the NEB (now CER) passed a new rule that artificially capped TMPL nominations starting in 2015.
This new rule:
"limits nominated volumes to be the higher of: ...average deliveries to a shipper ... using [the highest] 18 months out of the 24-month period immediately preceding the nomination date; or three per cent of the available capacity"
"limits nominated volumes to be the higher of: ...average deliveries to a shipper ... using [the highest] 18 months out of the 24-month period immediately preceding the nomination date; or three per cent of the available capacity"
The source for that quotation is the NEB& #39;s Reasons for decision for hearing RHW-001-2013
https://docs2.cer-rec.gc.ca/ll-eng/llisapi.dll/fetch/2000/90465/92835/552980/954476/1053909/2585874/2586310/A65317-1_NEB_-_Reasons_for_Decision_–_Trans_Mountain_-_Tariff_Amendments_regarding_Verification_Procedures_–_RHW-001-2013.pdf">https://docs2.cer-rec.gc.ca/ll-eng/ll...
https://docs2.cer-rec.gc.ca/ll-eng/llisapi.dll/fetch/2000/90465/92835/552980/954476/1053909/2585874/2586310/A65317-1_NEB_-_Reasons_for_Decision_–_Trans_Mountain_-_Tariff_Amendments_regarding_Verification_Procedures_–_RHW-001-2013.pdf">https://docs2.cer-rec.gc.ca/ll-eng/ll...
So, basically, the post 2015 nominations are restricted to be an approximation (with a slight upward bias) of the 2014-2015 throughput (which is just the capacity of the original pipeline). So it delivers lower nominations by design (not as a reflection of reduced demand).
This means that the pre 2015 nominations are the best approximation we have of demand for new capacity. And what do you notice about the level of nominations vs the level of TMPL + TMX capacity?
Just about equal. That& #39;s not a coincidence.
Just about equal. That& #39;s not a coincidence.
TMX is justifiable based on CURRENT demand for capacity, not just future demand.
And the picture looks similar for apportionment on other common carrier pipelines coming out of Alberta.
And the picture looks similar for apportionment on other common carrier pipelines coming out of Alberta.
Note: I have not read the CCPA study making the rounds today in detail. Frankly I am fairly sure I know what it will say and I don& #39;t have the time. This thread alone is more energy than I should have to devote to this zombie of an idea.
No, rail isn& #39;t a good substitute. It costs more, isn& #39;t as safe, and has it& #39;s own issues with earning scarcity rents.
No, we shouldn& #39;t just rely on KXL or the line 3 expansion (they are not exact substitutes BECAUSE THEY GO DIFFERENT PLACES).
No, we shouldn& #39;t just rely on KXL or the line 3 expansion (they are not exact substitutes BECAUSE THEY GO DIFFERENT PLACES).
No, COVID-19 has not destroyed the market for crude oil and refined products. Sufficient demand for TMX already existed as far back as 2015 and the existing TMPL has been full or over subscribed for every month in the last decade INCLUDING THROUGH THE PANDEMIC.
There may be valid arguments against TMX, particularly if you expect a very high cost of carbon. But a lack of market isn& #39;t one of them.
Shippers have already made long term commitments. Arguing that there is no market for expansion is at best ignorant and at worst disingenuous.
Shippers have already made long term commitments. Arguing that there is no market for expansion is at best ignorant and at worst disingenuous.
