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The Aqualegend crude oil tanker is escorted by tugboats as it arrives at Kinder Morgan’s Westridge marine terminal in Burnaby, B.C., in July. Kinder Morgan plans to expand its Trans Mountain pipeline and ship much more crude from Vancouver. (Rafal Gerszak For The Globe and Mail)
The Aqualegend crude oil tanker is escorted by tugboats as it arrives at Kinder Morgan’s Westridge marine terminal in Burnaby, B.C., in July. Kinder Morgan plans to expand its Trans Mountain pipeline and ship much more crude from Vancouver. (Rafal Gerszak For The Globe and Mail)

OIL AND GAS

Trans Mountain: The other Pacific pipeline Add to ...

It is a sunny Sunday and Vancouver is doing what it does best: looking pretty and post-industrial. Morning lights up the downtown’s glass horizon. A half-dozen scooters rip down the road in a platoon. Cyclists swish past Zipcar lots, kayakers and stand-up paddle surfers ply the waters.

But just a few kilometres away, an oil tanker is preparing to raise anchor and slide into port. Soon, it will open its holds, with a total capacity of 650,000-barrels, to a flush of Alberta oil. After 30 hours of pumping, it will slip away to Long Beach, Calif. Oil tankers are, for now, relatively rare here. A tanker sails into the Vancouver harbour about once a week, docking at the Kinder Morgan-owned Westridge Terminal to accept Alberta crude flowing across the Rockies in the Trans Mountain pipeline.

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On this day, it is the 250-metre long Aqualegend that glides into place, smoothly manoeuvring alongside the Kinder Morgan dock. Its deck is spotless enough to eat off. The waters alongside the dock are clear and blue; a harbour patrol vessel has to ask crabbers to make way so the tanker can dock. Under blue skies and sunshine, exporting oil seems safe – even easy.

For Canada’s energy industry, however, the tanker route through the North Pacific is likely to be anything but.

The Aqualegend is a glimpse of what is to come: a future that could see a tanker sail past downtown Vancouver almost every day, to pick up oil from a newly expanded Trans Mountain. Kinder Morgan intends to twin the line, allowing 750,000 barrels a day – more than double the current 300,000 – to flow west. Most of the new barrels will be loaded on tankers. The project stands to change Alberta, making it an important global oil player. By placing crude on tankers that can deliver product anywhere a ship can sail, the oil industry can grab hold of global prices rather than selling its product on the cheap to its principal export market, the over-supplied U.S. Midwest. Expanding Trans Mountain stands to change Canada as well, enabling an expansion of the oil sands that will allow years of growth.

And Trans Mountain would change British Columbia’s Lower Mainland as well. Vancouver – home of the Prius taxi – could one day become Canada’s Rotterdam, a major oil tanker hub.

Yet the $4.1-billion project’s tremendous economic potential comes against a question mark nearly as big: is it even possible to build the expansion against rising anxiety that oil shipments will stain the shores of one of Canada’s biggest metropolitan areas?

Much rides on that question for Alberta’s energy industry. Take just one company: by 2020, Cenovus Energy Inc. intends to sell nearly 1 million barrels a day, most of them from projects not yet operating. It needs to find a home for those barrels, and the Kinder Morgan project is central to its plans. Already, the company is seeing a substantial lift in price for the barrels it is pumping through the existing Trans Mountain pipe and selling on the international market.

The Kinder Morgan project, in part because of its location, will likely send most of its crude to California, although some may also flow to Asia. For oil companies such as Cenovus, the destination doesn’t matter. Oil is often sold at the dock, and the price there is the international price, no matter where the crude ends up. To “unlock the value” of Canada’s crude oil, that product has to touch tidewater, says Paul Reimer, senior vice-president of marketing, transportation and power at Cenovus.

The stakes, then, are high for Kinder Morgan. In some ways, Canada’s global industrial position depends on this pipeline.

“More market connections increase our global competitiveness and position us to better receive full market value for our growing production,” says Patti Lewis, spokeswoman for Nexen Inc., which has been a supporter of the Kinder Morgan expansion. Ms. Lewis spoke before Nexen agreed to be bought out by China’s state-controlled CNOOC Ltd. for $15.1-billion, a deal that underscores the growing connections between Canadian crude reserves and Chinese energy ambitions.

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