The Trans Mountain pipeline expansion may not ease B.C. gas prices

Premier Jason Kenney is offering to help his B.C. counterpart with the high price of gasoline in that province’s Lower Mainland.

As he announced his government has proclaimed Bill 12, better known as the turn-off-the-taps legislation, Kenney suggested the additional pipeline capacity from the Trans Mountain expansion would pay dividends for Alberta and for British Columbians.

“Eight hundred thousand barrels per day will mean that we can increase shipments of refined products to the Lower Mainland. That will reduce gas prices for Vancouverites,” said Kenney.

An official with a retail petroleum consultancy said additional pipeline capacity could help ease the gas price situation in B.C., but not for at least a couple of years.

Jason Parent, who is the managing director with Kent Group Limited, also said there are no guarantees the additional capacity will mean more refined product will move westward.

Alberta is keen to see more product from its northern oilsands reach tidewater.

How much diluted bitumen and how much refined product makes it through the expanded pipeline isn’t known yet.

“There’s no guarantee that the expansion of the Trans Mountain, that there’d be additional space for refined products,” said Parent.

New pipeline will carry different products

Shippers will indicate their interest in sending products down the pipeline but if it’s oversubscribed, he said the capacity will be divvied up based on a proportional basis.

“If a whole bunch of people nominate for space and it’s all crude as opposed to refined product, that may not necessarily increase the space for refined product on the line,” said Parent.

He points out that even if construction on the pipeline expansion were to start soon, it couldn’t make a difference to the high gasoline prices B.C. drivers are facing today. He expects it will take a couple of years.

Parent said the high prices currently being seen at some B.C. gas stations is due to a combination of factors.

He calls it a perfect storm right now. There isn’t enough refining capacity in B.C. to meet demand.

That means more refined product needs to be brought in from Alberta. Normally that would come through the Trans Mountain pipeline but it is fully subscribed.

So that requires more gasoline from U.S. refineries and costs have gone up due to maintenance work at some of those facilities.

Add in higher taxes in B.C. and Parent said that means prices have gone up more in B.C. than in other parts of Canada.

B.C. relies heavily on Alberta

According to the B.C. government, 55 per cent of the province’s gasoline and 71 per cent of its diesel is imported from Alberta pipelines. The majority of that product is moved through the Trans Mountain pipeline.

That pipeline also carries crude oil to the Parkland refinery in Burnaby, B.C., which uses that feedstock to product refined fuels.

The Parkland refinery, which has a daily capacity of 55,000 barrels of oil per day, accounts for 82 per cent of B.C.’s refining capacity.

Due to an inability to access enough crude oil, the Parkland facility is operating at 80 per cent of its normal capacity.

As soon as the Kenney government proclaimed Bill 12 soon after being sworn into office, the B.C. government announced it will challenge the legislation in court.

Kenney said he has no intention of actually reducing oil shipments at this time to B.C. or any other part of Canada.