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Valero Energy Corp. and Chevron Corp. Buying Oil Through Trans Mountain Pipeline For California Refineries

Valero Energy Corp. and Chevron Corp. are purchasing oil from Canada’s expanded Trans Mountain Pipeline system to supply their refineries in California, according to sources familiar with the matter. This suggests that the US West Coast could emerge as a key market for oil-sands crude.

In June, Aframax tankers will load Cold Lake crude—a dense variety from the oil sands—at the Westridge Terminal near Vancouver. The sources, who preferred to remain anonymous due to the confidentiality of the information, noted that Chevron has not commented on the matter and Valero has not replied to requests for comments.

These shipments mark the first instance of oil from the expanded pipeline being sold to refiners in the Western US, following earlier transactions with China’s Sinopec Group and Sinochem Group for shipments to Asia.

The Trans Mountain Pipeline’s expansion will nearly triple the throughput capacity of the sole pipeline system running from Alberta to Canada’s Pacific Coast. The expansion is set to begin commercial operations on May 1, following extensive delays and cost overruns in its construction.

Despite the pipeline’s initial aim to diminish Canada’s reliance on US refiners by facilitating exports to Asia, some experts believe that US West Coast refineries might become the primary consumers. This is partly due to their proximity and the fact that the Trans Mountain pipeline is limited to loading smaller Aframax tankers, which are suitable for the port facilities at Vancouver.

The primary producers of Cold Lake crude are Imperial Oil Ltd., a subsidiary of Exxon Mobil Corp., along with Cenovus Energy Inc. and Canadian Natural Resources Ltd., as reported by Crude Oil Monitor.

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