The man in charge of Kinder Morgan's expansion project thinks twinning the Trans Mountain pipeline should solve the Burnaby Chevron refinery's supply problems.
Greg Toth, project director for the Trans Mountain expansion, wants to debunk the belief that the pipeline is threatening the viability of the Chevron refinery and its jobs.
"We've designed a system and we are putting forth a system configuration that we believe provides adequate capacity for local markets and the other markets we serve," Toth told the NOW. "Chevron has been a long-term customer. They also had the opportunity to secure long-term 20-year contracts and have the same equal rights as all the rest of the shippers," he added. "That's a business decision on their part."
Chevron has been raising concerns the refinery is not getting enough supply because shippers are demanding oil in volumes beyond the line's capacity, and everyone's requested volumes are cut back as a result.
In an attempt to secure a more steady supply of oil, Chevron applied to the National Energy Board for "priority destination designation" - or prioritized access to the line when demand is high.
The Trans Mountain pipeline, which has been running oil from Alberta to B.C. since the 1950s, can transport a maximum of 300,000 barrels of oil each day. Approximately 250,000 barrels are currently available for general market access, which goes to companies like Chevron that bid for volumes on a month-to month basis, while the rest is reserved for shippers with long-term contracts.
Kinder Morgan wants to twin the existing line, and on Jan. 10 announced an even bigger $5.4-billion plan to bring capacity up to 890,000 barrels a day. Only 180,000 barrels would be left for shippers who bid on a month-to month basis - that's 70,000 barrels fewer than what's currently allocated for general market access.
"Technically it is less, but some of the people who are shipping, who make up the 250,000 (current barrels) a day, a large number of those people have committed to long-term, 20-year contracts," Toth explained. "We've provided capacity that we believe will account for all of the local consumption, the users, such as Chevron and some of the Washington state refineries."
In response to Toth's comments, Chevron spokesperson Ray Lord said his company has never said or suggested an expanded Trans Mountain pipeline is threatening the refinery and its jobs. "The issue we have is with recurrent and ongoing pipeline apportionment that repeatedly continues to threaten the supply of crude for ongoing operations at the refinery," he wrote in an email to the NOW. "We have always made it very clear that our priority destination designation application with the National Energy Board is a separate issue from any discussion of the future of an expanded Trans Mountain pipeline, and we cannot speculate on the future of that pipeline. Chevron supports the safe and efficient movement of Canadian energy resources to diversified markets, and an expanded pipeline could certainly play a key role in that opportunity. The issue for us is ensuring the Burnaby refinery has a reliable and economic source of crude now and in the future."
When asked why Chevron doesn't sign up for a long-term contract, Lord also pointed out that any expansion of the Trans Mountain pipeline would be in five or six years.
"A long-term commitment is of no value if Burnaby cannot secure its access to crude during the interim period. Therefore, our application for priority destination designation remains the focus of our attention."
Chevron's National Energy Board hearing was set for January but has been delayed till March 26.