Canada’s Trans Mountain oil pipeline, which allows producers to sell crude to markets in Asia, could fill to capacity as early as this year if United States President Donald Trump follows through with threats to impose tariffs on the country’s crude, according to an executive for the government-owned project.

Trans Mountain was expected to reach capacity by 2028 as output in Alberta ramps up and spare space in other lines is used, but Trump’s tariffs could help it reach full volume sooner as producers seek to boost sales to non-U.S. markets, said Jason Balasch, the company’s vice president of business development. The expanded system began operation in May, but is running below its 890,000 barrel-a-day capacity because of expensive tolls for shippers without contracts.

“If tariffs come into effect, we think it’s possible to reach full capacity at the Trans Mountain pipeline system this year,” Balasch said on the sidelines of the Argus Crude Summit in Houston. “We are ready to handle the extra volume.”

Trump had planned to impose 10 per cent tariffs on energy imports from Canada as well as 25 per cent levies on all other products, but agreed to a 30-day pause. Canada exports nearly all its oil to or through the U.S., with Trans Mountain and its outlet on Canada’s Pacific Coast representing the sole option for selling to other markets.

The system is currently only shipping about 720,000 barrels a day, roughly 80 per cent of its projected capacity. The high tolls are the result of the pipeline’s over-budget $34 billion price tag. The capacity could be expanded by 200,000 to 300,000 barrels a day by boosting pumping power, executives have said.

There are opportunities to “enhance the capacity” of Trans Mountain via some “modifications” within a year or two, Jonathan Wilkinson, Canada’s natural resources minister, said in a video press conference on Thursday.

An oil pipeline solely in Canadian territory that carries crude from the western producing provinces to eastern refineries is “a conversation that premiers and the prime minister will want to have,” Wilkinson said. Eastern Canadian refineries currently receive their crude through a pipeline that crosses through the U.S.

“Being so dependent on the United States for the export of oil is a vulnerability,” Wilkinson said.

Meanwhile, Trans Mountain is looking to add navigational lighting to permit ships to enter the channel 24 hours a day while outbound ships would only run in the daylight, Balasch said. The lighting is set to be installed in the current quarter, with testing and commissioning planned in the second quarter and the system going into service in the third quarter.

The 24-hour operations could happen “very soon,” executives at Suncor Energy Inc., an oil sands producer that uses the line, said on an investor call Thursday. In addition, Trans Mountain is looking to dredge some of the ship channel to allow tankers to carry more oil, according to Suncor.

Bloomberg.com