Pipeline expansions are Canada's lifelines

Morningstar Senior Equity Analyst Joe Gemino anticipates that all three of the major pipeline expansion projects will be placed into service by the end of 2022

Joe Gemino 9 January, 2019 | 6:00PM

Canada’s oil supply continues to surpass expectations, and aided by technological advancements, namely solvent-assisted technology, there is no shortage of economic growth opportunities.

But pipelines are operating at maximum capacity, leaving few options to move new supply out of the country. To make matters worse, needed expansion projects continue to hit road bumps.

With limited market access, Canadian crude sold at record lows during the fourth quarter of 2018. To combat low prices, Canada’s producers have turned to crude by rail, and the Alberta government ordered mandatory short-term production cuts in 2019. The actions are having a positive impact on pricing, but relief is likely to be short-lived.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Cenovus Energy Inc5.56 CAD-1.59
Enbridge Inc40.21 CAD-0.84
TC Energy Corp60.47 CAD0.92

About Author

Joe Gemino

Joe Gemino  Joe Gemino, CPA, is an equity analyst for Morningstar covering Canadian oil and Gas companies.

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