Canada Approves Trans Mountain Pipeline Rate Settlement, Long-Term Capacity Cap Raised to 90%

en.Wedoany.com Reported - On September 28, Canada's energy regulator approved a rate settlement between the Trans Mountain pipeline and shippers, determining that the relevant tolls are "just and reasonable," and establishing a new framework for pipeline tolls, transportation services, and related rules. Under the regulatory decision, Trans Mountain may in the future allocate up to 90% of pipeline capacity to long-term contracted transportation, up from the previous 80%, while reserving the remaining capacity for shippers without long-term contracts.

The approved settlement stems from a rate dispute between Trans Mountain and long-term shippers that lasted about 18 months. On July 7 of this year, the company submitted a settlement application to Canada's energy regulator, reaching agreement with 7 of its 8 existing long-term service shippers on pipeline tolls, transportation services, related rules, and certain arrangements for the 2026 long-term capacity open season. The regulator subsequently launched a comment process and suspended its earlier review of interim tolls.

The Trans Mountain expansion system entered operation in 2024, with a total investment of approximately C$34 billion, increasing crude oil transportation capacity from about 300,000 barrels per day to 890,000 barrels per day. After completion of the expansion, shippers had objected to the increased transportation tolls intended to cover project cost overruns. With approval of this settlement, the relevant long-term tolls and transportation arrangements will be implemented under the new regulatory framework.

Regarding capacity arrangements, after the long-term contracting share is raised to 90%, the proportion of capacity left for spot and non-long-term shippers will fall to about 10%. Canada's energy regulator stated that after increasing the share of long-term contracts, Trans Mountain can still preserve meaningful pipeline access for other shippers. Under the expanded system, 13 shippers previously signed 15-year or 20-year long-term transportation agreements, locking in about 80% of total capacity.

Trans Mountain is also advancing follow-up capacity expansion plans, aiming to add up to about 300,000 barrels per day of transportation capacity by 2028 through system optimization projects. This year, the company has launched a bidding process for about 90,000 barrels per day of that new capacity. The expanded Trans Mountain pipeline connects Alberta, Canada, with the coast of British Columbia and can export crude oil to China and other Asian markets via the Westridge Marine Terminal.