Ottawa may not want to get out of the pipeline business just yet: Trans Mountain CEOTrump's trade threats have only spurred increased interest in TMX, Mark Maki said
Published May 02, 2025
4 minute read
 A workman walks past steel pipe to be used in the pipeline construction of the Trans Mountain expansion project at a stockpile site in Kamloops, B.C. Photo by Dennis Owen/Postmedia files
Ottawa has long said it intends to sell its $34-billion Trans Mountain pipeline to the West Coast, but the head of the Crown corporation that owns it says the federal government may not want to get out of the pipeline business just yet, particularly if it decides it shouldn’t be the last oil export pipeline built in Canada.
“If there is another pipeline to be built, and private capital won’t do it, with Trans Mountain, (Ottawa) can ring the bell and say, ‘You guys get this done,'” Trans Mountain Corp. chief executive Mark Maki said.
But he said he didn’t know if the new government under Prime Minister Mark Carney would deviate from previous plans to sell the Crown corporation that owns and operates the expanded 890,000-barrel-per-day pipeline, which just finished its first full year of operations.
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“It’s very possible. We’re going to have to see. But taking (Carney’s) words at face value, the desire to have Canada be an energy superpower, for sure (it’s possible),” he said. “Canada does have a big, natural resource-based economy, so we should take advantage of that and Trans Mountain can be a piece of that if the government wants it to be.”
The Trans Mountain expansion (TMX) project took more than a decade to build, and its price ballooned to more than $34 billion from an estimate of $5.4 billion when it was first proposed by Kinder Morgan Inc. in 2013.
But as it marks one year of commercial operations this week, TMX’s proponents say they finally have the receipts to counter critics who have argued that Ottawa made an expensive mistake when it decided to buy the pipeline project after Kinder Morgan walked away in 2019 — underscored, Maki says, by Canada’s now urgent need to diversify its trade away from the United States following President Donald Trump‘s economic and annexation threats against Canada.
At its startup on May 1, 2024, TMX added 590,000 barrels per day in export capacity and for the first time provided Canada meaningful access to international crude markets, especially Asia, according to a recent analysis by S&P Global Commodity Insights.
That access to new markets and the additional pipeline capacity, analysts say, has been key to stabilizing prices for Canada’s benchmark heavy crude, Western Canadian Select (WCS), and increasing returns for producers and taxes and royalties for governments.
WCS, which is a heavy oil with a higher sulphur content, is considered a lower-quality crude and it trades at a discount to light oils such as West Texas Intermediate (WTI). For much of the previous decade, whenever Canadian production would outstrip export pipeline capacity, there would be a glut of landlocked heavy barrels in Western Canada that would lead to prices cratering.
But since TMX entered service early in 2024, the WCS-WTI differential has fluctuated in a relatively tight band between $12.50 and $16.50 per barrel, even as Canadian production has risen to new records, according to S&P Global Commodity Insights, compared to $18/bbl for much of the last decade.
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The differential was around $20/bbl in 2022 and 2023, but hit $45/bbl after one particularly nasty pipeline bottleneck-induced blowout in 2018.
Now, despite rising trade tensions and market uncertainty putting downward pressure on oil prices, average daily oil production from Alberta was up more than five per cent in the first quarter, likely due to the additional capacity provided by the still-not-full TMX pipeline, according to ATB Capital Markets.
“A related factor likely to be playing a role in keeping production volumes elevated is rising Canadian crude demand from China to replace U.S. imports,” ATB said in a note on Friday.
Roughly half the oil shipments that depart the pipeline’s Westridge Marine Terminal in the Port of Vancouver have landed in countries other than the U.S., according to Trans Mountain.
Trump’s trade threats have only spurred increased interest in TMX, Maki said, as Canadian officials and business leaders look for ways to secure alternative trading partners. The company has plans to boost the pipeline’s throughput to 1.35 million barrels per day from the current 890,000.
One of TMX’s major committed shippers, Suncor Energy Inc., said it is selling increasing volumes to India and looking at other opportunities.
“The Canadian crude stream is somewhat unique and so we’ll look at customers that value those product lines,” Suncor chief executive Rich Kruger said. “And there could and will be other Southeast Asian nations that, as their refineries accommodate what we produce, we could look to them to be expanded customers.”
The Justin Trudeau government had previously said its ownership of TMX would be temporary, but any sale process is expected to be delayed until at least 2026.
A key determinant of TMX’s value to a potential buyer is still being worked out. Shippers on the line, including Suncor, are currently paying interim tolls until a hearing process conducted by the Canada Energy Regulator in November can set final tolls.
Ottawa will have to pick its moment for a sale, Maki said, but it should ideally be when interest rates are low and there’s a good production environment in Canada.
Then again, “Maybe they want to hold. They have all the options available to them,” he said. “We all know the resources are there. It has been a tremendous wealth driver for the country for decades and it can still be a driver for wealth growth for decades to come.” |
