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The long-delayed project to expand Canada’s Trans Mountain pipeline has encountered another setback, pushing back the completion timeline to at least Q2, the company announced on Monday.
The government-owned pipeline operator stated that it faced technical issues during January 25-27 involving activity with one of its drills. This will “result in additional time to determine the safest and most prudent actions for minimizing further delay.”
On the back of Trans Mountain’s scheduling uncertainty, heavy sour crude prices at Hardisty, Alberta, fell on Monday, following a narrowing in its discount to the light sweet crude benchmark in Cushing, Oklahoma, in recent weeks, as reported by Argus.
A Trans Mountain official mentioned last week that the start-up was anticipated in early April, with volumes ramping up to full capacity by year-end.
Regarding the potential impact of the project, Randy Ollenberger, BMO Capital’s managing director of oil and gas equity research, highlighted the anticipated benefits to Canada’s oil sector. He expressed optimism about the project, stating that it will be the first time in over a decade that spare pipeline capacity will be available, making the oil sector a competitive force in the market.
“We’re going to be moving into a market where buyers are going to be competing to buy Canadian oil,” Ollenberger emphasized, predicting that this will result in a better price for Canadian oil relative to other benchmarks in the world.
He further added that the change in market dynamics is likely to benefit heavy oil producers in Canada, such as MEG Energy (OTCPK:MEGEF), and that they could see a substantial increase in their cash flow. Additionally, he highlighted that other relevant stocks like Suncor Energy (SU), Cenovus Energy (CVE), and Canadian Natural Resources (CNQ) are expected to be influenced by the evolving market dynamics.
