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Market Insights > First Look

First Look: Trans Mountain pipeline expansion to start operations

May 01, 2024
  • Oil is trading sharply lower to $80.85 as prices continue to move lower
    • The API forecasts a storage build of 4.9 MMBbls, which, if confirmed by the EIA would be the fifth storage build in the past six weeks
    • The dollar is trading higher, which can weigh on crude prices, and equities are trading lower
  • Trans Mountain pipeline expansion to start operations (Reuters)
    • After 12 years of delays and cost overruns, the nearly $25 billion pipeline is set to begin shipping oil today from Alberta to Vancouver for export overseas
    • The expansion increased capacity on the existing Trans Mountain pipeline from 300 MBbl/d to 890 MBbl/d and will primarily ship heavy crude
      • The original line will continue to ship mostly light crude to refineries in Washington state and British Columbia
    • The expansion of pipeline egress out of Canada should support WCS differentials and lower the probability of major price blowouts, as seen in the past

 

  • Natural gas prices trade lower as LNG maintenance curbs demand for feedgas and looming storage surplus
    • June ’24 Henry Hub is down 6.5c this morning to trade around $1.926 /MMBtu
    • The Summer ’24 strip is down 1.5c to $2.329 and Winter ‘24/’25 strip is down 1.8c to $3.411
    • Today's Euro Ensemble forecasts a significant cooldown across all regions, especially a 10-degree drop in the Northeast for the 11-15 day period, with overall below-normal temperatures persisting
  • Equitrans projects completion of Mountain Valley pipeline by May 31 (S&P Global, Criterion)
    • Mountain Valley pipeline, with less than one mile left to install the 304-mile route as of April 28, is expected to start final commissioning activities around May 31, reported Equitrans in its 1Q earnings report
    • Furthermore, MVP Southgate Expansion aims for completion in June 2028 and will extend 31 miles, supported by 550,000 Dth/d in firm commitments 
    • OVC Expansion began interim service on April 1, 2024, with full service starting May 1, 2024, adding 350 MMcf/d capacity across PA, WV, and OH
    • Additionally, EQT's 1Q24 production curtailments of 1 Bcf/d, significantly impacting Equitrans assets, are expected to continue through May 2024, with potential further curtailments throughout the year
  • DT Midstream reports 1Q24 earnings, LEAP Phase 3 expected online in 3Q24 rather than 4Q24 (Criterion)
    • In 1Q 2024, DT Midstream's Haynesville system throughput declined to 1.52 Bcf/d, marking the lowest level in the past year; Appalachian assets slightly increased to 1.54 Bcf/d
    • The company guides production growth from both Haynesville and Appalachian basins to increase from 49 Bcf/d in 2023 to 67 Bcf/d by 2033
    • The 0.2 Bcf/d LEAP Phase 3 expansion in Louisiana is ahead of schedule, set to enhance system capacity to 1.9 Bcf/d by 3Q24, earlier than the previously expected 4Q24; plans for Phase 4 aim to add an additional 200-400 MMcf/d in 2025/2026
    • DT also plans to connect Stonewall Gas Gathering assets to the Mountain Valley Pipeline with a new interconnect in the 1H 2026, supporting a total firm capacity expansion of 350 MMcf/d in the Appalachian Basin

 

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