# Transcanada Pipelines (TRP.TO)



## humble_pie

what will be the effect on transcanada pipe of the controversial keystone XL decision ?

http://www.theglobeandmail.com/repo...to-transcanada-pipeline/article2048032/page1/

it'll be a US state department decision later this year. Some say the issue is so big it has to go to obama for final vetting.

keystone XL will send tar sands oil to the gulf of mexico. Existing keystone ends at cushing oklahoma i believe.

US authorities shut down existing keystone pipeline with dire warnings late last week but news this am is that protocol for repairing its small leak (s) is already approved.


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## Sampson

Huge.

TransCanada needs Keystone XL, and Enbridge needs their Northern Gateway to go through.

If they don't, I see these two morphing into more classical utilities. I know many already view them as utilities, but the truth is their operating margins are much higher, and they have very significant growth prospects.

Both companies have already made their most significant gains in reducing costs and securing extremely favorable rates on moving and storage during the peak of the last boom, so if these projects don't go through... they won't be darlings anymore, but they won't be at risk either, since capital costs to enter this market are too high. There is some foreign competition in the space, but it is largely insignificant.


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## Sampson

I wanted to add that it ain't the end-all be-all. They are starting to make acquisitions outside of North America, so their could be some growth opportunities their, but until Canadian oil and gas moves to countries outside the US, those projects won't be big money makers.


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## zylon

Owning TRP directly, and also as part of a fund, along with ENB, I would benefit from both projects going through.

But I'm in favour of keeping our crude and natgas land-locked. If exports of crude start flowing freely, the WTIC discount to Brent will evaporate.

At present, the rail cos are benefiting from the troubles of the pipelines.


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## Sampson

zylon said:


> At present, the rail cos are benefiting from the troubles of the pipelines.


That's the best way to do it, hedge by owning the 'competing' interests.

I also own CNR, but they also face significant opposition from environmental and aboriginal groups regarding building a refinery out at Kitimat.

This is a very interesting scenario, one I've never seen, where the business is all good, and all companies have secured significant contributions from stakeholders (both from the target markets and from partners in production), but the gov't and environmental groups are opposed.

In my eyes, the outlook for Enbridge and CN have improved now Harper has a majority. The situation in the States, very murky - they need the oilsands as a bridge before their alternative energy projects mature and to get them off the oil from the middle-east, but Obama has in the past stated to be looker for cleaner solutions.

Cleaner or safer?


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## dubmac

Don't underestimate the role of big gov't, US senators and all those in the US that see oil/gas as significant to the security of the US. I recall seeing an update on the TRP website that included support from many high ranking military types that support the project based largely on the question of security of oil from the middle east/SA etc...


http://www.marketwire.com/press-rel...te-hillary-rodham-clinton-tsx-trp-1505407.htm


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## Financial Cents

Both projects will happen, not without some political drama along the way though. Tis the U.S. way.


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## Toronto.gal

I agree with the drama FC.

http://www.theglobeandmail.com/repo...xl-oil-sands-face-choke-point/article2052562/


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## dubmac

humble..FYI
Morningstar just updated their assessment on TRP on June 10th. Their analysts are of the opinion that the Keystone will be approved by the state dept later this year. Interestingly, the article puts some of the hype surrounding the leaks in perspective ...I quote the article below

"Also, our discussion with management put Keystone's recent pipeline leaks in context: 12 total reported leaks during the last year have resulted in a little more than 400 barrels leaked, compared to upward of 60 million-70 million barrels shipped. Moreover, all of the leaks have been at pump stations--not related to the integrity of the pipeline itself--and in some cases due to the malfunction of half-inch fittings. One of the leaks was just eight gallons, the equivalent of a few oil changes. In sum, we think Keystone's virtues far outweigh its risks, and that rational decision makers will come to the same conclusion."


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## humble_pie

it's strange ... but would you believe i read almost the exact same verbiage a few days ago, right down to the small size & relative unimportance of the leaks.

trying to think where. I think it might have been td securities. Is the morningtstar blurb taken from other sources. Could they possibly have picked up this research piece from the td.

if not then one would have to say they were all in the same conference call or meeting together & all heard the TRP spokesman speak these arguments.

i'll check for the td piece in the morning, too sleepy now.


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## dubmac

State Dept has a Nov. 1st date with Keystone...http://www.thestar.com/business/companies/article/1009517--u-s-sets-keystone-deadline


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## dubmac

*Trouble with the Mainline G&M July 2 article on TRP*

Hi all..

How concerned should a TRP holder be with the report on TRP's mainline. The CEO sounds quite smug with his perspective..(ie: we have the pipe in the ground, and it costs too much for other competitors to compete with it!)...but the future, according to the author, is not without challenges. I'm not sure whether there will be an improvement in the gas market - but some suggest there will be. If there is an improvement this fall, how best to capitalize?

1. Is Husky (HSE) a player that would complement TRP?
2. Is there a nice low cost ETF that would supply gas to a pipeline co (like TRP)
3. What about the LNG projects that would move gas from BCE & Alta to ports in China/Asia. Any companes that lead the rest in this initiative?

As usual with me, lots of questions...(not many answers)..Happy post-Canada Day


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## humble_pie

this is an important roundup article. An in-depth must read for all holding trp. But are they reading ? commentary & applause here have been deafening ...

looking also at the 105 comments from globe readers, some of whom seem to be knowledgeable gashands, article does seem to present a slight anti-trp bias.

the marcellus & other eastern north america shale gas plays are being presented as closer to actual production than they really are. In reality both new york state & quebec have banned shale fracking until more can be known about the technology & its impact on the green.

i'm not sure i'd agree with portrayal of russ girling as a rearward looking ceo, clinging to his legacy infrastructure & saying cost of any new transmission network effectively prohibits competition.

however, all who own trp have no choice. Read this article. To shale or not to shale, that will be the question.


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## equityval

*Transcanada Mainline*

Dubmac & Humble Pie,

The "Pipeline in Peril" story is an important one and this is an issue that I think investors have overlooked. TRP management has downplayed it consistently over the last couple of years, but the economics of the pipeline have only deteriorated over that time. 

The Marcellus is real and has exceeded expectations. Pennsylvania gov't views it as an economic opportunity, and despite the anti-fracking rhetoric, the industry will grow in the state. The central counties of the state, which until now had not really been developed due to infrastructure issues, are starting to be drilled with good results, that will be the second phase of its growth. Also the EUR for well in the play have consistently gone up over time as the E&P cos learn how best to exploit the formation. While New York has stymied the industry for the last 2 years, the DEP just released a study that lays the groundwork for drilling to start, and the governor seems to understand that this can be an important boost to the economy. Unclear how much cost the regulations will add, but it's a good bet that at least the most prospective areas (around Binghamton) will be drilled. I would strongly suggest that all TRP investors take a look at this presentation which lays out some of the details of what has happened to gas flows recently (a little dated but still quite valid): 
http://www.uniongas.com/storagetransportation/communications/presentations/CAMPUTWebinar/index.asp

TRP has been attempting for the last year to find a way to restructure the toll regime on the pipeline. The proposals have been very convoluted and have been unable to garner a consensus among stakeholders because TRP is trying to avoid recognition that a substantial portion of the pipeline has experienced a permanent impairment of value. Specifically, the middle section of the pipeline between the Emerson spur and Northbay, has very little value because there is little demand to ship gas between these two points other than for a few weeks during the peak winter heating season. Realistically, TRP needs to take a write down of something on the order of $2B (the entire pipeline has a cost basis of $6.5B) so that tolls can be lowered to a rate that makes it economically viable to flow gas on the pipeline again. TRP is insisting that the existing rate of return regime, which allows TRP to collect a fixed amount of revenue regardless of volume, should remain in place. However, this has led to a steady increase in toll hikes, which in turn chases more volume off the system leading to what is known as a "death spiral". The toll to ship gas from Alberta to the Eastern Ontaria has gone from $1 to $2.50 in the last 5 years and will go up again next year under this toll regime. A realistic settlement is one that recognizes this is an impaired asset and a workout situation in which all the stakeholders, including TRP, share the pain.

I have been playing this situation by being long ENB and short TRP for that last year or so and that has worked out well so far. 

As to Keystone, I think it will eventually get approved. The US would be stupid not to swap reliance on mideast sources for Canadian crude, but it may take a change of administration to get this approved. The recent spill in the Yellowstone River, along with last year's ENB spill in Michigan isn't helping the politics of the situation. The game that is going on is the greens are horrified that new, reliable sources of fossil fuels (tar sand, shale gas) are being developed that will extend the life of fossil fuels as an energy source and moderate prices increases. Their only hope for a green future filled with wind and solar is if the prices of existing fuels increases dramatically, but they are too dishonest politically to push for an energy tax that would tilt the market that way, so they are attempting to throw up all these roadblocks to fossil fuel development as a way to limit supply and increase price. That is why you are seeing all this hysteria over fracking despite the fact that no one has produced any evidence that fracking fluid migrate up into the water table.

The other issue I would be looking at as a TRP shareholder is this nuke plant that they are refurbing in Ontario. As a Yank, I don't know the politics of nuclear in Canada all that well, but this project has been behind plan and over budget as far as I can tell and I suspect will get greater scrutiny in the post Fukushima world.

I have a write up on the Canadian Mainline situation if you are interested.


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## dubmac

Equityval...

Short answer – “yes ..I am interested in the Mainline write-up.”

Long answer...
Kind thanks for your (very) well-written update - it offers up some much needed perspective from sources other than Canadian. Your link to the presentation is quite revealing – the picture for TRP looks a tad glum. As a 20-something I worked both for Union Gas and for TRP (mostly summer jobs), and became acquainted with some of the biz. Interestingly, I am pretty sure that Union Gas Enterprises is now owned by Duke Energy – a US owned company. Given the new realities of gas distribution and new sources in the Marcelleus, it makes more sense that Duke would want to own Union if not mostly for the gas storage capabilities (that is, the Dawn storage reservoir near Chatham) rather than it’s function as a pipeline and gas distribution utility. I wonder if they are buying up some of the storages reservoirs in the Michigan side of the St. Clair river…hmmm

Should TRP be pressed to take a 2B write-down on the northern mainline, this would move TRP from 27.8B to 25.8 B company- if it does come to pass – I would expect the stock price to suffer….but… given the prospect that TRP's Keystone will be approved and some 500000 barrels does indeed move south daily (http://business.financialpost.com/2011/07/11/study-warns-of-leak-risks-to-keystone-pipeline/) would this not serve to improve the situation faced by TRP? I’m also curious what companies are best positioned to succeed in the new order established by shale gas in the NE. Perhaps Duke Energy is one? Who are the big players in the development of the Marcelleus Shale & NE Gas? Is Enbridge (ENB) affected by any of this bru-ha-ha? 

Me..I am no wizard of the markets - a simple investor who hopes to draw down on dividends in my evening years (while warming his feet by a gas-furnace)...so I am left wondering what the effect would be (on the TRP stock price over the short term - say 1-2 yrs out) and on the future prospects for TRP. Tis’ more of an open question than one with an absolute answer..

(PS..Go NY Yankees)


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## equityval

*Mainline*

dubmac,

As soon as I can figure out how to send you a private message, I'll ask your for your email so I can send you my write up, either that or perhaps you can send your email address to me.

Union is now part of Spectra Energy (which was spun off from Duke) which can make use of the Dawn storage (though they own other storage assets in Pennsylvania as well). I think the distribution business of Union stands on its own, though the pipeline up from Dawn also serves a role as a transmission asset and will probably see more volume as gas from the Marcellus enters Canada at Niagara.

I think the correct way to think about a write down of the Mainline asset is that it currently generates about a quarter of TRP's EBITDA. If they had to write down a third of the value, and thus the revenue stream, the impact on EBITDA would be larger than 2/27ths that you postulate (remember costs on the pipe are largely fixed though would decline a little perhaps if they physically mothballed some of the pipe segments). The biggest impact will probably be felt in dividend growth for TRP which would drop. If the income drop is big enough that it threatens their credit rating then they would have to cut the dividend, so that is your downside. I like the pair trade as I think ENB has better assets and grows earnings and dividends faster. 

Keystone will help though remember that the delays are adding to the capital cost (accruing interest and taxes on the sections built but not in use) and the depreciation charges for the portion not in use have not kicked in yet.

