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U.S. oil refiners are raising concerns about the quality of crude shipped on the newly completed Trans Mountain pipeline expansion, warning that high vapor pressure and acidity limits could deter purchases of Canadian heavy barrels, Reuters reported Wednesday.
The U.S. West Coast refining market is expected to be a major outlet for Canadian heavy oil shipped on Trans Mountain but questions over crude quality could hurt demand for the barrels, which could weigh on prices or push more oil onto rival Canadian export pipelines, according to the report.
Several West Coast refiners reportedly have expressed concerns in recent weeks about the initial volumes' high sulfur content, acidity and vapor pressure, conditions that could damage refining equipment or increase air pollution, although demand has not been affected so far.
Ten companies and industry associations including Canadian Natural Resources (NYSE:CNQ), Chevron (CVX) and Valero Energy (VLO) have written to the Canada Energy Regulator to complain about high vapor pressure limits and have asked for the pipeline's technical specifications to be narrowed, the report said.
The low cost and proximity of Canadian barrels so far have outweighed the quality concerns; the vessel Aqualeader discharged ~290K barrels of crude last month at Marathon Petroleum's (MPC) Anacortes, Washington, becoming the first TMX cargo to arrive on the U.S. west coast, and Chevron's (CVX) El Segundo, California, and Phillips 66's (PSX) Ferndale, Washington, refineries also took shipments in recent days.