Rigs: The total US rig count increased to 577 rigs for the week of July 4.
Infrastructure: The Trans Mountain Expansion (TMX) relieved Western Canada’s crude oil bottleneck when it entered service in 2024, adding nearly 600 Mb/d of pipeline capacity and expanding access to Pacific and international markets. That capacity cushion will not last indefinitely.
Supply and Demand: The US natural gas pipeline sample, a proxy for change in oil production, decreased 0.6% W-o-W across all liquids-focused basins for the week ending July 13.
Rigs:
The total US rig count increased by 2 rigs to 577 for the week of July 4. Liquids-driven basins increased from 446 to 447 rigs.
- Anadarko (-1): Reach Oil & Gas Co.
- Permian (+1)
- Delaware (+2): Jetta Operating; Petroplex Energy Inc.
- Midland (-1): Tischer Energy, LLC
- Uinta (+1): Uinta Wax Operating, LLC
Infrastructure:
The Trans Mountain Expansion (TMX) relieved Western Canada’s crude oil bottleneck when it entered service in 2024, adding nearly 600 Mb/d of pipeline capacity and expanding access to Pacific and international markets.
That capacity cushion will not last indefinitely. East Daley Analytics’ WCSB Production Model forecasts liquids production will increase by approximately 500 Mb/d through 2030,
leaving Western Canada’s crude oil egress system highly utilized at about 97% throughout that same period.
Western Canada is not immediately returning to the severe constraints experienced before TMX. However, the industry may need to sanction additional takeaway capacity before the existing system becomes physically full.
Pipeline projects require years to secure commercial commitments, complete regulatory reviews and enter service. As utilization approaches the upper 90% range, producers also have less flexibility to manage maintenance, disruptions and seasonal changes in refinery demand.
The relevant question is therefore not when every pipeline becomes completely full. It is which expansion can attract shipper commitments as the capacity cushion narrows.
Existing Corridors Hold the Advantage
Several projects could address the tightening balance, but expansions that leverage existing infrastructure appear to have the highest probability of moving forward.
- Trans Mountain is evaluating opportunities to increase throughput through operating efficiencies, additional pumping capacity and other system optimizations. An expansion would add West Coast capacity without requiring an entirely new pipeline corridor, preserving the strategic benefit of greater access to Asian markets.
- Enbridge’s Line 26 project offers another relatively achievable path. The project would increase Canadian crude movements into the Bakken and connect those barrels with the Dakota Access Pipeline system. Because it relies substantially on existing infrastructure, Line 26 could provide incremental capacity sooner and at lower cost than a major greenfield project.
- South Bow’s proposed Prairie Connector would provide another route from Alberta into U.S. markets, including more direct access to Gulf Coast refining demand. South Bow is targeting a mid-2027 final investment decision following a successful open season backed by 20-year binding commitments. However, the project is still contingent on the other two legs of the project: the U.S.-Canada border to Guernsey and from Guernsey to Cushing.
Larger proposals, including new West Coast or eastern Canadian pipelines, could provide greater market diversification and materially more capacity. However, those projects would require substantially more capital, government support and long-term shipper commitments.
The Next Buildout Is Likely to Be Staged
East Daley’s forecast supports the need for additional Canadian crude takeaway capacity over time, but it does not support every project currently under discussion.
The most likely outcome is a staged buildout. TMX optimization, Line 26 and other brownfield expansions appear best positioned to capture the first tranche of demand. These projects can add capacity incrementally and may be easier to align with the pace of WCSB production growth.
The key signal will be contracting activity rather than current physical utilization. TMX solved Canada’s immediate pipeline problem. It also started the clock on the next one. – Amelia Johnson and Keland Rumsey Tickers: SOBO, ENB.
Supply and Demand:
The US natural gas pipeline sample, a proxy for change in oil production, decreased 0.6% W-o-W for the June 29 week across all liquids-focused basins.
The Williston (-6.1%) posted the largest decrease for the week, followed by the Anadarko (-3.8%), Permian (-1.7%), and Arkoma (-0.6%). Volumes increased in the Rockies (2.7%), Eagle Ford (2.4%), Barnett (1.4%), and the Gulf of America (0.2%). Rockies and the Gulf of America have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
As of July 13, 93.5 Mb/d is offline due to planned maintenance on the Par Pacific East Refinery in Kapolei, Hawaii. The refinery is expected to run at full capacity by the end of the month.
Vessel traffic monitored by EDA along the Gulf Coast increased W-o-W. A total of 27 vessels were loaded for the week ending July 11, a moderate increase from the previous week.