One midstream company benefitting from shale is MarkWest (MWE) they have a very good position in the Marcellus. Copano (CPNO) has a good midstream position in the Eagle Ford shale. The E&P names in the Marcellus to focus on are EQT, NFG, RRC, COG and REXX. Enbridge may see some impact from shale gas on its Alliance pipeline that runs down to Chicago. The Rex pipeline is likely to be reversed from the Marcellus back toward Chicago which will push down the basis in Chicago. Also, as gas flows up from the Marcellus toward Dawn, that will likely push gas that now comes up to Dawn from the midcontinent over toward Chicago as well. However, their oil pipeline down from Canada should pick up some volume from the Bakken shale in North Dakota. 

One other problem for TRP is the Ruby pipeline just started up from the Rockies to the Pacific Northwest. It is a big pipe and it will take away some of the market from TRP's GTN pipeline that runs from Alberta to the NW US. No short term impact on earnings, but as the GTN capacity contracts start to roll off you will see an earnings hit. One other issue that may arise for both that pipe and the Mainline is that there is a proposal to build a pipeline to Kitimat where gas would be exported via an LNG terminal. If that were to be built, that would probably take some incremental gas off the Mainline and GTN pipes. They haven't put a shovel in the ground on that one yet though.

Hope that helps.

(Yankees will have a dogfight this year with the Red Sox. They need to stay healthy to stay in the race)


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## humble_pie

val one would have to suppose that you are on the side of shale fracking, perhaps even bear bashing in trp.

but i digress. We are having a fierce nyc-style heat wave right now, so one thing at a time. My issue ce soir is the safety of fracking chemicals that are forced in below the water table. You say these cannot rise.

but no one can guarantee that such chemicals will never permeate through crumbled shale formations to reach the aquifers. Perhaps they would not for 25, 30, 40 years or longer. It's impossible to state with authority that such an outcome cannot happen.

another alarming aspect is that such a pollution accident, if it occurred, could not be treated. It would be too deep in the earth to open up.

severe pollution does not happen overnight. It took three-quarters of a century before the poisoned love canal & the toxic sydney tar ponds were finally understood.

water is blue gold now. NY city is dependent upon the hudson river. It's difficult to imagine manhattan welcoming widespread fracking around the hudson sources in upstate new york. And isn't it true that what nyc wants, albany delivers.


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## equityval

*Bear Bashing and Fracking*

Humble Pie,

You can call me whatever you like. I happen to think that there is an underappreciated risk in TRP's business model. I think there is a write down coming that will impair reported earnings and their ability to either grow or maintain their dividend. I do not think they are going out of business, but I also do not think they have been candid about the risks they face on the Mainline. Time will tell if I am right. Perhaps we should check back in a year and see how the Mainline is doing.

With regard to fracking, I would strongly urge you to do some of your own research and not just rely on what you read in the newspaper. Facts have been an early casualty in the debate. Go to Range Resources, for example, and look at what is in their fracking fluid: http://www.rangeresources.com/getdo...29b-e2b8ef0afe4f/Well-Completion-Reports.aspx

The first well on the list had fracking fluid that was 95.3% water, 4.6% sand, and 0.08% additives. Most of the chemicals on the list can be found in the cleansers under your kitchen sink.

Next I would suggest that you learn a little about geology. Water tables sit at levels of 1500 feet and above. Fracking operations are, depending on the field, usually done at 5-10K feet down. If they are doing a really good job, fracking operators might create fractures that are a few dozen feet in length. There is no way on earth they can create fractures of several thousand feet there isn't enough force in what they are doing. Moreover, there are layers of rock above the shale that will not fracture at the pressures that are used in fracking operations. If you are going to worry about this as a risk, I suggest you get a very large telescope and start scanning the skies for asteroids that threaten the earth - they are a much more likely concern in my view. Beyond this, I would suggest you look at what EPA officials have said. To summarize, there is no evidence that ANY fracking chemicals have migrated up into the water table. Even the much touted Duke report, which was hardly a disinterested analysis, found no evidence of migration like this. 

Given that track record, ask yourself why you are hearing all this sudden hysteria over "fracking" (which, BTW, has been going on for a few decades). None of it is based on any science that documents problems. The reason, is that fracking and horizontal drilling (along with micro seismic and a bunch of other innovations that have all been developed and paid for by the private sector - no big subsidies involved thank you very much) have a) reduced the cost of finding gas by a third and b) have increased the known reserves in the US by a factor of at least 5. If your goal in life was to cover the landscape in wind farms, the discovery that "fracking" will result in cheap abundant gas is your worst nightmare. It is less costly than wind, can be dispatched whether the wind is blowing or not, and is substantially less carbon intensive than coal, and doesn't require sending money to autocrats who are a little too chummy with people that would like to kill us given the chance. What is not to like? Nothing, unless as I mentioned, your goal in life is to cover the landscape with wind farms. Next time some tells you of the horrors of "fracking", ask them to show you the evidence, and also ask them if they have any pecuniary interest in green energy.

As to the treatment of underground pollution, it would not require digging a hole to 5,000 or 10,000 feet to treat the problem. We have, for at least the last couple of decades, been treating ground water contamination from things like leaking gas station tanks and landfills without digging up the ground - there are some well established protocols for this that a little digging on the internet would produce for you.

As to NYC's water supply, the city is not dependent on the Hudson, but on a series of reservoirs in the Catskills (please, let's deal in facts). Said reservoirs and a large area around them are already subject to probably the most stringent set of land use regulations in the country. Moreover, the company which owns leasing rights to the area of the Marcellus that overlaps the reservoir system has said they will not drill in that area, and the proposed state regs would declare this area off limits. So can we please put that bogey man to bed?

All of this is not to say there are not risks involved with shale gas. There are risks involved in ANY kind of energy production (have you looked into the issues with cadmium and selenium in solar cells - it's an issue that no one in the green community wants to talk about). It's all about tradeoffs involving cost, risk, convenience, fit with existing infrastructure, etc. The biggest risk with shale gas, and the one that needs the most attention in my view, is methane migration. This is natural gas that escapes from wells and ends up in private wells. There have been a few instances of this in Pennsylvania - not many, but it is a topic that I think the industry needs to address. This is a function of wells that are not properly cased, and the source of the gas is most likely not the Marcellus, but gas bearing rocks closer to the surface that must be drilled through to get to the Marcellus. Hence the much celebrated Gasland videos. Please note this has nothing to do with "fracking", it has everything to do with well casing. It is also worth noting, that there are many spots in the country where methane (and other potentially hazardous materials) seeps naturally into well water and reports of people being able to light their tap water on fire have been around for decades, long before we became obsessed with "fracking". In fact, the producer of Gasland was aware of naturally occurring methane migration, but apparently decided that he could omit that fact from his "documentary" (you can watch him admit that here: http://www.fightgaslandcensorship.com/ ) To truly measure what impact, if any, shale gas drilling is having on private wells, you need to take samples of the water before and after the drilling. The gas companies are now doing this so that there is a baseline for everyone to look at. As some of that information is released, we'll have a better idea of just how frequent this issue arises (assuming of course that the press reports it - most outlets don't seem to be interested the science, they would rather just print "toxic fracking" in bold letters and try to scare the hell out of everyone, for example try to find a traditional news outlet that printed this news: http://eon.businesswire.com/news/eon/20110707006671/en )


The other risk with shale gas is how the flowback water (fracking fluid that comes back up the well after fracking is finished) is handled. This is often put in lined ponds until the water is reused in future wells. It often contains low concentrations of naturally occurring radioactive materials that exist in the shale. There have been some spills from these holding ponds, but none that have caused any material damage. I think the industry needs to be more careful in how it handles this flowback water, and indeed some are starting to put it in tanks rather than ponds. 

In my view, methane migration and flowback spills are not show stoppers. The industry needs to make sure it is diligent in handling these two issues, but doing so will not materially impact the economics of the producing this gas. 

People throw around the word "game changer" a lot, but in my view, shale gas is deserving of that label. It represents a much cleaner, cheaper and abundant source of energy than the alternatives and is the best path to a day when "green" energy technologies are cost competitive. I'm not inherently pro-fossil or anti-green energy, but I look at the economics and practicality of the technologies to see which is likely to make more sense. Things that need subsidies in perpetuity or over very long periods of time tend not to work out well and tend to distort markets (ie, corn based ethanol). I think we are still some distance away from the time when green energy can stand on its own two feet. Until that time, we ought to take maximum advantage of shale gas provided that we use best practices to produce it.


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## clovis8

This American Life was all about fraking and Range Resources this week. Great episode you can download free.


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## dubmac

clovis8 said:


> This American Life was all about fraking and Range Resources this week. Great episode you can download free.


go here..
http://www.thisamericanlife.org/play_full.php?play=440&podcast=1
thnx clovis..I listened to it. wow...there's a huge amount of gas there..and alotta controversy!


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## humble_pie

sourcing future energy within north america has got to be one of the biggest geopolitical stories of our time, if not the biggest. It stretches like a giant hand with fingers splayed out across the spine of the continent. Borders mean nothing to the giant grasping hand. Borders are just temporary obstacles to overcome.

thank you val for your amazing contributions on the positive side of gas fracking. We will have to keep this thread alive as it's more important than just a question of whether or not to buy a few shares of trp.

it would take a geologist to oppose val & i am not one. Nor do i have the time to recruit one to this thread or to take up the arguments val so persuasively launches.

nevertheless plain common sense tells this piecrust that a great deal more information has to be obtained. The information may exist already - val mentioned good sources & links - but popular knowledge has to be brought up to speed before shale fracking can ever get underway in quebec, for example.

plain common sense also tells me that repairing a deep rupture from fracking is not comparable in the least to treating soil around underground gasoline storage tanks or any other close-to-the-surface contamination. There is almost no experience with repairing deep fracked wells. There hasn't been enough time.

as far as i know, deep geological formations do shift. Plate tectonics is real. An earthquake fault of medium importance runs from the appalachians up through montreal & the ottawa river valley. Earthquakes occur every few weeks along that fault line. Montrealers frequently sense minor earthquakes, especially when they're in bed, at night. (i know a couple who argue about this constantly. She wakes up & says It's an earthquake. He says Go back to sleep it's just semis on the throughway.)

we need to think of a vast time frame. It's not a question of a well casing failing in its first 10 or 20 years of operation, although some of these will likely happen. It's a question of how to treat thousands of them 50, 100, 150 years from now, by which time most of the casings will have failed. And in those cases where deep geologic shifts would have occurred, collapsing the casings, how could any repairs at depth be carried out. This is the same king of long-term worry that prevents europeans from burying those still-radioactive casks of spent nuclear fuel.

as for shorting TRP over the past year & doing well with this, which val claims, i for one am doubtful. TRP has steadily risen. It was imho a horrible short candidate.


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## dubmac

I did an undergrad degree in Geology & worked a little in the mining & gas industry - this doesn’t make me a P.Eng– but informed on a few matters geological. A very good source of information on the Marcelleus can be found here: http://geology.com/articles/marcellus-shale.shtml

Humble your concern on the impact that (1) fracking may have on inducing seismic activity and (2) the negative impact that earthquakes may have on the many cased wells is interesting. The NE part of the US is quite far from active plate boundary (like the San Andreas Fault for example) – unlike say Vancouver or California. The extent to which “fracking” could cause dormant faults to reactivate however, is largely unknown (see below). 

“West Virginia, part of the Marcellus Shale field, has experienced at least eight small earthquakes in the Braxton County area since April 2010. Martin Chapman, director of Virginia Tech Seismic Observatory, told the Associated Press (AP) (September 2) that earthquakes are rare in the area. "Something's going on there," he said, "and I have a strong suspicion that it's something associated with [gas] drilling." According to the AP report, "Some geologists suspect high pressure and wastewater have lubricated old fault-lines, allowing them to slip and trigger small earthquakes. Marshall University geology professor Ronald Martino told AP that it's "quite possible" the quakes are linked to the high-pressure injection of fluids. "Geologists have known of a possible link between fluid injection and small quakes for a half-century, he said, and the potential impact on fault lines under Braxton County should be explored further."…” http://www.watershedsentinel.ca/content/does-gas-fracking-cause-earthquakes. How much of this is fear-mongering vs. science…who knows – not me!

