Jun. 11, 2014, 8:14 AM
- TransCanada (TRP) CEO Russ Girling says he remains "very optimistic" that the Keystone XL pipeline will get built, but he isn't sure when it will happen.
- Girling adds that the cost of the project will be "materially more" than the current $5.4B estimate, but he can't say how much more because "there's no sense announcing new costs until we actually know when we're going to start construction."
- The CEO also expects TRP will file an application for its C$12B Energy East pipeline with the National Energy Board in mid-August; Energy East is expected to carry 1.1M bbl/day of crude from Alberta's oil sands to refineries in Quebec and New Brunswick.
Jun. 10, 2014, 10:59 AM
- Shipments of crude oil by rail from western Canada are expected to more than triple in the next two years to ~700K bbl/day in 2016 from 200K in late 2013 amid a severe shortage in pipeline capacity, according to the annual forecast from the Canadian Association of Petroleum Producers.
- Rail transportation is widely regarded as more dangerous than pipelines, but oil trains can be ramped up fast in response to market demand because they are not as regulated as pipelines.
- Oil supplies in western Canada from the oil sands and from new shale plays continue to increase, while four major pipeline projects - Keystone XL (TRP), the TransMountain expansion (KMI, KMP), Northern Gateway (ENB) and Energy East - await regulatory approval and construction.
Jun. 7, 2014, 8:25 AM
- The State Department is correcting several errors it made in its study evaluating the impact of the proposed Keystone XL pipeline, including a new estimate of hundreds more deaths and thousands more injuries that could occur if the project were rejected and oil traffic by rail increased.
- The initial study noted that without the pipeline, companies instead would move the oil by rail, which could contribute to 700 injuries and 92 deaths over 10 years; the updated report raises those numbers more than fourfold.
- TransCanada (TRP) says the update reaffirms that the safest and most environmentally responsible way to move oil is through a pipeline, opponents say the report highlights the dangers of developing Canada's oil sands at all, and State Department officials say the corrections have "no impact" on the integrity of the first report.
Jun. 4, 2014, 9:47 AM
- TransCanada (TRP -0.5%) says it is pushing ahead with development of its proposed C$1.9B pipeline extension project in western Canada after signing agreements with Chevron (CVX) and Apache (APA).
- The deals call for delivery of ~1.9B cfe/day of natural gas on the Merrick Mainline project to reach a proposed export facility near Kitimat, B.C.
- TRP says it expects to file an application with Canada's National Energy Board in Q4 for approvals to build and operate the project, with service starting in 2020.
May 30, 2014, 12:28 PM
- The new Russia-China gas deal, along with a new trend of setting prices linked to gas prices rather than the traditional crude oil benchmarks, could upset western Canada's plans for launching a liquefied natural gas export industry, according to a new report by TD Bank.
- "With so much LNG supply capacity set to come on stream, Asian buyers have more power to bargain for lower prices in LNG contracts, lowering the potential prices Canadian producers would receive, and could squeeze the economics of certain LNG projects,” TD says.
- Canadian projects still offer attractive spreads and proximity to Asian markets despite the challenges, but proponents must move quickly to grab first-mover advantage, TD says as it expects two LNG projects to secure final investment decisions before the end of the year.
- Relevant tickers include CVX, RDS.A, RDS.B, XOM, TRP, REPYY, REPYF, CEO, BRGYY, BRGXF.
May 27, 2014, 10:23 AM
- U.S. safety regulators have added two new conditions on construction of the Keystone XL pipeline (TRP -0.5%) after learning of potentially dangerous construction defects involving the southern leg of the Canada-to-Texas project.
- The defects - bad welds, dented pipe and damaged pipeline coating - have been fixed, but Pipeline and Hazardous Materials Safety Administration wants to prevent similar problems on the northern segment, which is on hold pending a decision by the Obama administration.
- "The level of defects is indeed cause for alarm and indicative of something that is going on in the Keystone organization that isn’t satisfactory." says a Cal-Berkeley civil engineering professor.
May 24, 2014, 8:25 AM
- Failure to approve the Keystone XL pipeline would cause oil companies - including project developer TransCanada (TRP) - to find other ways to ship their product; the oil firms will do what they must, but a surge in oil shipments by rail would create new public health risks while raising the cost of food production, WSJ's James Freeman writes.
- The State Department's January report spelled out the added dangers of crude-by-rail: Tank cars would generate an estimated 49 additional injuries and six additional fatalities every year vs. one additional injury and no fatalities annually for the pipeline.
- Increasing crude-by-rail shipments are raising concerns in U.S. towns en route which say they don't get the data needed to ensure safety, but security experts worry disclosures would increase the likelihood of terrorist sabotage.
- Also, clogged railroads are creating a backlog in fertilizer supplies, raising fears that upper midwest farmers won't have adequate nutrients to sow their crops, and farmers have struggled for months to get enough rail capacity to ship grain harvested last year to processing plants.
