Canada Oil Industry Takes Fresh Hit With Key Pipeline Delay
https://finance.yahoo.com/news/canadian-oil-industry-takes-fresh-100000325.htmlMarch 4, 2019
Canada’s already beaten-down oil industry is facing a fresh setback as regulatory issues bog down another key pipeline project.
The roughly one-year delay to Enbridge Inc.’s expansion of its Line 3 conduit, announced late Friday, threatens to prolong a shortage of pipeline space that has made it difficult for Canada’s drillers to ship their crude to refineries. That pinch caused a crisis in the industry last year, sending local oil prices to record lows and prompting the government of Alberta to embark on an unprecedented intervention in the market.
Enbridge’s Line 3, which would help move 370,000 more barrels of crude out of Alberta, is particularly important because the province’s government was counting on it to help end mandated production cuts. The delay may scramble plans for drillers who were counting on the line and shift investors’ focus to efforts by producers and Alberta’s government to move more crude by rail. Enbridge shares dropped the most in almost a year.
"The revenue the producers miss out on for the lack of access, coupled with likely extended curtailment, equates to staggering losses in royalty payments to the province," said Rafi Tahmazian, who helps manage about C$700 million ($525 million) at Canoe Financial in Calgary. "Every Canadian is getting hurt here now."
Alberta announced a plan last month to invest C$3.7 billion to lease 4,400 rail cars, buy crude from local producers and sell it to refiners across North America. The government expects to turn a C$2.2 billion profit on the plan through service revenue and increased royalties....