The bigger concern is with wastewater from the fracking operations– as Equity val mentioned & with contamination of well & surface waters. As of May 12th 2011, Range Resources, for one, can no longer deliver wastewater from their drilling operations to wastewater treatment plants (where they had previously had it delivered) These wastewater treatment plants are not designed to treat these wastes or have the infrastructure to remove many of the compounds in the brine (salts etc) and from the drilling muds (barium etc.). Equityval mentioned that the shale is buried deep below the groundwater sources & aquifers (true) and that the dangers for contamination come more from improperly cased wells (true from what I can tell), and challenges with treating with wastewater with facilities that were not designed to do it! Also, The Times wrote an article on some of the uranium found in the brines. http://www.nytimes.com/2011/02/27/us/27gas.html?_r=4&scp=1&sq=hydraulic&st=cse From some of the information that I’ve seen, some wells have some nasty compounds dissolved in the brines and in the fracking fluids - not sure whether all wells are like the one that equitval comments on in his post. Can the EPA and gas industry resolve the bigger issues on contamination of water & treatment of the fluids?


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## equityval

*Union takes a shot at the Mainline, TRP pair trade*

Humble Pie, my short on TRP involved a pair trade, with a long position in ENB offsetting the short position in TRP. I'm up about 15% in a year on that trade which essentially removes the general market risk that a long only trade entails. Risk adjusted, that is a good trade and the fun is really just getting started with the Mainline. 

I see that Union has updated their gas market overview and is now taking much more direct aim at TransCanada. see: http://www.uniongas.com/largebusine...entations/2011_AprEMAC/natural_gas_update.pdf

In the past they were more diplomatic had merely indicated the change in flows and the challenges presented by the rising tolls. See page 19 and 20 in the slide deck:

"Mainline paths are out of the money" - meaning that Alberta producers would be better off selling locally than incurring the toll and shipping the gas east and​
"long term solution to include right-sizing assets" - that would be a euphamism for a write down.​
The end game with the toll application to the NEB is starting to set up and the players in that proceeding are starting to stake out positions.

Regarding Keystone, it looks like the Yellowstone spill on Exxon's oil pipeline is putting the heat on one of the big supporters of Keystone: http://online.wsj.com/article/SB100...56.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsThird

Also, TRP's Bison pipeline, which has only been in service a couple of months ruptured in Wyoming late last week. That isn't going to help TRP's safety image.


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## dubmac

No question that TRP has it's issues and challenges with future demands for gas in the east. One must balance the challenges posed by the mainline with some of the other positives in the TRP plan andbalance sheet - I quote Morningstar analyst review of TRP below..

"On the power side, the company is approaching completion of a CAD 2.4
billion refurbishment of the Bruce nuclear facilities in Ontario, which offer very attractive returns among power-generating assets. In the long term, the flagship Canadian Mainline and Alberta systems *could* see new volumes from the proposed Alaska pipeline, but we consider these volumes a bird in the bush for now, given the regulatory hurdles and colossal investment required." Note: my emphasis on "could"

Looking more at the challenges inherent in the gas situation in the NE states, I have been reading some of the press on shale gas. The NY Times editorial board seems to have the NE gas industry firmly in it's cross-hairs. They have a editorrial series "Drilling Down" where they "evaluate" what is going on in the industry at this time. I don't quite know why the Times has a bee in their bonnet over the shale gas, but...it sure looks like they do! One particular page caught my eye..

http://www.nytimes.com/interactive/us/natural-gas-drilling-down-documents-4-intro.html..
and 
http://www.nytimes.com/2011/07/17/opinion/sunday/17pubed.html from Sunday July 17th...

Over the past six months, The New York Times reviewed thousands of pages of documents related to shale gas, including hundreds of industry e-mails, internal agency documents and reports by analysts. A selection of these documents is included here; names and identifying information have been redacted to protect the confidentiality of sources, many of whom were not authorized by their employers to communicate with The Times. 

http://www.nytimes.com/interactive/us/natural-gas-drilling-down-documents-5.html..see specifically pages 9-13.

Yes..TRP has had their oil spills and chills...but there seems to be enviro-anxiety in the NE as well! I quote one paragraph from the July 17th op-ed above...

"A countervailing surge of support for the article, meanwhile, has come from environment-minded readers. And four Democrats in Congress have called on public agencies to examine some of the issues that Mr. Urbina raised in that story and one the next day. 

The reaction underscored the stakes involved in shale gas. Hailed as a cleaner replacement for coal, it is extracted using a relatively new, water-intensive drilling technique commonly called fracking. As The Times documented in an earlier installment of “Drilling Down,” there is concern that fracking could wreak environmental havoc in shale basins across the country. 

TRP may have it's issues, but what of the gas industry in the NE States?


----------



## daddybigbucks

Obama approves Keystone

http://www.guardian.co.uk/environment/2011/aug/26/obama-approves-pipeline-alberta-texas

"But with Friday's decision the pipeline is now expected to come on line in 2013."


----------



## ddkay

How come it's necessary to build the KXL? Is it to save Texas' refinery businesses because of dwindling crude supply in the Gulf Coast? I read the only other place with tar sands is the Orinoco in Venezuala and they export heavy crude to Texas to refine as well.

Just wondering, why don't we refine KXL oil in Canada by expanding our own pipeline capacity and East and West Coast refineries? Couldn't we just as efficiently sell it to domestic refineries for local and world markets?


----------



## ddkay

So it sounds like KXL oil isn't even primarily for US consumption, the Port Arthur, TX refinery just happens to be in a foreign trade zone and imports/exports are exempt from taxes.



> What would happen if Keystone XL doesn't go through:
> 
> "In the event the US fails to approve the Keystone XL line, then the Canadians will turn their efforts to Enbridge's Northern Gateway project, the line that is proposed to be built for C$5.5 billion from Edmonton, Alberta, to Kitimat, British Columbia. The Northern Gateway project is a 1,777 km (1,110 miles) pipeline system comprised of a 525,000 b/d crude pipeline for export and a 193,000 b/d line to facilitate the import condensates."
> 
> "Another option is to expand the lines and reverse some of the Enbridge line eastward. Enbridge recently submitted plans to reverse part of its Line 9, running from Montreal, Quebec, to Westover, Ontario, and then to Sarnia, Ontario. This reversal will enable up to 200,000 b/d of new crude production to go markets in Nanticoke, Ontario, where Imperial Oil operates a 112,000 b/d refinery, and to the 70,000 b/d Warren refinery in Pennsylvania via Kiantone."
> 
> "Attempts to open an outlet to the Atlantic Coast has not received much support from the industry because US Atlantic Coast refiners prefer sweet crudes while those in Europe too prefer crudes that are lighter and sweeter too. Some of the oil from the oil sands would meet this test, but a lot of it wouldn't."


From Platts http://www.platts.com/weblog/oilblog/2011/09/01/a_primer_on_jus.html


----------



## ddkay

Wow, the whole Keystone system is designed for enough capacity to export *all* of Alberta's current oil sands crude production, 1.5 million barrels a day, isn't that a potential overcapacity problem?



> - Crude Oil Supply, Markets and Competition Alberta produces approximately 80 per cent of the crude oil in the WCSB and is the primary source of crude oil supply for Keystone. *In 2010, the WCSB produced* an estimated 2.6 million Bbl/d, consisting of 1.1 million Bbl/d of conventional crude oil and condensate, and *1.5 million Bbl/d of Alberta oil sands crude oil*. The production of conventional crude oil has been declining but has been offset by increases in production from the oil sands. The Alberta Energy Resources Conservation Board estimated in its June 2010 report that there are approximately 170 billion barrels of remaining established reserves in the Alberta oil sands.
> 
> - Based on current long-term commitments of 910,000 bbl/d, Keystone is expected to generate EBITDA of approximately US$1.2 billion in 2013, its first full year of commercial operation serving both the U.S. Midwest and Gulf Coast markets. If volumes increase to 1.1 million bbl/d, the full commercial design of the system, Keystone would generate approximately US$1.5 billion of annual EBITDA. In the future, Keystone can be economically expanded from 1.1 million bbl/d to 1.5 million bbl/d in response to additional market demand.
> 
> - Alberta oil sands production is forecast to increase to 2.2 million Bbl/d by 2015 from 1.5 million Bbl/d in 2010 and total
> Western Canada crude oil supply is projected to grow over the same period to 3.1 million Bbl/d from 2.6 million Bbl/d.
> The primary market for new crude oil production extends from the U.S. Midwest to the U.S. Gulf Coast and contains a
> large number of refineries that are capable of handling Canadian light and heavy crude oil blends. Incremental western
> Canadian crude oil production is expected to replace declining U.S. imports of crude oil from other countries.


^^ Culled from a various of TRP filings


----------



## equityval

*Why not refine in Canada*

ddkay,

The US (and NA) already has excess refining capacity. It doesn't make a lot of sense to build more refining capacity in that environment (there are already several mothballed refineries in the US and it would no doubt be cheaper to restart them than to build de novo plants). There isn't much prospect for increased consumption given that miles driven are flat to down and fuel efficiency is going up over time. The refineries on the coasts are not configured to deal with heavy crude. They could be changed to process Canada's crude, but the cost would be significant. The markets with the highest netback for tar sands crude are in the middle of the US.


----------



## ddkay

I'm trying to figure out why are they building the US Gulf Coast extension while marketing it as necessary for America's energy security when it's not?

It seems to me like the primary markets for KXL product in the Gulf Coast will be diesel for Latin America and Europe http://www.eia.gov/dnav/pet/pet_move_exp_dc_r30-z00_mbblpd_a.htm

Isn't it a better strategy to build a pipeline to the West Coast/B.C. and refit some refineries that will trade with the Far East?


----------



## equityval

*Sunoco exits refinery business, KXL to Gulf*

ddkay,

See Sunoco's press release announcing their exit from the refinery business. They will either shut or sell their east coast refineries having lost money for six of the last eight quarters.

As to the extension of KXL to the Gulf Coast, all you have to do is look at the spread between WTI and Brent or LLC, to see why you wouldn't want to put any more oil into Cushing, you would want to send it to the gulf. As to why go to the US, the short answer is the producers will have a higher netback selling it there then they will shipping it to Asia where the transport costs will be much higher, all else being equal. That could change, but that is what makes the most sense now (though if Obama keeps screwing around with the state department certification, it might make sense to go to Asia to hedge your political risk, something that wasn't an issue with the US until this administration came into power). In addition, due to mismanagement and economic idiocy in the cases of Mexico and Venezuela respectively, oil production from these two places is in decline. In looking to source oil to replace these imports, given the choice between buying more from people in the mideast who make it their business to kill us when they have the chance vs buying it from you Canucks, who seem to only get violent when you lose the occasional championship hockey match, we Yanks will buy it from you, thank you very much.


----------



## humble_pie

hi there val just passing by & whizzing thru your post, i'll go back & study all the valuable details later, just want to say at the mo that i'm greatly taken by your killer knowledge plus your rousing style of rex imperator, ruler of the americas, embodiment of manifest destiny, proud standard-bearer of the monroe doctrine, all that's ours is, indeed, righteously yours.

carry on ! this is the grand old US of A we know & love so well ...

(signed)
arrogant tart


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## HaroldCrump

This whole protest against the pipeline is frankly getting ridiculous now, with folks like Dalai Lama and Hollywood actors joining the party.

http://business.financialpost.com/2011/09/07/dalai-lama-joins-opposition-to-keystone-pipeline/

_The Dalai Lama, Archbishop Desmond Tutu and seven other Nobel Peace laureates have joined groups opposing the approval of a controversial pipeline expansion project that would carry more crude oil from Alberta to refineries on the Texas Gulf Coast._

The debate is now getting more and more divorced from reality and just becoming a popularity contest.

With all due respect to leaders like Dalai Lama, Desmond Tutu, etc. there are scores of other worthwhile causes in the world right now that merits their attention.
Take the daily human rights violation and torture of civilians in Syria for example.
Or the famine in Somalia.


