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The long-delayed project to expand Canada’s Trans Mountain pipeline has been hit by another setback, which will delay the project’s completion to the second quarter at the earliest, the company said Monday.
The operator of the government-owned pipeline said it had encountered technical problems Jan. 25-27, anticipating activity with one of its exercises, which will “result in additional time to determine the safest and most prudent actions to minimize further delays.”
Prices of heavily sour crude in Hardisty, Alberta, fell Monday on uncertainty over Trans Mountain’s schedule, after narrowing the discount to benchmark light sweet crude in Cushing, Oklahoma, in recent weeks, Argus reported .
A Trans Mountain official said last week that start-up was expected in early April, with volumes reaching full capacity by the end of the year.
Canada’s oil sector will benefit “enormously” once the project comes online, Randy Ollenberger, managing director of oil and gas equity research at BMO Capital, told Bloomberg.
“This will be the first time in more than a decade that we will have reserve pipeline capacity coming out of the base,” Ollenberger said. “I think investors have forgotten how potentially big this could be for the industry.”
“We are moving towards a market where buyers will be competing to purchase Canadian oil,” according to Ollenberger, which “will result in a better price for Canadian oil than other benchmarks in the world.”
The change in market dynamics will likely benefit Canadian industrial heavy oil producers like MEG Energy ( OTCPK:MEGEF ), “which is 100% heavy [oil] without downstream operations, they will see a substantial increase in their cash flow,” Ollenberger said.
Other notable stocks include Suncor Energy (SU), Cenovus Energy (CVE), and Canadian Natural Resources (CNQ).