Proposed TransCanada eastern pipeline no quick fix for oil glut – by Nathan Vanderklippe (Globe and Mail – February 13, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — It will take until at least 2017 before TransCanada Corp.’s much-vaunted plan to take oil across the country can take Alberta oil to Eastern Canada, a lengthy timeline that casts into question the role of that project in easing current pricing pain for the oil patch.

Canadian energy companies are forgoing millions of dollars a day in revenues as pinched export pipelines create an oil glut in Alberta that has hurt prices. The prospect of easing that glut by pumping oil through parts of TransCanada’s cross-country natural gas network has attracted substantial political favour, with Alison Redford and David Alward, the Premiers of Alberta and New Brunswick, stirring excitement about a project they say can help solve the problem.

But if the west-to-east pipeline offers a solution, it’s not a quick one.

On Tuesday, TransCanada outlined a potential timeline for the project. An “open season” to solicit for contractual support could be held toward June of this year. A formal regulatory filing might then be made near the end of 2013, which would trigger a review likely to take 18 to 24 months. After that, construction would take two years, Alex Pourbaix, TransCanada’s president of energy and oil pipelines, said Tuesday.

It’s “looking like 2017” before it’s in service,” he said.

That timeline offers a reality check to the optimism presented by the two Premiers, who met in Alberta last week. In a speech, Ms. Redford said the two governments are “making good progress very quickly” on the project. She later added that “people are very optimistic” about the prospects for carrying Alberta oil to Montreal, Quebec City or Saint John – the final destination has yet to be chosen.

Alberta has discussed the west-to-east plans in the context of large discounts in the price of heavy oil. On Tuesday, heavy oil futures sold for a per-barrel discount of $26.17 (U.S.) from the benchmark West Texas intermediate. The historical average discount has been about $18.

But crude deliveries four years from now are “irrelevant to the immediate-term issue that we’re in a panic about right now,” said Rafi Tahmazian, who manages several energy funds for Canoe Financial LP. Without new pipeline capacity by 2015, serious trouble could ensue, he said.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/globe-investor/proposed-transcanada-eastern-pipeline-no-quick-fix-for-oil-glut/article8482069/

 

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