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## gibor365

HaroldCrump said:


> _The Dalai Lama, Archbishop Desmond Tutu and seven other Nobel Peace laureates have joined groups opposing the approval of a controversial pipeline expansion project that would carry more crude oil from Alberta to refineries on the Texas Gulf Coast._
> 
> The debate is now getting more and more divorced from reality and just becoming a popularity contest.
> 
> With all due respect to leaders like Dalai Lama, Desmond Tutu, etc. there are scores of other worthwhile causes in the world right now that merits their attention.
> Take the daily human rights violation and torture of civilians in Syria for example.
> Or the famine in Somalia.


I think another Nobel Peace laureat Yasser Arafat also would've join them


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## dubmac

equityval said:


> In looking to source oil to replace these imports, given the choice between buying more from people in the mideast who make it their business to kill us when they have the chance vs buying it from you Canucks, who seem to only get violent when you lose the occasional championship hockey match, we Yanks will buy it from you, thank you very much.


well put val...(some of us are a cantankerous lot when it comes to hockey). 
never mix hockey with alcohol myself.
agree with HP...your posts are quite introspective & well researched.


----------



## Cal

http://www.theglobeandmail.com/glob...-give-transcanada-a-thumbs-up/article2161585/


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## equityval

*Analysis of Mainline Toll Application*

Interesting commentary on TRP from Ian Doig who writes Doig's Digest. 

"TransCanada's shareholders won't come out of this fray unaffected. Expect push back from many of the stakeholder groups who want parts of the current Mainline system written off with shareholders taking a hit.

The current Mainline tolling agreement looks like it was directly taken from the European Central Bank's playbook as it deals with the sovereign debt crisis affecting most of the European Union. In that battlefield, shareholders aren't untouched by events as Euro banks face massive write downs, some reaching close to their market capitalizations.

As such, TransCanada now faces the same problem confronting Greek banks - withdrawals. In the latter case, customers are taking thei rmoney and placing it in other countries. In the TransCanada case, shippers are directing their volumes to other systems."

http://www.northerngaspipelines.com/sites/default/files/images/file/9-8-11 Doigs Digest.pdf

This is the first time I've encountered this publication, but it appears to have been around for a while. Here's a description of the publication (from an archived version of the web site - no active link): "Doig's Digest is an internationally acclaimed, independent, Canadian monthly newsletter on the oil, gas and petroleum industry. Written by Canadian based Ian M. Doig, Doig's Digest and the annual report, Canadian Energy Ventures Abroad, is read by the top energy decision makers in the energy industry"

Humble Pie, thanks for the comments about rex imperator, Monroe doctrine, manifest destiny, etc - brings back fond memories of AP history in high school. Just because we're currently led by Obama and headed down a rat hole doesn't mean some of us can't have a little swagger 

Dubmac, I hear you about hockey and alcohol. Played some myself as a kid, and attended more than a few college hockey games with well lubricated crowds. Things can get a little ugly when they mix.


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## dubmac

FYI...

http://business.financialpost.com/2011/09/21/harper-confident-keystone-pipeline-will-be-built/


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## KaeJS

dubmac,

Thanks for the post. However, I think it was already baked into the price of the stock.

I think had you posted an article saying Keystone would NOT be made.... the stock would be in the red. TRP is somewhat neutral today. But its a fairly neutral stock altogether - and I like that trait.


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## dubmac

I don't recall posting concerns that Keystone would not proceed - but I have been watching/reading equityval's msgs on TRP. Equityval has shed some light on some of the news relating to TRP's business model - more specifically - that their mainline (pipeline) is charging to tolls that most producers find too high, and the future prospects for the pipeline may be / or already is, in jeopardy. There is also the impact of shale gas from the NE states.

I continue to hold TRP - and am watching news and views on it. Keystone is an important project to TRP - it is the main reason that I continue to hold & DRIP it


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## humble_pie

dubmac did i miss something, i didn't think that washington has issued a decision on the keystone yet.

for canada, an alternate new westward pipeline to kitimat would be difficult. With the massive objections sure to crop up it could easy be 10 years.

val, an american, has kindly posted here & he has a wealth of knowledge. He was positive about keystone but skeptical about other aspects of trp's business namely the ageing mainline. 

as black mac points out, val's view is that the mainline is vulnerable to shale gas imported from north-east USA if & when that industry gets frackin.
.
myself i thought that val was/is a spokesman for the shale gas industry. I don't think it's as riskless as some make out. Not only is surface treatment of spent water necessary right away, but also nobody ever talks about the possibility of well caps & well bores breaking down in 40-50-100 years time. Which they will.

i'm happy that quebec decided to put a moratorium on fracking until more is known. Issue is very hot in ny state.


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## dubmac

humble_pie said:


> dubmac did i miss something, i didn't think that washington has issued a decision on the keystone yet.
> .


humble - washington will announce a decision in early November if I recall correctly. 

My earlier post links to an article in the FP on Harper's optimism that the project would go as planned.


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## dubmac

Shale gas producers facing increased scrutiny - Globe and Mail Sept 28th

http://www.theglobeandmail.com/repo...ers-facing-increased-scrutiny/article2182502/


more news on the continuing debate over fracking in NY & the EPA...


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## dubmac

Final hearing (not decision) set for today on keystone...

http://www.cbc.ca/news/business/story/2011/10/07/keystone-pipeline-washington.html


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## equityval

*Another Whack for the TransCanada Pinata - Mainline Version*

As if the Keystone fiasco was not enough to make the TRP PR rep dread the next phone call, here's the Globe and Mail whirling the stick around for another shot at the TRP mainline carcass. Nothing really new in the story other than some very direct quotes from users of the pipe demanding writedowns. The gloves are now clearly off in this zero sum battle - the push back on the tolls will be fierce.

This is going to be a regulatory shootout at the OK Corral (I'm sure there is a Canadian equivalent for that expression, but I have no idea what it is, Dubmac, perhaps you can help, there is no listing for Canuck in Google Translate ). Bring your six shooters and big bag of pop corn, this is one spaghetti western you don't want to miss.

http://www.theglobeandmail.com/repo...pipeline-has-users-seeing-red/article2200638/


----------



## equityval

*Fracking - Why Josh Fox doesn't talk about the science*

I stumbled across this today and wanted to share it with those of you following the "fracking" controversy. I've been painted by some on this board as being some kind of a shill for the gas industry. I am not, just an investor who sees a technology driven growth opportunity, and a US citizen who thinks we are nuts not to be taking advantage of the resource, particularly at a time when we need to reduce our trade deficit (heavily driven by petroleum) and when we need to grow the job base. I realize there is the potential for water problems to occur if gas wells are not cased properly (as has always been the case), but I find no evidence that fracking is a threat to ground water supplies, either empirically through a review of history, or conceptually by looking at the science of what actually occurs during the fracking process. These are issues that the people that are promoting the Gasland view of energy development have never bothered to consider, they just get their tape of someone setting their tap water on fire and tell you that all drilling must stop post haste.

What is interesting about the video clip below is that this is a hydrology professor who actually discusses the science of what takes place in fracking and why it cannot be the great black beast that the Gasland crowd would have you believe. All you have to do is look at the physics involved (force applied against mass) to understand that the risks attributed to fracking are completely overblown. Also note that this guy has nothing to do with the gas industry, he is just your average member of the academy (which in the US tends to be reflexively liberal - so this guy is actually taking quite a risk in coming out and telling the truth - he'll probably be shunned at the next faculty meeting for not towing the liberal line on fracking) who is tired of all the falsehoods being bandied about by the Gasland crowd. 

http://www.youtube.com/watch?v=Ci2aJokWzqs&feature=player_embedded

It is very telling to listen to the reaction to the reporter when he gives the BB gun analogy. You can hear her thinking, "Really? you mean its not cracking the rock all the way up to the surface" which I suspect would be the reaction of a lot of people if the media ever gave voices like this equal time in the debate, which of course, they are not.

In closing, I ask all of you to think about why the Josh Fox crowd has completely ignored the science of fracking in the way they have chosen to portray the topic. After all, the environmental groups have their highly sophisticated models of the earth's temperature and green house gas formation and all the subtle ways in which they measure climate change. They've compiled their temperature records going back hundreds of years, have looked at all kinds of tree rings to understand temperature and precipitation variation over time, etc, etc. They have whole institutes that are dedicated to studying the science of climate change. Yet when it comes to hydraulic fracturing, they have turned their back on science and cherry picked a few unfortunate and preventable incidents to create this enormous fear mongering campaign. 

I urge you all to think about why that is. Could it be that gas, which will now be plentiful for at least a couple of centuries at the rate we are finding shale deposits around the world and which now costs a third less to find than it did a few years ago, is now a formidable and perhaps invincible foe to the wind and solar energy that they so ardently wish to see as our primary energy source? What would you do if your dreams of a green energy future were suddenly dashed by this ominous new source of fossil fuels, and you didn't have any scientific data to combat its growth? Well, you might just start filming a bunch of flaming taps, feed them to a media predisposed to hate energy companies and start a campaign of fear, knowing that a lot of people are too busy in their day to day lives to drill down (pardon the pun) to really understand the science involved.

So far they have been pretty successful in scaring people. That doesn't make them right. Go look for the facts and be sure to consider the source of what you read and hear and their motivations. Use your brain and see if the facts add up.


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## humble_pie

val what you talkin about ... nobody ever said you or anyone else was a shill. What i wrote upthread is that you seem to be a spokesperson for the fracking industry & indeed so you still seem to me to be.

I also wrote - when i started this thread - what a serious issue the question of north american energy supply is, how it reaches across the continent like a giant hand, crushing the border beneath it like fragile paper.

and i don't agree that the many issues confronting the fracking industry, imposing a moratorium on the fracking industry, even opposing the fracking industry, are all being driven by ultra-green enviro occupier wingnuts.

for example, many people are aware, just like the reporter whom you cite, that fracking takes place far below the depth of the water tables. And that impermeable rock strata are in place between fracked shales with their unpleasant brines & the surface.

but i myself am worried about the wells themselves. Over long periods of time, say 25 out to a hundred years or more, some or many of these are going to break down. There is not a polymer composite known to man that does not break down after 40 or 50 years.

so i ask myself, when the liners of these wells do break down, what will stop the brine, which will be under pressure, from leaking or spilling out into the more superficial layers of the earth, layers that are much closer to the surface. Specifically, layers where the aquifers can be contaminated.

this is just one concern. Other concerns focus on the immense volumes of water that are required, and the reliability of the water treatment programs that will have to be installed at the surface to treat recovered brines.

ps val i cannot resist this ... we don't tow a line, we toe a line. Yessir, when the big bad US of A barks at us, we canucks certainly do know how to line up & toe it.


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## dubmac

equityval said:


> This is going to be a regulatory shootout at the OK Corral (I'm sure there is a Canadian equivalent for that expression, but I have no idea what it is, Dubmac, perhaps you can help, there is no listing for Canuck in Google Translate ). Bring your six shooters and big bag of pop corn, this is one spaghetti western you don't want to miss.
> 
> http://www.theglobeandmail.com/repo...pipeline-has-users-seeing-red/article2200638/


Val..you write with flare! 
I had to look the word "shill" up in the dictionary (cdn version) - 

Having read the 3 posts above - I agree that the fracking debate has moved from the rational (scientific assessment) to the irrational (political) realm. Fracking will be more and more accepted as the bumps and brusies are addressed by both the industry and the politicians. The environmental lobby has targeted TRP with it's Keystone project - as we all know - and TRP was looking rather sheepish at times appearing unprepared for the media glare. The environmentalists had and continue to have a "perfect target" - the oil sands - the huge black tarpit of doom. I wonder whether they have any real idea how much more contribution of carbon dioxide comes from coal-fired power generation plants! Perhaps TRP has been targeted by media as much as fracking gas companies...one can only hope reason will prevail.

As for fracking, HP, you raise a good point - the industry has devoted much to develop the technology/process to get gas out. Will they devote as much to keeping it out water/environment in the future. It would require an expenditure, presumably, that would impact profits. Water quality and the management of wastes are the priority for joe citizen living next door to a well. This is a matter I sense for the EPA or other regulatory organization. I really do not know how the US monitors these matters of well safety and security - which regulatory bureau oversees these decisions? EPA? other?

As for tolls - My suspicion is that TRP will probably come out of this gunfight with more holes that the other guys - at least on the Mainline toll question. As your article indicates however, 
"_Because the Mainline is regulated, TransCanada is largely assured of a certain return. That has galled producers in recent years, when times have been tough. But it has also meant that TransCanada has sacrificed greater profits in good times. _ How long will natural gas stay cheap and plentiful? When will the "good times" for gas return? The Marcelleus Shale as you mentioned is a game-changer - regardless of the outcome the direction gas flows is being altered.

