Canada's Trans Mountain oil pipeline shut down due to British Columbia storms

·2-min read
FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops

By David Ljunggren and Nia Williams

OTTAWA/CALGARY, Alberta (Reuters) -Canada's Trans Mountain oil pipeline has been shut down temporarily because of rainstorms pounding parts of the province of British Columbia, the operating company said in a statement on Monday.

The Canadian government-owned pipeline ships 300,000 barrels a day of crude and refined products from Alberta to the Pacific Coast. Work on a major expansion project on the pipeline has also been halted, Trans Mountain Corp said.

"As a precaution, Trans Mountain has shut down the Trans Mountain Pipeline due to widespread flooding and debris flows in the area around Hope, BC," a company spokeswoman said in an email. She did not give any information on when the pipeline is expected to restart.

Heavy rains and flooding are causing widespread disruption across Canada's westernmost province. Landslides have trapped people in vehicles on highways and the entire town of Merritt, with a population of 7,000 people, has been ordered to evacuate.

Trans Mountain is a key oil export route and nearly two-thirds of its volumes in the first half of 2021 were light oil deliveries heading to U.S. refineries, said IHS Market Vice President Kevin Birn, citing Canada Energy Regulator data.

Cenovus Energy Inc, one of the oil producers that uses the pipeline to transport crude, said it was monitoring the situation.

Refiners in Washington state – including Phillips 66 and BP – have other options to acquire oil, as they have access to the Pacific Ocean.

"The disruption's duration is the key metric for scale of impact," Birn said.

Western Canada Select crude for December delivery, the benchmark Canadian heavy crude grade, showed limited reaction to the pipeline shutdown. WCS last traded at $19.15 per barrel below U.S. crude futures, according to NE2 Canada Inc, 70 cents narrower than Friday's settlement price.

(Reporiting by David Ljunggren and Nia Williams; Additional reporting by Rod Nickel in Winnipeg; Editing by Aurora Ellis and Peter Cooney)

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