TransCanada sees interest in converting gas Mainline to crude pipeline
'TransCanada Corporation officials said Friday they are seriously considering converting its troubled Canadian Mainline from transporting natural gas to one that moves crude oil, and are already in discussions with potential customers.'
platts.com
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TransCanada urged to ‘Go East’
'The idea of converting one of the Mainline’s five existing gas lines to oil service was first floated in late April by TransCanada as a potential solution to the pipeline’s waning competitiveness. Just one line could allow for up to 900,000 barrels per day of oil to ship from Alberta to eastern Ontario, RBC estimates.
From there, a planned reversal of Enbridge Inc.’s Line 9 could move the crude even further, from Sarnia to Montreal. TransCanada could drive up to $8 per share in additional value if it moves forward with that plan, RBC said.
Producers in the west would then be able to access the east coast refinery sector, which has been struggling in recent months from shrinking margins due to a reliance on expensive Brent crude. Those refineries would stand to save millions of dollars in costs, allowing them to retain hundreds of employees, by purchasing Western Canadian Select crude for more than $20 per barrel less than Brent.
“Displacing expensive foreign oil and improving the competitiveness of the refineries in Quebec and New Brunswick could also end up being factors that will help the project garner support,” wrote Mr. Kwan.
The analyst joins Frank McKenna, current deputy chairman of TD Bank and former Premier of New Brunswick, in publicly calling for TransCanada to commit to a trans-Canadian oil transportation channel.
The company, which is set to report second quarter earnings Friday, has said nothing of its plans since first saying it was considering the idea nearly three months ago.'
business.financialpost.com
Jim
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