Keystone is the big one for TRP - whether this is enough to offset any losses from the mainline remains to be seen. Assuming this goes ahead, they will be shipping oil - ....from a Morningstar report (old - March 2011) 

Keystone is a massive pipeline that connects
the Alberta oil sands to refineries in Illinois and storage at
the Cushing hub, with capacity of 591,000 barrels per day.
TransCanada plans to spend another CAD 7.4 billion to
build a new leg from Alberta straight toward Cushing and
an extension from Cushing to the Gulf Coast, pending U.S.
regulatory approval. This would expand capacity to
roughly 1.1 million bpd, and we assume a high likelihood
of regulatory approval. Though Keystone's returns aren't
eye-popping at an estimated 7%-9%, we like that more
than 80% of its capacity is backed by long-term
take-or-pay contracts, and shippers also share anywhere
from 50%-75% of any cost overruns or savings. Even more
appealing is the potential upside from low-cost
incremental expansions and ancillary services
TransCanada could add later as oil sands production
ramps up. At a relatively low cost, TransCanada could
increase Keystone's capacity to 1.5 million bpd with
pumping stations, and we wouldn't be surprised to see the
company add terminals or storage down the road as well,which would benefit from a reliable source of supply and
allow TransCanada to collect more rents on the same
barrels.

I don't see TRP as a limp out-dated vestigial (how's that for a rebutt for shill) company. Even tho they are old (heck..I think the Leafs even won the cup when they started up), they are diversifying and responding well in the game.


----------



## equityval

HP,

OK, so you didn't say shill, but you seem to be saying I'm a frack flack. I'm just pointing out the facts as I see them that most of the media don't want to report - I'll leave it to you to decide what their motives are. I didn't say fracking was without risk, but I think the risks are not high and are offset by the benefits. 

As to the what happens in 50 years time, the wells are going to be plugged with cement when they stop producing - that's what they have to do by law. I'm sure a few leak, but I have to say that I'm not hearing about an epidemic of leaking old wells. You know, we've probably drilled a million of them here south of the border in the last century - if this was a huge problem, you can bet the EPA would be raising a fuss over it.

As to the water use, a typical well uses the amount of water that is used by a golf course in a month. Where are the pickets in front of the local country club? As to treatment at the surface, the state of the art in the industry is to recycle 100%of the flowback, and they are no longer using public wastewater treatment systems in PA. I'm not saying there isn't the odd screw up by the industry now and then, but they are responding to the concerns that have been raised (ie disclosure of what is in the frack water) but no one wants to listen to the facts. 

Yes, I should have toed the line in that prior comment, though I can tow a line off the back of a boat trolling for fish.


----------



## equityval

*TRP as poster child*

Dub,

I agree the facts have been the first casualty in the Keystone XL debate. I think this is another example of the changing tactics of the green movement in the last couple of years in the US. When they didn't get cap and trade and when they saw the implications of horizontal drilling and fracking, they realized they could no longer count on escalating costs of fossil fuels to move people to greener energy sources (and the lousy economy put the voters in no mood for new laws that would explicitly increase costs). So they now decided to attack fossil fuels through regulation and to try to either increase costs indirectly or to deny the industry access to the infrastructure it needs. That's how Keystone XL suddenly became a monster even though we've had pipes moving oil around for 100 years. Much like in shale gas, they aren't working from first principles, they are trying to scare people instead.

That said, TRP hasn't exactly covered itself in glory in response. It is another data point that suggests to me that the TRP management team aren't the sharpest knives in the drawer. And frankly, running a pipeline business generally isn't rocket science, but it doesn't require more PR chops these days, and Russ and the boys seem to be a can or two shy of a six pack on that metric.

I think it will get approved eventually, I'm just not sure it will be before Obama leaves office or before he is a lame duck. Lately, he's been trying to prove his populist bona fides and renew support from his liberal base. Approving this will be a bitter pill for that group to swallow, so my guess is he tells TRP to pull its application or tells them to reroute part of the pipeline or something that defers the decision until after the election. The other thing to watch is the proposed Enbridge pipeline to take Bakken oil south and relieve the congestion in Cushing. I don't know what kind of commitments they have for that, but that could open up some space on the exisiting pipes and perhaps delay the need for XL for some period of time. I don't know what kind of outs the XL shippers may have if the pipe isn't operational by a certain date - you might want to check that. At the end of the day, I do think XL gets built, I'm just not sure whether they put a shovel in the ground in 2012 or 13 or maybe even 15 if the Enbridge pipe sets it back a few years.

As for the Mainline tolls, yes you are right there is an inherent bargain in rates for regulated assets that trades profit maximization for a more certain return. That said, I dion't think that entitles an asset or a company to profits in perpetuity, and as circumstances change, particularly if they change dramatically, there has to be some resetting of the compact between customers and the owners of the asset. When the rate of return toll setting mechanism starts to produce non linear increases in toll rates, then the regulator has to step in and reset the asset base off which the tolls are calculated. If they don't, all the demand will be chased off the pipe by the high tolls. Even the poor saps in Manitoba who are beholden to the mainline will do something like truck propane in from the Bakken rather than pay $10 an MCF in tolls (which is where they will be in few years if nothing is done about the current rate design). My guess is that the NEB will split the baby and make both sides share the pain - won't make anyone terribly happy, but TRP's current stance of we're going to get 100 cents on the dollar is unrealistic and politically unwise, I believe (that PR thing again).

I don't think TRP is at any kind of solvency risk, but I do think there is risk that the dividend could be cut if the upcoming decisions fall the wrong way for them. That wouldn't be good for the stock price.


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## dubmac

equityval said:


> I don't think TRP is at any kind of solvency risk, but I do think there is risk that the dividend could be cut if the upcoming decisions fall the wrong way for them. That wouldn't be good for the stock price.


Val..
I continue to hold TRP for now; it has weathered the past 6 months rather well - better than others in my pf. You make a good argument - but, there is a "jump" to an anticipated dividend cut that, in my view, is not a fait accompli as of yet. Perhaps when more poker is played at the regulatory meetings there will be more of an indication when and how earnings will be impacted. I will watch the reports on TRP carefully - (HP is helping me with my sleuthing skills.). In your argument, you suggest that TRP and the gas companies will "share the pain" - my question is - How much sharing, and how much pain is there to be shared. The market will respond to those questions after the Nov. deadline fo Keystone. 

I will infer that you hold ENB - are there any other pipelines that TRP can be compared to (from a business model view)? IPL...I don't know much about it -other than I failed to buy it at 11 last yr. I quite like Keyera (KEY), although not a pipeline company - but it has gotten somewhat out of reach at the moment.


Addendum...Oct 20th
Hey val..check out the link below - if we were involved in a debate, this would certainly be a +1 for your side of the debate. 
http://www.fool.com/investing/general/2011/10/20/the-pipeline-nobody-talks-about.aspx

Interesting point about the use of drawing gas out of the pipeline to help liquefy the oil to be pumped by Keystone...my TRP shares may have plateaued and I'm considering a "trim", and watching ENB. The article certainly has me pondering how to distribute my allocation among pipelines.
I do appreciate your comments and research - kind thanks for this.


----------



## zylon

*Keystone Pipeline Controversy*



> What's another pipeline amongst oil-addicted friends?
> http://www.caseyresearch.com/cdd/invest-gold-and-chinese-renminbi


----------



## dubmac

equityval was right on the predictions on Keystone XL decision being delayed... 
http://www.2articles.com/story/obama-puts-keystone-decision-quelle-surprise


----------



## daddybigbucks

"no such thing as bad publicity"

I think that rings true here.


----------



## Dibs

Here are some recent articles on TRP:

Nebraska lawmakers introduce 5 Pipeline Bills - Businessweek

Transcanada Official expects Keystone OK by end of year - Ottawa Citizen

Keystone approval key to TransCanada stock outlook - Financial Post

Oil patch gives a dire warning to the U.S. - Globe and Mail

I am interested in what kind of implications a Keystone refusal would have on the company.


----------



## equityval

*Is Obama hinding behind the Cornhuskers?*

Dubmac et al,

It's looking grimmer for a near term resolution on Keystone. This report from the LA Times is unattributed, but it comes from their DC bureau so this is probably coming from inside the White House as a kind of a trial balloon.

http://www.latimes.com/news/nationworld/nation/la-na-keystone-pipeline-20111107,0,236919.story

The Nebraska controversy could be a convenient election year dodge for Obama and provide a pretext to allow time for "more study" of the pipeline's path without formally opposing it.

It also appears the EPA is chomping at the bit to get involved in this decision. When I have a little more time, I'll post a link on that.

Dubmac, the way I have played all this is a pairtrade of long ENB and short TRP. My reasons for doing that were that I think a write down is coming on the Mainline. Have Keystone delayed would of course help the TRP short position, though I didn't think it would be blocked when I put the trade on over a year ago.

Dibs, having Keystone delayed or denied would hurt the stock. They've spent a lot of money on it, the analysts all have a contribution from the pipeline in their models and if it is delayed, it may allow other pipeline solutions within the US to remove the need or at least the urgency of doing Keystone.


----------



## humble_pie

val i take it you are still running a short position in trp.

but it has cost you dearly over the past year or 2 has it not. Stk up, margin requirements up, dividends to pay out.

still, if keystone is nixed you will have the last laff ...


----------



## larry81

keystone will NOT be nixed, this is just politics.


----------



## dubmac

equityval said:


> Dubmac, the way I have played all this is a pairtrade of long ENB and short TRP. My reasons for doing that were that I think a write down is coming on the Mainline. Have Keystone delayed would of course help the TRP short position, though I didn't think it would be blocked when I put the trade on over a year ago.
> QUOTE]
> 
> Val...I reduced my TRP position a few weeks ago - looking to add ENB - but my , my ENB is expensive presently. I'd like to add a nice pipeline, but at the right price- many folks suggest 30 is right. 33 is morningstar's fair value.


----------



## equityval

*State Dept about to cave*

This is from Bloomberg - it doesn't appear to have made it on to their web site yet - seems like we are beyond trial balloons and onto actual delay by the "reroute the pipeline" gambit:

"By John Lippert
Nov. 7 (Bloomberg) -- The U.S. State Department may require
TransCanada Corp. to move its planned $7 billion Keystone XL
pipeline away from the Sandhills region of Nebraska, a State
Department official said.
The department is considering requiring a rerouting because
of concern among Nebraska citizens and public officials about
the risk that TransCanada’s current plans could pose to the
state’s Sandhills region, said the official familiar with the
deliberations who spoke on condition on anonymity about internal
discussions."


...........................................................................

Dubmac, there may be cheaper pipelines than ENB in Canada, I haven't spent the time to sort through them. I think you also need to look at the growth rate of earnings and divdidends. ENB's dividend growth rate has exceeded TRP's by over 500 basis points in the last 5 years and ENB has had substantial earnings growth while TRP's have actually declined.


----------



## webber22

ENB has earnings this Wednesday with the ex-date on Thursday, so maybe the price might come down some time on Wednesday.


----------



## doctrine

ENB could easily drop 2-3% after earnings.. its P/E is very high and its unlikely they'll have anything more than their predicted 10% earnings/revenue growth - their stock is priced for 20-25%.


----------



## humble_pie

i was thinking to myself that a long-trp-short-enb pair for more than a year now was self-defeating because a) enb rose insignificantly more than trp & b) trp's heavy dividend would have weighed the pair down & wiped out profit.

but now, as the re-routing possibility became clearer, after 15 months the pair might finally work out ...

in other canadian pipelines i like altagas & veresen


----------



## equityval

*TRP ENB Pair Trade*

Humble Pie,

We may be nearing a peak in the spread between ENB and TRP, but remember that the Mainline situation will not be resolved before next June at earliest according to the schedule that is being mooted in the NEB proceedings. I think that will hang over the stock between now and then. 

