What does Canada have in common with the US, Brazil, Guyana, and Argentina? These are the non-OPEC+ countries driving an increase in global oil supplies for 2024 and 2025, according to the International Energy Agency (IEA). Canada is known for its significant oil and gas resources, but getting energy to end-markets has been challenging. With new oil and gas pipeline capacity and other demand drivers under development, Canadian oil and gas production is poised for incremental growth. Today’s note looks at the expected growth in Canadian energy production and why it matters for midstream.
New pipelines provide access to global markets
In the last 18 months, two major pipeline projects have been completed in Canada providing critical access to seaborne export markets. Accessing global markets, particularly demand in Asia, is an attractive alternative to shipping hydrocarbons exclusively to the US. (At writing, the status of potential tariffs on Canadian crude imports remains unclear, but if implemented, these would be costly for US refiners in the Midwest that have been geared to run Canadian crudes and may struggle to find alternative supplies. Tariffs would likely result in higher gasoline prices.)
For crude, the Trans Mountain Expansion Project was completed in 1H24, increasing the system’s capacity from 300 thousand barrels per day (MBpd) to 890 MBpd. Trans Mountain transports heavy crude, refined products, synthetic crude, and light oil from near Edmonton, Alberta, to Canada’s western coast, near Vancouver. The expansion included new berths at the related marine terminal to facilitate more exports. The Canadian government purchased Trans Mountain from Kinder Morgan (KMI) in 2018, and the expansion cost over $30 billion CAD.
On the natural gas side, TC Energy (TRP, TRP:CA) completed Coastal GasLink in late 2023. The 416-mile pipeline transports natural gas from northeastern BC to LNG Canada in
