Quote:
Originally Posted by whatnext
Thanks for reinforcing my point. Alberta-based companies saw there was more money to be made by closing Vancouver's refineries, period. Were they losing money on them? They could have expanded them, surely supplying Canada's third largest city should ahve been an attractive option.
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There's no room for expansion of the refineries in the Lower Mainland, unless the refinery got moved somewhere else.
Parkland for example is jammed up near Burnaby Mountain, and is bordered by Burrard Inlet, 2 large parks, and residential.
Ironically, the construction of the Trans Mountain pipeline obliterated most of the refineries along its route because it was no longer profitable to operate the small refineries when they had to compete with the larger refineries in Alberta.
And expansion of any West Coast refinery would have run into the same type of environmental opposition TMX is facing now. There is also no support in the business community for either a expanded refinery, or a brand new one; for example, David Black been trying to sell investors the idea of a new refinery somewhere along the BC coast for over a decade, years before the Trans Mountain expansion project was even proposed. He's gotten nowhere on that. That new refinery has to compete with the larger Albertan refineries (of which, a new one came online this year), and the extremely large Washington State refineries.
Quote:
Originally Posted by whatnext
Bingo.
TMX is already shorting Parkland and Vancouver by starving it of product in favour of export markets. There is Zero reason to believe this will change with expansion, in fact the opposite is more likely true.
Horgan is quite shrewd to wield the Liberals purchase of TMX now against them: ie the Federal government could, as the owner, easily order the product mix changed to favour Vancouver. Why aren't they?
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Because Trans Mountain is a product neutral pipeline as they are designated as a "common carrier". It is the shipper that determines what they send down the pipeline, as long as it meets the tariff requirements.
When there is a capacity crunch, like there is now, then the NEB decides on what gets sent down via the already uncommitted capacity via their powers through the National Energy Board Act.
Every month, shippers
nominate barrels that compete for spot market space. The *NEB* chooses, and that process is independent of political considerations.
Because the NEB is who actually makes the decision as to which nominated barrels move, and which are left behind because there isn’t enough room, month to month, shippers aren’t who makes the final choice regarding supply.
Could the NEB free up more space for refined product? Yes it could in theory, provided that shippers were willing to produce and nominate the barrels in the first place.
However, with the same constraints we have on capacity, it means something else gets elbowed out. So what should be left behind? Parkland needs crude. Washington needs crude, and is needing more of it over time (their traditional sources are starting to run dry, with year after year of production declines).
Already, the bulk of the TMX expansion already has customers signed up and committed to it; 80% of the new, additional capacity is already under contract but there is still a substantial amount of spot market space that may be repurposed as needed. This means that the NEB and shippers don't have to make the decision as to what to exclude crude to make way for gasoline or vice versa.
No more constraint means more barrels can ship. More barrels = lower prices.
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