The Mainline story looks like it is getting more visiblilty, from Bloomberg:

By Jeremy van Loon and Matt Walcoff
Nov. 8 (Bloomberg) -- Enbridge Inc. is nearing TransCanada
Corp.’s market value for the first time since 2000 as political
opposition to the Keystone XL pipeline highlights the risks of
TransCanada’s dependency on natural gas.
The CHART OF THE DAY shows the market value of Enbridge,
Canada’s largest pipeline company by revenue, climbed to C$27.5
billion ($27.1 billion) yesterday, while that of TransCanada
closed at C$29.3 billion. The ratio between the two narrowed to
the least in nearly 11 years. Enbridge shares cost 49 percent
more than TransCanada’s relative to earnings, the biggest
premium since 2003.
“TransCanada’s core business is in a death spiral,” James
Cole, a money manager who oversees C$600 million in equities at
Portland Investment Council Inc. in Calgary, said in a telephone
interview, referring to the boom in natural gas supplies from
regions other than Alberta. “Enbridge is a superior performer
by a considerable margin.”.....
Natural gas prices in North America are about a third of
their 2008 value as a drilling technique known as hydraulic
fracturing has increased production and reduced demand for
conventional sources of the fuel in Alberta. TransCanada has
aimed to reduce its reliance on natural gas shipping by building
the Keystone XL pipeline from Alberta’s oil sands to the Gulf of
Mexico. The project has stalled amid opposition from U.S.
property owners and environmentalists.
“Keystone has hogged the spotlight,” said Cole. “The
real story is their main business. TransCanada realized that
natural gas demand and prices aren’t rising and they became a
serial issuer of equity in order to buy companies.”


----------



## KaeJS

Who's selling TRP?


----------



## Dibs

I sold my position this morning. I am more comfortable watching from the sidelines for now.


----------



## Greyhound86

KaeJS said:


> Who's selling TRP?


I sold the last of mine Oct 19 @ 43.34. 

I am a chicken and may regret selling. The mainline rate worries, the Keystone protests, USA politics and the fact it's share price had a good run made me pull the trigger. Originally bought TRP in May 2009 @ 30.43. 

I still own IPL, PPL and ENB.


----------



## KaeJS

Yeah. I know. Lots of negatives surrounding TRP right now.

Not sure how I feel about it. I feel like maybe I should wait it out and hope Keystone comes through. If it doesn't, I'm focked.


----------



## KaeJS

I don't know about ENB. Not sure why people like it so much.

Growth maybe, but the dividend is under 3% and it had a huge run....

I feel safer holding TRP than selling TRP to buy ENB.


----------



## dubmac

I sold a portion (half of my shares) in TRP because I want diversification. I sold at 43.17 a few weeks ago - and I plan to buy another good-ol boring utility - preferably ENB - because of it's pipeline biz and it's plans to ship lng from Kitimat, among other things. I am wondering how much China & Asia will look to buy cheap Canadian oil and Gas from a port in Kitimat...I still need to do more DD on it. Interestingly, TRP has told the Americans that if they don't approve Keystone, they'll ship their product(s) to Asia - which, I suspect, is posturing to tell them that they will sell their product to the competition, providing China with even more access to cheap oil and gas.

I like the idea of holding both TRP and ENB. TRP has more downside -I made a few dollars from it - maybe buy more if it drops significantly..don't know now.

I'm exploring enbridge income fund (ENF) as well. They are both expensive presently - and I'm hoping for a nice correction

(In August ENF moved from 20.24 to 15.67 (In August)..nearly a 25% drop!)


----------



## KaeJS

dubmac said:


> I like the idea of holding both TRP and ENB. TRP has more downside -I made a few dollars from it - maybe buy more if it drops significantly..don't know now.


Definitely more downside - and that's why there's no way in hell I would ever buy more TRP.

I think I will hold for now...

If everything ends up working out for Keystone, then the price should become stable again and work its way back up. As long as TRP stays in the 40's, I am content. The second it drops below $40......  I will not be impressed.


----------



## KaeJS

Keystone XL Controversy


----------



## ddkay

It's still amazing how many people dismiss the protest and think KXL product is meant for the American market and will "reduce oil dependence from the Middle East". The majority of it will be exported overseas from the refineries in Port Arthur. equityval touched on one reason they would build the line, to reduce the wti/brent spread a bit, but the bigger reason is avoiding export taxes they would face shipping out from Canada and most other US states.


----------



## KaeJS

I don't care who its meant for or what the protestors have to say, nor do I care about the environmental causes it _could_ have. 

People drive cars everyday and they aren't worried about _those_ environmental hazards.

I just want want the company to make some money, so I can make some money. They can ship the oil, sell it locally, build across fields, whatever they like - as long as it creates revenue.

I mean, we already have fields of worn out tires, don't we?


----------



## ddkay

Soil pollution and air pollution are two different things, both of them are bad, but both of them can kill you quickly if exposed to high concentrations. Over the longer term and thru biomagnification, pollutants in our environment, sources of land irrigation and the quality of soil has a lot to do with human birth defects, diseases like leukemia, nervous system damage, kidney damage etc. (grade 6 biology...)

Anyway, there's no way this thing is getting passed.


----------



## doctrine

I like my TRP stock, but I wouldn't buy it above $40 at the moment. It could drop below that with enough negative publicity, and most people expect there will be a capital issue if they get the deal, so the price is probably fairly stable.


----------



## gibor365

KaeJS said:


> As long as TRP stays in the 40's, I am content. The second it drops below $40......  I will not be impressed.


The second it drops below $40, I'd consider buying it


----------



## ddkay

http://www.shanghaidaily.com/article/?id=486981&type=Metro


----------



## KaeJS

ddkay said:


> Soil pollution and air pollution are two different things
> Anyway, there's no way this thing is getting passed.


1. Pollution is pollution. Air pollution isn't any less of an issue. And it's not just air pollution. Think of all the pollution created to manufacture cars, to maintain cars. The oil, the chemicals, the brake fluid, windshield washer fluid, radiator coolant, brake cleaner, batteries, etc. etc. You're telling me none of that ends up in our water/soil?

2. You don't think it will pass? I'm on the fence about it. I think it should pass, but that doesn't mean it will.



gibor said:


> The second it drops below $40, I'd consider buying it


Well, I purchased it below $40. But still..... I would like it to stay in the $40s.

Assuming that Keystone XL does not get approved, what does everyone think about the future prospects for the stock? 

I just want a stable dividend producer. If it stays at $41 for a year, I couldn't care less. Just give me my 5.5%.

I'm having a hard time making a decision about this company. Everything I read is pretty 50-50. Some people/articles say Keystone will pass, others say it wont.

The fundamentals of the company look pretty stable. Revenue and EPS was stable over the last couple years.

Really, Keystone is the only reason this stock moves up and down right now


----------



## KaeJS

> _"Girling said that *refiners could turn to other options such as shipping more oil by rail or on river barges if Keystone isn't built on time, which would both increase the cost and risk of transporting oil.*
> 
> In a note to clients Tuesday, BMO Capital Markets analyst Carl Kirst said that if President Obama delayed the Keystone XL pipeline to after the 2012 U.S. presidential election, it "may very well be the same thing as effectively rejecting XL."
> 
> Kirst said that while the chance that Keystone would be rejected were increasing, he believes that *the most likely outcome is that the Obama Administration would approve it before year-end, and work on appeasing supporters who oppose it for environmental reasons in the year leading up to election.*
> 
> If approved, *the Keystone expansion would ship up to an additional 700,000 barrels of oil a day,* mostly from Canada's oil-sands producers in northeastern Alberta."_


I don't know, folks. It sounds pretty good to me.

700,000 extra barrels a day...

Somebody give me a good reason to sell this stock. I want an opinion on why it would be a bad idea to hold it. 

I am currently receiving a 5.5% dividend on 100 shares.


----------



## dubmac

KaeJS said:


> Somebody give me a good reason to sell this stock. I want an opinion on why it would be a bad idea to hold it. .


KJ..read up on equityval's comments upthread. He's bearish on TRP & has a fresh perspective from the American side of things. He mentions the _prospect_ (not a foregone conclusion when you read the threads) of a writedown on the company's assets by some 3B if the mainline is mothballed. Will this happen? some say yes, some no. Same with KXL. Even if KXL is approved, the mainline is still to be resolved. Many unknowns with TRP - time will tell - maybe sell 1/2 your position & hold the other 1/2

Maybe the best analogy on TRP could be found in the quote by Donald Rumsfled ...


We know there are known knowns: there are things we know we know. We also know there are known unknowns: that is to say we know there are things we know we don't know. But there are also unknown unknowns — the ones we don't know we don't know." —Defense Secretary Donald Rumsfeld, Defense Department briefing, Fe. 12, 2002


----------



## ddkay

4549 listings on the NYSE, 2798 on the NASDAQ and 1498 on the TSX

Could try an uptrending stock like LLY (pharma), also pays a 5% dividend, and you don't have to worry about dumb stuff like KXL. Put a stop under it. Sleep peacefully.


----------



## KaeJS

No.

I just did more DD.

I am holding. Keystone will go through.


----------



## KaeJS

equityval said:


> *1. I have been playing this situation by being long ENB and short TRP for that last year or so and that has worked out well so far. *
> 
> 2. As to Keystone, I think it will eventually get approved.


1. As soon as I read this, I stopped reading his post. TRP has done nothing but go up in the past couple years, so if he was shorting it, he was making a big boo-boo. Check a chart. TRP is up over 10% in the last 52 weeks. His opinion is automatically useless in my mind.

2. Even he thinks it will eventually get approved.... yet he has been short for a year???


----------



## ddkay

A lot of stuff has gone up in the last couple of years... doesn't really mean anything, what matters is when you buy and sell, or when equityval closes his short. MIC went up 3467% since March 2009. Did you buy it? No? Doesn't matter then.

Truthfully, this thing hasn't gone anywhere in 4 years.

Most of the recent run up (February-present) was fueled by MENA geopolitical risk rather than fundamentals.

Short term, it could fall a bit more, there's strong support around the $40.63 area, if it slices through that again it will probably look like Aug 8th


----------



## ddkay

I will never close my short on Groupon, I'm writing that into my will and passing it on to my kids


----------



## gibor365

KaeJS said:


> I just want a stable dividend producer. If it stays at $41 for a year, I couldn't care less. Just give me my 5.5%.


Than why to bother with TRP?! You can buy solid stable dividend champions with 6% yield like T or MO and sleep peacefully...

I'm thinking of buying UNS UniSource Energy Corp. , dividend about 4.6%, dividend growth above 20%, payout 60%


----------



## donald

Ddkay"lly) and (amln) are breaking up after a decade and amln is buying out the diabetes end of there product line going to court ect doesnt seem like a great development for lly right now....read it today(follow that stock)Litigation is never good short term?I think its there strongest product...See how that plays out...but what the hell do i know lol..wont do anything about the div but it caught my eye.


----------



## ddkay

Ah I didn't screen for news donald. Maybe better not to touch it, I screened for low debt/equity strong positive q/q sales and y/y eps. Now I see forward estimates are downgraded quite a bit. But strangely its still in an uptrend with shortterm support at $37 and long term support at $35 if the market holds up. IMO we'll find that out within the next 2 weeks.

Utilities are even better though.. Verizon shouldn't be going anywhere.


----------



## equityval

*Pair Trades 101*

Kae,

You don't seem to grasp the basic concept of a pair trade (along with a few other members of this thread). It is a technique to express a position about the relative prospects of two stocks while eliminating most or all of one's exposure to broader risks (ie market risk, currency risk, interest rate risk, etc). You go into it realizing one leg of the trade is likely to have a loss, but the net of the two positions is a gain. While you have the trade on, you lower the volatility of your portfolio and, if you want to be aggressive in managing your capital, can reinvest the short proceeds above the margin requirement in some other opportunity. The technique is widely used by professional investors, especially in volatile markets like those we have experienced in the last few years. 

It was particularly attractive to me in this instance because a) the yield on TRP meant the cost of carrying the short was going to be fairly high and b) I was quite certain that the Mainline has suffered a permanent impairment of its value, but was uncertain when the market and the regulators would recognize that fact. So I didn't want the position to cost me a fortune while I waited for the facts on the ground to play out in the stock. Pairing ENB with the TRP trade cut the cost of the carry by 75%. 

When I put the trade on TRP was trading for just under $33 and it's now just under $40 - so it's up about 25%. ENB was at 22.50 and its now just under $35 about a 55% gain. That's a 30% gain in a little less than two years taking effectively no market risk. I'll do that trade all day long.

