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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May. 2, 2014, 8:32 AM
May. 1, 2014, 5:30 PM
May. 1, 2014, 2:18 PM
- Fifty-six U.S. senators - all 45 Republicans in the chamber and 11 Democrats - have introduced legislation that would provide immediate congressional approval of the stalled Keystone XL pipeline (TRP +0.3%) project
- It remains unclear whether the bill would even get a vote in the Senate, where 60 votes are needed to clear procedural hurdles against legislation.
Apr. 30, 2014, 7:35 PM
- While Pres. Obama seeks to delay a decision on the Keystone XL pipeline until after the November midterm elections, Canada's government reportedly is considering launching a challenge under NAFTA.
- The government, acting alone or with TransCanada (TRP) and perhaps pipeline shippers, is said to be weighing its legal options for challenging the U.S. handling of the pipeline. but no decision has been made on how to proceed.
- Unlike other cross-border pipelines, whose approvals were given in a short time, TRP could make the case that Keystone is being treated differently than comparable pipeline applications and denying it "fair and equitable treatment" under NAFTA, according to a leading international trade lawyer.
Apr. 30, 2014, 2:49 PM
- Royal Dutch Shell (RDS.A +3%) is raising its stake in the proposed Canada LNG project on British Columbia's coast at Kitimat to 50% after two of the Asian partners pared their interests.
- Mitsubishi and Korea Gas had each owned 20%, and they now own 15% each, while PetroChina (PTR) maintains its 20% interest; Shell had owned 40%.
- Shell says early engineering work on the multi-billion dollar project is set to begin and would take up to two years to complete, but a final investment decision is still months away; it is partnering with TransCanada (TRP) on a proposed pipeline to carry gas to the coast.
- LNG Canada is designed to process 1.7B cf/day of gas in its first phase.
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