TransCanada: Blue-Chip Canadian Pipeline Company At A Depressed Valuation
Thomas Lott • 35 Comments
Thomas Lott • 35 Comments
Fri, Jan. 22, 12:46 PM
- With its Keystone XL project rejected by the U.S., TransCanada (TRP +4.7%) is pursuing more modest developments in the U.S. Gulf coast to make inroads in the oil refinery complex.
- TRP’s US$600M Houston Lateral pipeline and tank terminal connecting the existing Keystone pipeline system to refineries in Houston is set to come on stream by Q2, liquids pipeline president Paul Miller tells Financial Post.
- To bolster the Houston Lateral’s connection to Gulf coast markets, TRP and Magellan Midstream Partners are building a US$50M pipeline to ship 200K bbl/day between TRP's under-construction Houston terminal and MMP’s East Houston terminal.
- "It’s small from a dollar perspective, but it’s hugely significant from a connectivity perspective, providing connectivity to both the Houston and the Texas City refineries,” Miller says, adding that TRP is planning similar smaller projects either through acquisitions or greenfield developments around the Gulf coast.
Thu, Jan. 21, 12:54 PM
- Mayors from the greater Montreal area have come out against TransCanada's (TRP +5.6%) proposed Energy East pipeline, deciding the environmental risks far outweigh any economic benefits for the region, Financial Post reports.
- Montreal Mayor Coderre, current president of the Montreal Metropolitan Community, which represents 82 jurisdictions, says the pipeline would be worth ~$2M/year in economic benefits to the area, while a major oil spill cleanup could cost $1B-$10B.
- TRP’s planned $15.7B pipeline would transport crude from the Alberta oil sands to a terminal in New Brunswick before exporting it to overseas customers.
Wed, Jan. 13, 3:27 PM
- TransCanada (TRP -2.1%) affirms plans to link the terminus of its 2,000 mile, cross-country crude oil pipeline system to Magellan Midstream Partners' (MMP -3.3%) network of pipelines that serve Texas Gulf Coast refineries.
- TRP is working toward a Q2 completion in building the Houston lateral, which will add a second terminus and ~700K barrels of storage in Houston to the southernmost part of its Keystone system; MMP will build and operate the HoustonLink pipeline, which will connect to TRP’s Houston Lateral and is expected to be completed in H1 2017.
- Most important to TRP, MMP owns an East Houston terminal that is connected to its 100-mile Houston-area distribution system that serves Houston’s refineries and others in Texas City; MMP also has an outlet to the Gulf of Mexico and connections to a third-party line that runs east to refineries in Louisiana, which could appeal to shippers moving oil on TRP’s network.
Mon, Jan. 11, 11:43 AM
- After rejecting the Keystone XL pipeline for the U.S., the Obama administration is now encouraging construction of an oil pipeline in Kenya, according to a WSJ editorial.
- U.S. Ambassador Robert Godec reportedly told Kenya’s energy minister last week that the administration would help the African country raise $18B to finance its PowerAfrika pipeline project.
- Meanwhile, TransCanada (TRP +0.4%) is bringing an international arbitration case against the U.S. for not treating the Canadian company the way it would a U.S. company as it is seeks to recover $15B in costs and damages.
Thu, Jan. 7, 5:49 PM
- Moody’s gives TransCanada (NYSE:TRP) a slight boost following yesterday's announcement of the pipeline company’s $15B claim against the U.S. government over the Keystone XL pipeline rejection.
- The rating agency's best-case scenario of a quick victory and $15B payout would provide a powerful short-term boost to TRP shareholders, but it cautions that it would bring only modest improvement to the company’s long-term financial strength.
- A more likely event of a lengthy and expensive court proceeding also is not likely to have much impact either, as TRP is large enough to absorb the cost without faltering, Moody’s says.
- TRP plans to book a C$2.5B-C$2.9B Q4 after-tax writedown related to the investment it made in the line preparing for construction, but Moody’s say it had expected the writeoff.
- Meanwhile, The White House said today that it is confident that the Obama administration acted lawfully when rejecting the pipeline.