As to the apparent contradiction of holding both a short position and my view that Keystone will get approved eventually, I will give you two things to consider. First, I do think it will get approved eventually because we need the oil, but I think you will have to wait for another occupant of the Oval Office before you will see it as the current tenant has an allergy to all forms of fossil fuel. In the meantime, TRP is going to waste a lot of money and management cycles traipsing through corn fields in Nebraska, with an army of lawyers in tow, knocking down Ogallala straw men. Second, embedded in the stock price (and every sell side earnings model) was an assumption that Keystone would be a large contributor to profits in 2013. The action in the stock over the last week is starting to give us a measure of the risk to one's capital involved in changing that assumption. I can be right about the eventual approval and have a profitable short position in the interim while Obama plays politics. 

At this point, 2012 is not looking like it will be one of TransCanada's finest moments. Stay tuned.


----------



## ddkay

This is what you wanted to show val


----------



## ddkay

Nice curve fit


----------



## zylon

*ddkay*: I'm wondering, what are you showing with the Fib lines on TRP at post #85?

http://www.canadianmoneyforum.com/showpost.php?p=94624&postcount=85

Thanks


----------



## ddkay

just some reference levels, I think TRP $40.63 is the next logical support on daily close, could also coincide with the red trendline


----------



## zylon

ddkay said:


> just some reference levels,..


okay, thanks again


----------



## equityval

Thanks for the chart DDKay. Couldn't figure out how to paste one in!


----------



## humble_pie

_" When I put the trade on TRP was trading for just under $33 and it's now just under $40 - so it's up about 25%. ENB was at 22.50 and its now just under $35 about a 55% gain. That's a 30% gain in a little less than two years taking effectively no market risk. "_

hmmmmn the overall yield factoring in the negative amount from (enb div less trp div) over 2 years plus margin costs over 2 years takes that return down to something like T-bill return, does it not.

there are rough untutored pair-trading cmf members here in this forum who are collaring hi-dividend canadian stocks for significantly more than T-bill returns ...


----------



## ddkay

CALGARY (Dow Jones)-- TransCanada Corp.'s (TRP) original Keystone pipeline has been shut down due to mechanical issues, a spokesman said Wednesday.

The spokesman for the Calgary pipeline company didn't immediately have further details about the mechanical issues or how long the pipeline is expected to be shut down.

The Keystone pipeline runs from Alberta to Illinois refineries and to the U.S. main oil storage hub in Cushing, Okla. The pipeline can transport up to 591,000 barrels of oil a day.


----------



## equityval

*Return*

Humble Pie,

Huh? There was a 1% difference yield in favor of TRP, so you can deduct that and I'm paying about 40 basis points on my short balance. So you can deduct 3% from the two year return.

So that is the gross return, and then you have to risk adjust it. I took essentially no general equity market risk or interest rate risk, and got a mid teens return. I'll take that every day. 

You can't just look at it on a gross basis, you have consider what risk was taken in the process of getting the return.


----------



## KaeJS

equityval,

you make some good points. However, you still didn't know ENB was going to do so well. If it hadn't, you would have been in trouble, I think.

I feel you took a risk and it worked out in your favour. ENB went up and so did TRP, but if ENB has gone up less... I don't think the trade would have been so successful.

Had you just bought TRP, or just bought ENB, you would have made more money, no?

I understand the risk reduction aspect, but your play could have turned on you.


----------



## equityval

*State Dept pow wow on Thurs*

Sounds like we may get a little more clarity by the end of the week. Note the spokesman walking back from the end of year deadline:

_"The State Department is scheduled to meet Thursday with several officials who have helped oversee the permitting process, sources said. The group is expected to discuss whether to formally reconsider the project’s route, which would delay any final permit decision while the government conducted a new environmental assessment. People familiar with the process say this could take a year or more.

In a news briefing Wednesday, department spokesman Mark Toner said a rerouting of the pipeline is “one of many issues that we have discussed that were raised during these public hearings that we held, and all of those issues are currently under review as we move forward.”

Although the agency for months has said it intends to conclude the process by the end of the year, Toner added, “We’re not going to be held to any artificial deadline.”_

http://www.washingtonpost.com/busin...oil-pipeline/2011/11/09/gIQAuT5g5M_story.html

In the mean time, Enbridge is getting traction on Wrangler:

_CALGARY - Enbridge Inc said on Wednesday it will likely proceed with its 800,000 barrel per day Wrangler pipeline from the Cushing storage hub in Oklahoma to Gulf of Mexico refineries as the U.S. State Department raised the threat of a lengthy delay in TransCanada Corp's Keystone XL pipeline.

Pat Daniel, Enbridge's chief executive, said his company and partner Enterprise Product Partners have received strong interest from would-be shippers on the line.

While Enbridge is still discussing terms and conditions with shippers, it said there is enough interest for both Wrangler, and an expansion of its line from Flanagan, Illinois, to Cushing, to proceed.

"We expect to conclude those discussions with sufficient volumes to proceed with both segments of the line," Daniel said on a conference call.

The US$2-billion Wrangler line could be in service by the middle of 2013, offering relief to bloated storage levels at the Cushing hub... 

Daniel said that Enbridge, whose lines already carry the bulk of Canadian crude oil sent to the United States, has enough capacity on its system to handle much of the oil that would have flowed on Keystone XL, though Enbridge's lines between Superior, Wisconsin, and the Chicago region could 
become a potential bottleneck.

"We do have sufficient capacity available, and/or relatively low-cost expansions, to be able to accommodate most of, at least the early volumes, of what would have moved on Keystone XL," Daniel said...

Daniel said Enbridge was unlikely to face similar opposition since the company could expand capacity in existing rights-of-way instead of breaking new ground._

http://www.reuters.com/article/2011/11/09/enbridge-wrangler-idUSN1E7A80QT20111109


----------



## equityval

*Death and Taxes*

Kae, 

I'm not sure what your point is. There is no certainty in investing, only probabilities. See the title of this post for the only two certainties I know of in life. I didn't _know_ what ENB's stock would do anymore than you know what TRP will do from here. 

However, I spent about three months researching Enbridge and TransCanada before I put the trade on. I attended industry conferences and interviewed execs in the pipeline industry and its customers. I analyzed pipeline flow data and regulatory filings. I summarized what I learned in a 20 page document and asked people in the industry to critique my analysis. I made an _informed judgement_ about what was _likely_ to happen in the industry and to these two companies. Not all of my trades have been or will be successful. But I can raise the probablity of being successful by doing research that improves my understanding of the businesses in question. That's what I have done here and so far its working. Stay tuned.

Let me leave you with one more thought that may give you another way to look at pair trades. The people that bought ENB in the middle of May 2008 didn't _know_ that the stock would go down 40% by the spring of 2009. Did they all hang on through the downturn, or did they panic and sell? Perhaps they would have been more likely to hold on if they had done a pair trade (with TRP or another pipeline) and taken the market risk out of their position. Here's another thing to consider, if they had done a pair trade as opposed to a long only trade in 2008, they would have preserved more capital and would have been in a position to close out the short position and come out of the downturn with an even larger ENB position and then amplified their profits in the upturn. Granted you would need to have the foresight and the gumption to buy somewhere near the bottom, but preserving capital in times of stress creates opportunities, particularly in a situation like this where you are uncertain as to how fast your thesis will play out.

Pair trades are not for everyone. Some people would rather just invest long only, but there are clear advantages to avoiding large losses in investing. Buffett has insightful things to say on that topic.


----------



## humble_pie

i think it would be fair to say that an ordinary investor lacking val's massive in-depth knowledge of the pipeline industry would not - because of the substantial carrying costs to this pair - have chosen the trp/enb combo.

for the simple reason that there are other risk-free paired strategies, for example a collared bce, that are more easily comprehensible to parties outside the energy industry.

curiously, at this very moment, a trp/other-hi-dividend-pipeline pair looks more appealing than it would have, say, 15 months ago, at least to me. Meanwhile the particular trp/enb combo looks poised to enjoy its best era yet, over the next 12 or 18 months.

however canadians considering a short-trp strategy should remember that tax consequences may be different in canada from the US. Dividends paid out in short strategies in canada are not deductible as carrying costs, for example (no clue about the US of A.)

unlike several other recent cmf threads full of bop-in bop-out investorlets who hardly know what they're doing, this thread has benefited from the beginning from participation by equityval & dubmac, with their sustained long-term views & ability to look at continental energy drifts over a couple of decades. A big thank-you to both, and particularly to equityval, for hanging in so splendidly. Appreciate all that you've written. 

in its own small way, the thread also reflects how closely entwined canada & the US really are. It's not possible to have a single-country energy policy or water policy or even manufacturing/industrial policy.


----------



## Sampson

^ agreed. The depth of insight is fantastic.


----------



## equityval

*The Coffin Corner*

Obama has delivered a punt on Keystone worthy of Dave Jennings (former NY Giants perennial all-star punter for you folks north of the border who don't subscribe to Sunday Ticket) putting the ball out of bounds at the 2 yard line. The ball is now turned over to TRP QB Russ Girling who faces a challenging field position and a Nebraska Cornhusker blitz that has sacked him repeatedly. 

For those of you with a sense of humor, the State Department informs us that the decision on a new route could be made "as soon as" the first quarter of 2013, LOL.

http://www.bloomberg.com/news/2011-...-is-delayed-by-u-s-to-study-alternatives.html

This is truly a sad day for US energy policy and US/Canadian relations. The pipeline makes all kinds of sense for both sides, and Obama has just materially reduced our energy security, perpetuated the funding of petrostates that sponsor radical zealots that fly planes into our buildings, and has turned his back on a stimulus project that would actually bring jobs and some sustained benefit to the country, rather than the Keynesian ditch digging that has characterized his stimulus plan. Here's a further read on that topic: http://www.econbrowser.com/archives/2011/11/shovel_ready.html


----------



## dubmac

equityval said:


> This is truly a sad day for US energy policy and US/Canadian relations.[/url]


The pending question remains..
What of TRP & it's oil & gas pipelines now that KXL is delayed? 
TRP's leadership stated publicly that if KXL doesn't go ahead (we know that the project it isn't dead...yet), that they would ship & sell oil & gas to Asia. 

val...what do you see here? 
What could Mr. Girling do in the future to bolster his bottom line give the fact that KXL has been delayed and the mainline has it's toll issues? hmmmm.....


----------



## Rommel

Rommel said:


> Absolutely, I used to work for TransCanada. Slightly off-topic but one of PM Harper's former top aides works for TransCanada, very nice lady too
> 
> Keystone XL is certainly going to happen; not if, but when  *I say the major hurdles clear up around 2013 (the year the next US President is sworn in) since regulatory stuff seems to stall in an election year 2012.*
> 
> Just my 2 cents.


----------



## ddkay

I think the benefits of this are exaggerated. Just a bit.


----------



## zylon

This is reverse psychology at it's finest, although likely accidental.

If Canada had shut down Ft McMurray, mothballed major oilfields, and said, “the oil is staying here until the world is ready to pay up for it”, the SEALs and Green Berets would have come a chargin'.

Now, US is saying, “we don't want your stinkin' oil”.

Result; WTI stays landlocked at a discounted price to Brent. Not good for oil companies, stock holders, related industries, employees, and governments. But good for the energy consumer.

Do the people east of Manitoba not want western oil? Is Manitoba or western Ontario so prosperous that they couldn't use an extra thousand jobs? Why not build a refinery or two in central Canada, pipe the western oil to those refineries, then ship the distillates to where it's needed farther east, and import less Brent oil to NS/NB at higher prices?

Seems to me there have to be other workable ideas, instead of courting the totally uninterested party.









*Irving Oil, St John, NB*


----------



## ddkay

So the US doesn't pay the evil-doers for oil. China pays the evil-doers instead.

What have you actually solved? Nothing. You took some short term demand away from WTI and pushed it into Brent instead. Congrats. Dhahran will starve. 

BTW have you guys seen how the oil sands operation will run as nat gas supply runs low? Yeah, that N word. Unfortunately CANDUs are NOT completely passive. It's nearly 2012, there are better reactor designs available--we don't need to use highly pressurised systems--but they probably won't be chosen. Or maybe they might now AECL is sold.

