A Key Victory For Kinder Morgan And The Canadian Oil Industry

Value Digger

A few days ago, we posted in our free article here the 3 oil projects that could transform the Canadian oil industry along with the headwinds or pending issues per project.

One of them was Kinder Morgan's (KMI) Trans Mountain pipeline expansion whose map is below:

And we read some great news yesterday. According to Reuters, Canada’s energy regulator ruled on Thursday in favor of Kinder Morgan’s appeal to sidestep some municipal permits for its Trans Mountain pipeline expansion that has been budgeted at $7.4 billion.

Canada’s National Energy Board (NEB) said that Kinder Morgan is not required to comply with sections of the city’s bylaws over preliminary planning approvals and tree-cutting permits for work at its Burnaby storage terminal and a nearby temporary infrastructure site.

This project will nearly triple the capacity of the existing pipeline from Alberta to Vancouver. Specifically, this is a 590,000 bbls/d expansion that is expected to be completed by the end of 2020 and will bring the total capacity to 890,000 bbls/d.

As a result, the main beneficiaries from this project are the Canadian oil producers such as Cardinal Energy (CJ.T), Crescent Point (CPG.T), TORC Oil (TOG.T), Obsidian Energy (OBE.T), Surge Energy (SGY.T), Baytex Energy (BTE.T), Athabasca Oil (ATH.T), MEG Energy (MEG.T) and BlackPearl Resources (PXX.T) who need more pipeline capacity to fetch better prices, given that their landlocked oil currently trades at a significant discount to the WTI price. Specifically, the differential between WTI and WCS closed yesterday at C$24.88/bbl, as shown here.

Although this was a key victory for Kinder Morgan, the fight for Kinder Morgan is not over, as the federally approved project still faces opposition from environmentalists, aboriginal groups, the province of British Columbia and some municipal governments.

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Disclosure: I'm long Cardinal Energy (CJ.T).

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Comments (3)
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Thank u for the response!

Value Digger
Value Digger


Investor, I like RZE too. It's really a very cheap oil-weighted producer targeting the prolific Swan Hills formation while being surrounded by potential suitors.


I own oil-weighted Razor Energy, RZE. Cheap with high insider ownership. Do u like RZE, Value Digger?