Wed, Jan. 6, 5:12 PM
- TransCanada (NYSE:TRP) says it has filed suit against the U.S government in U.S. federal court, alleging Pres. Obama's rejection of the Keystone XL pipeline exceeded his power under the Constitution.
- TRP also intends to file a claim with NAFTA authorities saying the pipeline permit denial was "arbitrary and unjustified"; through the NAFTA claim, TRP says it seeks to recover more than $15B in costs and damages it says it has suffered as a result of the denial.
- TRP says it will take an estimated C$2.5B-C$2.9B (US$1.78B-$2.06B) after-tax writedown in its Q4 results.
- The company also says it invested ~$4.3B (US$3.1B) in the project before Obama denied the pipeline’s application on Nov. 6.
Dec. 17, 2015, 11:23 AM
- TransCanada (TRP -2.1%) says it filed an amended application for its Energy East pipeline project, a move that would increase the project’s cost to C$15.7B (US$11.4B) from C$12B.
- TRP says the filing with Canada’s National Energy Board includes nearly 700 route changes aimed at satisfying environmental and community concerns about the project.
- TRP says it still expects Energy East to start up in 2020; it initially had said the project could be in service by late 2018, but earlier this year pushed the date back to 2020 following its decision not to build a marine terminal in Quebec because of concerns about Beluga whales.
Dec. 16, 2015, 5:17 PM
- The cost to produce crude oil from Alberta’s oil sands dropped this year after 15 years of continuous inflation, according to a new report from IHS Energy, as capital and operating costs in the region have fallen in response to collapsing global oil prices.
- But the findings do not mean the oil sands are now a more competitive choice for energy companies’ investment dollars compared with shale or offshore oil formations, as costs across the global energy industry also have dropped.
- The report also says 70% of oil sands production growth over the next five years will come from the expansion of existing projects, and 80% of that growth will be from steam-based, rather than mining, projects.
- Relevant tickers: SU, CVE, OTCPK:HUSKF, OTCQX:COSWF, RDS.A, RDS.B, IMO, XOM, CNQ, ENB, TRP, OTCPK:MEGEF
Dec. 11, 2015, 7:26 PM
- Alberta's provincial government says it will delay the release of a controversial review of royalty rates paid by oil and gas producers until early next year.
- Premier Notley and her NDP party had promised to reassess royalty rates on energy production as part of an election campaign that swept them into office earlier this year, but the review has drawn sharp criticism in the oil patch and from opposition parties because it comes as the province and energy industry struggle with tanking oil prices.
- Alberta's energy minister has said any changes in royalty rates would not take effect before 2017, a move intended to ease the impact on the energy industry.
- Relevant tickers: SU, CVE, OTCPK:HUSKF, OTCQX:COSWF, RDS.A, RDS.B, IMO, XOM, CNQ, ENB, TRP, OTCPK:MEGEF
Dec. 10, 2015, 1:57 PM
- TransCanada (TRP +1.5%) is higher after announcing new agreements for its proposed liquefied Coastal GasLink pipeline project with three more aboriginal groups in northern British Columbia.
- TRP says the new pacts with the Burns Lake Indian Band, Blueberry River First Nations and the Lheidli T'enneh First Nation outline financial benefits as well as the company's commitments to the native communities for as long as the pipeline is in service.
- TRP says it has signed nine project contracts with First Nations living along the proposed pipeline's route spanning the northern tier of the province and connecting natural gasfields in northeast B.C. with export facilities on the Pacific coast.
Dec. 3, 2015, 9:48 AM
- TransCanada (TRP +0.2%) and other owners of the Bruce Power nuclear complex agree to extend the operating life of the facility to 2064.
- TRP also says it is exercising its option to acquire an additional interest in Bruce Power for $236M from the Ontario Municipal Employees Retirement System, giving TRP and OMERS each a 48.5% interest.
- The owners will repair six aging Bruce Power reactors beginning in 2020; two units already have been retooled, although with cost overruns and delays.
- TRP says it expects its Bruce Power investment to be accretive to earnings and cash flow over the short and long term.
Nov. 24, 2015, 6:56 PM
- Alaska finalizes its deal to buy out TransCanada's (NYSE:TRP) share in the proposed Alaska LNG export project for $64.6M, giving the state direct ownership in the project along with partners BP, ConocoPhillips (NYSE:COP) and Exxon Mobil (NYSE:XOM).
