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The long-delayed project to expand Canada’s Trans Mountain pipeline has been hit with another setback, which will delay completion of the project to Q2 at the earliest, the company said Monday.
The government-owned pipeline operator said it encountered technical issues during January 25-27 involving activity with one of its drills, which will “result in additional time to determine the safest and most prudent actions for minimizing further delay.”
Heavy sour crude prices at Hardisty, Alberta, fell Monday on Trans Mountain’s scheduling uncertainty, after narrowing its discount to the light sweet crude benchmark in Cushing, Oklahoma, in recent weeks, Argus reported.
A Trans Mountain official said last week that start-up was expected in early April, with volumes ramping up to full capacity by the end of the year.
Canada’s oil sector will benefit “hugely” once the project comes online, Randy Ollenberger, BMO Capital’s managing director of oil and gas equity research, told Bloomberg.
“This will be the first time in more than a decade we have spare pipeline capacity exiting the base,” Ollenberger said. “I think investors have forgotten about how big this could potentially be for the sector.”
“We’re going to be moving into a market where buyers are going to be competing to buy Canadian oil,” according to Ollenberger, which “will result in a better price for Canadian oil relative to other benchmarks in the world.”
The change in market dynamics likely will benefit heavy oil producers in the Canadian industry such as MEG Energy (OTCPK:MEGEF), “which is 100% heavy [oil] with no downstream operations, they will see a substantive increase in their cash flow,” Ollenberger said.
Among other relevant stocks: Suncor Energy (SU), Cenovus Energy (CVE), Canadian Natural Resources (CNQ).
