Workers lay pipe during construction of the Trans Mountain pipeline expansion on farmland, in Abbotsford, B.C., on Wednesday, May 3, 2023. THE CANADIAN PRESS/Darryl Dyck
After being hamstrung for years by a lack of export capacity, Canada's oil industry will have reason to celebrate when the much-anticipated Trans Mountain pipeline expansion comes online, expected to be sometime this spring.Workers lay pipe during construction of the Trans Mountain pipeline expansion on farmland, in Abbotsford, B.C., in this 2023 file photo. The project is expected to come online this spring.
That shortage of pipeline space, combined with refinery and transportation costs, is the reason Canadian oil producers typically take a price discount on their product compared to U.S. competitors. In a particularly dramatic example, the discount known as the Western Canada Select differential widened so much in 2018 — to $50 US a barrel — that the Alberta government moved to curtail oil production in the province until prices improved.
A TD Economics report suggested Canadian oil production in 2024 could grow by between six and 10 per cent year-over-year, the equivalent of between 300,000 and 500,000 barrels per day. "Everybody's kind of saying, 'OK, we see a pipeline. We're going to be able to grow.' Well, look, everybody's growing at the same time. It is going to be full in no time," Masson said.
"And sometimes you think it's strategic, because the whole strategy of the environmental movement was to attack the pipeline industry. And so now there is a de facto production cap, and that is a problem for the industry." Producers also have the option to increase their crude-by-rail shipments, which doubled in the last six months of 2023 as companies waited for news of a Trans Mountain start date.