May 21, 2014, 5:57 PM
- TransCanada (TRP) is in talks with customers about shipping Canadian crude to the U.S. by rail as an alternative to its Keystone XL pipeline project that has been mired in political delays, CEO Russ Girling says in his first comments confirming growing speculation that the company might use more costly - and more dangerous - railway shipments as a stopgap alternative to the pipeline.
- Girling says TRP is exploring shipping crude by rail from Hardisty in Canada, the main storage and pipeline hub, to Steele City, Neb., where it would flow into an existing pipeline to the Gulf refining hub.
- "It's an irony that the adamant opposition of environmental organizations and others against oil sands-derived crude have actually created a phenomenal opportunity for rail to pick up the slack," says Morningstar analyst David McColl.
May 14, 2014, 7:00 PM
- Canada introduces new measures to strengthen pipeline safety, ahead of the development of new projects proposed to carry crude from Alberta's oil sands to coastal ports for export.
- The new legislation will give Canada's National Energy Board more power to enforce compliance on safety and the authority to step in to lead spill response; also, companies now will be held liable up to C$1B (US$917M) for all spills or incidents on their lines, whether or not they are at-fault or negligent.
- "The 'polluter pays' principle will be enshrined in law so that it is clear Canadian taxpayers are not expected to foot the bill in the event of a major oil spill," Natural Resources Minister Greg Rickford says.
- The government is trying to raise public support for new pipelines as it prepares to rule on Enbridge’s (ENB) Northern Gateway project and Kinder Morgan's (KMI, KMP) plan to expand its Trans Mountain pipeline, and TransCanada (TRP) has proposed a line to carry crude to refineries on the east coast.
May 13, 2014, 6:15 PM
- Delays to the Keystone XL pipeline are changing the nature of the relationship between Canada and the U.S., TransCanada's (TRP) Russ Girling said today at the Bloomberg Canada Economic Summit, and "nobody believes that this doesn't set a precedent."
- The CEO repeated today that a Keystone start-up as planned by the end of 2016 was still possible, though it may be tough to get it done by then, but "if we don’t get pipelines, we’re going to rail it."
- Meanwhile, TRP said today is the deadline for holdout landowners to sign easement deals allowing the pipeline onto their property; ~20% of Nebraskans who live on the route are holding out, and the company won't offer equally generous terms in the future.
May 8, 2014, 11:34 AM
- TransCanada (TRP -0.2%) says it plans to build up to 370 km of new natural gas pipelines in Ontario to accommodate growing demand from the U.S. northeast.
- The Eastern Mainline project is designed to meet commercial obligations following the conversion of parts of the gas system to carry crude oil as far as Canada’s east coast under the $12B Energy East project, which would deliver up to 1.1M bbl/day of crude from western Canada and North Dakota’s Bakken region to export terminals in Quebec and New Brunswick.
- TRP does not disclose cost estimates for Eastern Mainline; startup is targeted for late 2016, while Energy East is scheduled to begin oil deliveries in 2018.
May 7, 2014, 7:35 PM
- A Senate squabble over energy policy and procedure looks likely to kill a vote on the Keystone XL pipeline (TRP), as Democratic leaders reverse course on bringing up a measure sought by Republicans and some Democrats from energy states.
- Majority Leader Harry Reid had indicated he might bring to the floor a measure approving construction of the pipeline as part of a deal tied to passing an energy efficiency bill, but prospects faded today when Reid said he wouldn't allow more amendments to the bill, angering Republicans, who now may block the bill from advancing.
May 7, 2014, 12:41 PM
- The price of crude from Alberta’s oil sands has surged nearly 60% since November, as new pipelines connect producers with refineries on the U.S. Gulf coast, meaning Canadian producers can begin to see a better return on investment while U.S. refineries can lessen their reliance on oil from Mexico and Venezuela.
- It also lessens the importance of the Keystone XL pipeline (TRP), WSJ's Ben Winkley writes, making it that much easier for the White House to delay a decision to clear the project.
- Traders say the current price gap of ~$20 between Alberta crude and benchmark WTI is about right, so with just a handful of refineries set up to receive tar sands crude, more transport capacity may not be needed, Winkley suggests.
- ETFs: USO, OIL, UCO, SCO, DTO, DBO, CRUD, USL, DNO, UWTI, DWTI, SZO, OLO, OLEM, TWTI
May 2, 2014, 12:59 PM
- TransCanada (TRP -0.4%) ticks lower even after reporting strong gains for adjusted Q1 earnings, cash flow and revenue as harsh winter weather conditions helped pipeline demand.
- TRP attributes the gains to higher earnings from its NGTL System, Keystone, Bruce Power, U.S. power, and natural gas storage operations.
- TRP says it expects to place ~C$3.6B of assets into service this year, including its recently completed 485-mile extension of its Keystone pipeline system from Cushing, Okla., to the U.S. Gulf coast.
- Meanwhile, Natural Resources Minister Greg Rickford says Canada is not considering a NAFTA challenge after the U.S. delayed its decision on approving Keystone XL (earlier).
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