- The $45B-$65B project would transport natural gas from the North Slope fields, then liquefy the fuel at a facility on Cook Inlet for shipment to markets in Asia; it has not yet been approved for construction and would not start commercial shipments before 2023.
- The state legislature earlier this month approved funding to buy out TRP’s interest in the project.
Nov. 24, 2015, 12:49 PM
- Canadian oil producers may say they are on board with Alberta’s new climate change policy goals, but the requirement that companies reduce their methane emissions by 45% will add costs "in the tens or hundreds of millions of dollars over the next five years," the Canadian Association of Petroleum Producers says.
- Alberta’s oil and gas sector produced 30.4 megatons of methane emissions in 2013, accounting for 70% of the province’s overall methane emissions.
- National Bank Financial analyst Kyle Preston calls Alberta’s climate change policy “fair and accommodating” for oil and gas companies, and says newer energy projects such as Canadian Natural Resources' (NYSE:CNQ) Horizon oil sands project and MEG Energy’s (OTCPK:MEGEF) Christina Lake facility emit less greenhouse gas than older facilities, which will be hit harder by the new policies.
- Other related tickers: TRP, ENB, IMO, XOM, RDS.A, RDS.B, OTCQX:COSWF, OTCPK:HUSKF, CVE
Nov. 24, 2015, 11:30 AM
- Analysts are betting that renewable energy developers such as Enbridge (ENB +1.2%) and TransCanada (TRP +1.9%) will be among the best placed to make the shift to Alberta's new carbon policies, Bloomberg reports.
- As the government boosts the province’s share of renewable electricity to 30% from 9% by 2030, "renewable power contracts are going to go to the bidder that needs the least amount of government support, developers with most financial flexibility and overall lowest cost of capital” such as ENB and TRP, says National Bank Financial's Patrick Kenny.
- The two companies already are among Canada’s largest renewable power operators: ENB owns 2,065 MW of wind power across Canada, enough to power 650K homes, while TRP operates wind, hydro and nuclear plants as part of its 11.8K MW of power generation.
- TransAlta (TAC -2%) surged 9.5% yesterday as investors felt Alberta's new policy avoided the worst-case fastest potential phase-out of coal plants.
- Earlier: TransAlta +12% on Alberta climate change plan (Nov. 23)
Nov. 23, 2015, 8:19 AM
- Alberta's government announces plans to cap oil sands emissions for producers, phase out coal power plants and implement a carbon tax in an effort to curb pollution.
- The provincial government in impose a limit of 100 megatons/year of carbon emissions, above current annual emissions of ~70 megatons, phase out coal power plants by 2030, and set a carbon price of C$20/metric ton (US$15) by 2017 which rises to C$30 in 2018.
- The Canadian Association of Petroleum Producers supports the initiative, saying it could help improve Alberta’s image in markets to which oil sands producers hope to expand access.
- "This will create a wealth of opportunities and jobs for generations to come. We in Alberta want to take a leadership role on climate," says Suncor (NYSE:SU) CEO Steve Williams.
- Coal producers criticized the new policy, however, saying it will raise electricity costs in Alberta and cost Canadian jobs.
- Other relevant tickers: TRP, ENB, IMO, XOM, RDS.A, RDS.B, OTCQX:COSWF, OTCPK:HUSKF, CVE, CNQ
Nov. 20, 2015, 10:55 PM
- TransCanada (NYSE:TRP) says it has halted construction of a natural gas pipeline after getting an order from Canadian regulators prompted by the release of drilling fluids into the Athabasca River in Alberta.
- The National Energy Board issued its safety order following four separate incidents involving the unintended release of the fluids into the river during late October and early November.
- The order involves construction for TRP’s McDermott Extension natural gas pipeline expansion, part of a C$44M project expected to start up April 1, 2016.
TransCanada Corp. provides gas storage and related services. It operates as an energy infrastructure company in North America. The company operates its business through three segments: Natural Gas Pipelines, Liquid Pipelines and Energy. TransCanada was founded on May 15, 2003 and is... More
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