stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
Oil investment shrivels as pipeline options run dry
space
Fears that Kinder Morgan could cancel Trans Mountain expansion weigh on energy shares, stoking concerns about the sector's competitiveness
space
By JEFF LEWIS
  
  

Email this article Print this article
Tuesday, April 10, 2018 – Page B1

CALGARY -- Kinder Morgan Inc.'s threat to abandon its Trans Mountain pipeline is magnifying pessimism in a capitalstarved industry already struggling with weak prices and no shortage of investor apathy.

Kinder Morgan chief executive Steven Kean said on Monday the company would scrap the contentious project should it face additional roadblocks, sparking industry fears the $7.4-billion expansion is close to being shelved.

That would place the Alberta-to-B.C. pipeline in dubious company, alongside TransCanada Corp.'s Energy East and Enbridge Inc.'s long-dead Northern Gateway proposal.

Even the slightest whiff of cancellation is likely to deepen a malaise that has weighed heavily on energy shares and stoked concerns about the sector's competitiveness, despite a broad recovery in U.S. and global oil prices.

The Alberta-based industry had already fallen out of favour with global investors, including the world's biggest energy companies. Now, one of the best hopes for rekindling some of that interest looks increasingly shaky.

"It's just one more impediment to getting that verymuch required shift in sentiment," said Eric Nuttall, portfolio manager at Ninepoint Partners in Toronto.

"Here we have oil almost back up to a four-and-a-half year high, and Canadian names are languishing."

Shares of Kinder Morgan Canada Ltd. fell more than 12 per cent in Monday's session on the Toronto Stock Exchange, a day after the company halted all non-essential spending on Trans Mountain. The stock pared earlier losses to close at $16.12.

Trans Mountain would nearly triple the flow of crude and refined products along an existing pipeline route between Edmonton and Burnaby, B.C., relieving shipping constraints that have contributed to hefty price discounts on Canadian oil.

Prime Minister Justin Trudeau approved the expansion to 890,000 barrels a day in late 2016, but the project has become ensnared in legal challenges and an escalating trade tiff between the NDP governments of Alberta and British Columbia.

Kinder Morgan had already delayed startup by one year and cut project spending to a minimum, citing difficulties obtaining necessary municipal and provincial permits in B.C. The company has also yet to complete an extensive list of preconstruction conditions.

But CEO Mr. Kean sought Monday to indemnify shareholders from any financial hit stemming from further delays. The company imposed a May 31 deadline by which he said it needs certainty that B.C. won't be able to block construction of the line.

He also said the company requires clear victories in court, where federal approvals of the project have been challenged. The company is seeking assurances before spending up to $300-million per month during construction, in addition to the $1.1-billion spent to date.

"We don't have the ability to just kick the can down the road," Mr. Kean said on a conference call. "We needed to make a decision and we made it."

Alberta Premier Rachel Notley reiterated on Monday that the province is prepared to take a financial stake in the contentious expansion to ensure its survival, although she declined to say what form that might take.

The escalating fracas over Trans Mountain comes at a time oil sands producers have faced sharp price discounts as output eclipses existing pipeline capacity.

While production cuts have helped ease pressure, analysts expect such relief will be temporary as output at big-ticket projects climbs.

Trans Mountain is one of three major pipeline proposals, along with Enbridge's Line 3 expansion and TransCanada's Keystone XL, that would boost exports.

But the Kinder Morgan project has become a major test of the federal Liberal government's approach to energy and the environment, which some business groups argue has discouraged investment. Share issues by Canadian energy companies have slumped to multiyear lows and make up just 2 per cent of total equity transactions so far this year, according to Royal Bank of Canada. And a growing proportion of this shrinking equity pie is used to fund consolidation, versus new exploration.

"It's already in the doldrums," said Martin Pelletier, portfolio manager at TriVest Wealth Counsel in Calgary, referring to investing levels. "It's actually quite encouraging to see a line being drawn in the sand here."

KINDER MORGAN (KMI) CLOSE: US$15.10, DOWN 7 US CENTS

Associated Graphic

The Suncor oil-sands processing plant operates near the Athabasca River in Fort McMurray, Alta. Producers have faced sharp price discounts as output eclipses existing pipeline capacity.

TODD KOROL/REUTERS


Huh? How did I get here?
Return to Main Andrew_Willis Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page