J.P. Morgan: Western Canadian crude export routes tighten: three expansion routes compete for incremental capacity

Why are export routes tightening again so soon after an expansion?

The Trans Mountain expansion entered service in 2024, adding approximately 590 thousand barrels per day of capacity and easing the export bottleneck at the time; however, JPMorgan expects demand for transportation out of the Western Canadian Sedimentary Basin to grow by a low-single-digit percentage annually over its forecast period, filling pipeline capacity within a few years.
There are already signs of tightness: Trans Mountain carried approximately 840 thousand barrels per day in the second quarter of 2026, reaching 94% utilization; even after the new capacity entered service, Enbridge's Mainline has continued to require capacity apportionment.
Producers generally prefer lower-cost pipelines. The report estimates rail costs to the U.S. Gulf Coast at approximately 15–20 dollars per barrel, versus approximately 10 dollars per barrel or less by pipeline.

Trans Mountain plans two optimization projects that together would add approximately 300 thousand barrels per day, raising system capacity from approximately 890 thousand to 1.19 million barrels per day. The drag-reducing agent project targets an increase of approximately 90 thousand barrels per day before the end of 2026; another optimization project of approximately 210 thousand barrels per day still requires regulatory approval and a final investment decision.
Enbridge's MLO1 and Southern Illinois Connector are scheduled to enter service in phases in 2027, adding approximately 180 thousand barrels per day of capacity combined. Another project, MLO2, has been resequenced to prioritize downstream sections to the U.S. Midwest and Gulf Coast, leaving the timing of upstream Mainline expansion uncertain.
The west coast route also offers destination diversification: of the 610 vessels loaded at Trans Mountain since it entered service in May 2024, approximately 65% had sailed to Asia as of the time covered by the report.

The proposed Pacific Link has capacity of approximately 1 million barrels per day and an estimated cost of 35.2 billion–43.7 billion Canadian dollars; it has been designated a project of national interest by Canada. The federal and Alberta governments intend to fund most of the investment, while Pembina plans to hold a 10% stake and retain autonomy over the final investment decision; the project has entered a review targeted for completion by September 2027.
JPMorgan has excluded Pacific Link capacity from its forecast period, citing the review schedule and the history of cost overruns and delays on west coast pipeline projects.
On another route, Prairie Connector, nine customers have signed binding transportation commitments totaling 465 thousand barrels per day for 20 years. The project targets a final investment decision in mid-2027 and startup by the end of 2028. Montana previously withdrew a permit exemption for the associated Bridger pipeline, and the project must submit additional baseline financial and environmental data; permit stability is an important hurdle for the investment decision.
JPMorgan believes incremental demand could accommodate more than one project, but it is not yet clear which major route will prevail.

JPMorgan's growth forecast assumes producers turn the memorandum framework involving Canada, Alberta and the oil sands industry into binding commitments. If fiscal and regulatory conditions, especially emissions obligations, fail to provide the required certainty, investment decisions on major export projects could be delayed, and production growth would also be constrained by existing expansion capacity.
Low oil prices would weigh on production forecasts: oil sands projects require substantial initial capital, and persistently low prices would weaken the appetite to invest; delays or cancellation of new pipelines would also affect the production growth included in the model.
External competition also exists. Chevron plans to invest 7 billion U.S. dollars over five years to raise its Venezuela-related production from approximately 300 thousand to 600 thousand barrels per day, potentially displacing Canadian heavy crude in the U.S. Gulf Coast market; however, JPMorgan sees Canadian crude's established ties to the U.S. refining system and its west coast export route as advantages, while damaged Venezuelan infrastructure would also limit the pace of production growth.