In the 1800's industrialiased cities had a horse manure problem, apparently in 2000s metaphorically it hasn't gone away.


----------



## ddkay

Anyway back to TRP, price target $37 within 2 weeks.


----------



## Sampson

ddkay said:


> So the US doesn't pay the evil-doers for oil. China pays the evil-doers instead.


Are you calling Canadians evil-doers.


----------



## doctrine

TRP price is dropping down nicely. 

If it hits $37.33, then you get a 4.5% dividend yield. Not sure if it will go though, its already been knocked down as the writing was on the wall for a week or two that there would likely be a delay.


----------



## KaeJS

http://www.latimes.com/news/nationworld/nation/la-na-keystone-20111111,0,1732793.story

Blah.

Looks like I will need to hold and forget about this one if I don't want to sell now.


----------



## PMREdmonton

zylon said:


> This is reverse psychology at it's finest, although likely accidental.
> 
> If Canada had shut down Ft McMurray, mothballed major oilfields, and said, “the oil is staying here until the world is ready to pay up for it”, the SEALs and Green Berets would have come a chargin'.
> 
> Now, US is saying, “we don't want your stinkin' oil”.
> 
> Result; WTI stays landlocked at a discounted price to Brent. Not good for oil companies, stock holders, related industries, employees, and governments. But good for the energy consumer.
> 
> Do the people east of Manitoba not want western oil? Is Manitoba or western Ontario so prosperous that they couldn't use an extra thousand jobs? Why not build a refinery or two in central Canada, pipe the western oil to those refineries, then ship the distillates to where it's needed farther east, and import less Brent oil to NS/NB at higher prices?
> 
> Seems to me there have to be other workable ideas, instead of courting the totally uninterested party.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> *Irving Oil, St John, NB*


No, the end consumer sees no benefit from the lower price for WTI. Rather, it is the refiners who take the extra profits. They buy the oil cheap and refine it into gasoline and diesel which they sell at market price.


----------



## ddkay

Sampson said:


> Are you calling Canadians evil-doers.


No, the dictator petrostates are "evil-doers". So far our disassociation with them makes zero difference because oil is an internationally traded commodity. Sinopec has no limits in first world countries except regulatory approval. Remember Addax (Iraqi oil)? Remember Syncrude? Remember Daylight? Multi-billion dollar deals, but still a drop in the bucket to them. And the oil industry gets the biggest subsidies of any industry in all time in the form of military backing. Just another example of privatise the gains and socialise the losses.


----------



## daddybigbucks

KaeJS said:


> http://www.latimes.com/news/nationworld/nation/la-na-keystone-20111111,0,1732793.story
> 
> Blah.
> 
> Looks like I will need to hold and forget about this one if I don't want to sell now.


all this really does is grease the rails for a run up past $44 in the next few months.
ive got to figure out how much more to buy.
with a chart like this, its hard to have too much negative to say.


----------



## equityval

*Now What?*

Dubmac,

Russ is in a bit of a pickle. I suspect they are going to have to sort of let things play out for the next six months and then perhaps reassess their strategy.

-On Keystone, they are half pregnant. They've got almost 2 billion dollars invested in pipe and leaseholds according to the Globe and Mail. Even though that is a sunk cost, they won't walk away from that quickly. They'll negotiate with Nebraska about a new path for the pipe and watch the polls in the US to see if we are likely to elect someone who wants to invest in solar boondoggles or someone who thinks we need Keystone. My guess is they will press on with seeking approval, but it will be 2015 before they seen any revenue from this. They also have to keep their shippers on board who will have an ability to opt out at the end of this year according to the Globe and Mail: _Underlying the $7-billion pipe are a series of long-term contracts with shippers – both producers and refiners – who have agreed to ship certain volumes on the pipe.But a template of those agreements filed with the National Energy Board shows that shippers have an exit they may be able to access. If, by the end of this year, TransCanada cannot prove it will have oil flowing through Keystone XL by Dec. 31, 2013, shippers can provide 30 days notice and dump their contracts._
http://www.theglobeandmail.com/repo...uld-spell-end-for-keystone-xl/article2232016/ (748 comments on that story, and counting!)


-On the Mainline, they are probably going to have to wait until late summer to see where the NEB comes out on the toll case. Perhaps Keystone will make them a little more likely to seek a settlement rather than drag it out, but I doubt it.

-The most likely way to add assets and grow income would be in the power space. I haven't surveyed what they might buy in Canada, but presumably that is not a long list. They might have more luck in the US. We've got new coal plant regs coming and there may be a few sellers who don't want to spend the money to upgrade those plants and may sell them or others may sell non-coal assets to stump up the cash to rehab their coal fleets.

-The obvious plan B for an oil pipe is to go west to Kitimat, but it looks like ENB has beaten them to the punch on that. 

-In the category of more speculative ideas, they could go acquire one of the long haul pipe companies in the US, like Williams' pipeline group. The problem with that plan is that they need to keep enough powder dry to start building Keystone in 2013, assuming that it is approved. Maybe they go down this route in 2H 12 if they conclude Obama is going to win and they'd rather not keep negotiating with the Hamlet of fossil fuels.

-Finally if things get bad enough maybe they just sell the whole kit and kaboodle to Richard Kinder (Kinder Morgan). He would certainly run the place better and probably find all kinds of costs to cut. On the other hand, he'll probably be pretty busy sorting out El Paso for the next year or two, so he probably doesn't have the balance sheet capacity to do it. He'd also have a pretty challenging antitrust gauntlet to run - and I can imagine selling an asset like TransCanada to a Texan might raise a few hackles in Ottawa and Calgary. Here's one other speculative thought, maybe Buffett might be a buyer. He bought a couple of pipes from Williams when it almost committed Seppuku trying to imitate Enron, back in the day. And he's invested a lot in regulated assets with Mid American. It would also be an "elephant" kind of deal that would let him put a lot of money to work. That said, while he probably wouldn't be as hard a sell as Richard Kinder, a sale to any Yankee is going to be an uphill battle. I also think it would have to be a distress/rescue kind of deal to get Buffett's interest, but TRP has demonstrated an ability to get itself into that position in the not too distant past, so never say never.


----------



## ddkay

Buying 13 year lows you would have done better investing directly in the commodity. Rent a tanker.

TRP 2000 - present 526.72%
WTI 1999 - present 810.16%

Enter ETFs, outside a market crash USO/USL have a .99% correlation to "oil spot" aka front-month crude futures

Year to date:


----------



## humble_pie

val to what extent might you believe that US keystone decision makers - all the way up to the top - might be favouring or encouraging the shale gas industry. On a longer term basis i mean, not just the next 15 months while alberta oil has sort itself out re export possibilities.

it's interesting that the very voters who support obama in the NE & particularly in nyc include the voters most likely to oppose shale. But obama has turned out to be a surprising president with unexpected reversals in decision-making.


----------



## Toronto.gal

humble_pie said:


> A big thank-you to both, and particularly to equityval, for hanging in so splendidly. Appreciate all that you've written.


Ditto! I have been reading every word.


----------



## Eclectic12

zylon said:


> [ ... ]
> 
> Why not build a refinery or two in central Canada, pipe the western oil to those refineries, then ship the distillates to where it's needed farther east, and import less Brent oil to NS/NB at higher prices?
> 
> Seems to me there have to be other workable ideas, instead of courting the totally uninterested party.


Hmmm ... so you are saying that demand warrants building more refineries than already exist?

Wiki lists:

Alberta - three, eight if Bitumen Upgraders are included
Saskatchewan - one, three if upgraders are included
Ontario - four, five if lubricants are included
Quebec - four
New Brunswick - one
Nova Scotia - one

http://en.wikipedia.org/wiki/List_of_oil_refineries#Canada

Manitoba seems to be the only "have-not"


So the question seems to be ability to move the oil, available capacity and whether the power that be are happy with what is currently happening.


Cheers


----------



## equityval

*Obama's Motivations*

Humble Pie,

I don't think this is a backdoor boost for shale - I'm quite certain of that. Obama hasn't lifted a finger to help the shale gas business, and his EPA is chomping at the bit to regulate it more heavily, only Congress is standing in the way of that. This administration would put a solar panel on every rooftop and windmill in every backyard, costs and economic devastation be damned, if they had their way. Look at some of the hail mary "green" investments that the government has made for an idea of what makes their hearts beat faster. Did you see that announcement about the govt setting up NG filling stations on the interstates for long haul truckers so they can switch to shale gas - neither did I. 

The political battle for shale gas is much more with the coal lobby and not oil. We hardly burn any oil for power any more and NG only threatens a very small part of the transportation fuel market and most NG firms produce oil too so they aren't stabbing the oil interests in the back.

This is much more about Obama getting his street cred back with the environmentalists specifically and the left more generally. The left, amazing as it may seem, thinks Obama has disowned them, apparently because he hasn't nationalized the banks, delivered a single payer healthcare system and turned off every coal plant in the country. This is what happens when you sell yourself as the messiah and then expectations run headlong into reality. So he needs to throw them a couple of large bones between now and the election so that they get their latte sipping asses off the couch and to the voting booth next November.

All that said, there is one other group that Obama is trying to appease which is labor (Obama for all practical purposes collects a payroll tax from every union member in the country that goes directly into his campaign fund, so they are very important to him. That is why, for example, his labor relations board is suing Boeing to keep it from opening a non union plant in S. Carolina - do you see a trend here when it comes to decisions that ease the path to job creation?). Keystone would largely be build with union labor, and this is why Obama didn't kill it. He decision, which I called a punt, was basically a straddle. He can tell the union it's still in play, and the greens think that they have killed it with delay. There is a long history of Obama ducking contentious decisions. Today's WSJ editorial on Keystone references his long observed tendency to vote "present" on difficult issues (see this for more on him voting present http://www.realclearpolitics.com/articles/2007/02/the_everpresent_obama.html). 

So really at the end of the day, this is Barry being Barry, and it is all about politics. And perhaps this gives you a glimpse as to why the next election is so important down here.


----------



## dubmac

*thnx val*

val...
let me add my thanks to you along with others in the forum
Your posts, opinions and analyses have been very helpful. I sold a chunk of TRP in mid-oct (and ended up happy with the decision) having learned much from your assessements. Kind thanks for this.


----------



## ddkay

ddkay said:


> Anyway back to TRP, price target $37 within 2 weeks.


Well, looks like it hit $37.80 in pre-market hours this morning (doesn't show on this chart), FYI that's a 3.7% gap down from yesterdays close. Significant 6.14% intraday bounce off the green downtrend line I posted a few pages back, I'd consider a short term long trade now. Keep yer stops tight, there's still significant resistance at $40.63 due b/t Mon-Wed next week, and momentum is slowing. The range will get wider, $37.00 or $41.69 is in the cards by December 15th.












> HOUSTON (Dow Jones)--A TransCanada Corp. (TRP) executive said Friday the company hopes to win final State Department approval of its Keystone pipeline expansion sooner than the 18 months the department has said it might.
> 
> The State Department said Thursday it would take up to 18 months to review alternative routes for the Keystone expansion so it avoids carrying heavy Canadian crude past Nebraska's environmentally sensitive Sand Hills region and a major regional aquifer.
> 
> But the review could move more quickly than expected as the State Department "has been fairly specific about moving [the proposed line] away from the Sand Hills," said TransCanada's general and corporate counsel, Sean McMaster .
> 
> *"This might take six months, not 18 months," McMaster said in an interview. " If the Nebraska governor is supportive, things might move more quickly."*
> 
> [...]
> 
> TransCanada has said that it could be forced to kill the project if the newly announced review process does go on past 18 months. If that is the case, TransCanada could focus on building a pipeline connecting the U.S. crude oil storage hub of Cushing, Okla., to the Gulf Coast, McMaster said. A distribution bottleneck in Cushing has depressed prices for the light, sweet crude stored there, making it more desirable to Gulf Coast refiners.
> 
> "Building [a pipeline] from Cushing to the Gulf, that's the only option we can see," McMaster said.


----------



## whitecar

Maybe I'm missing something, but with this news causing delays and added costs to the company, why is the stock up almost 2% today? I thought bad news would have caused the price to go down. Maybe this has been anticipated and the price has already absorbed that over the last little while?


----------



## equityval

*Alliance Pipeline - Plan B?*

In the category of what other options does Russ have, here's one other long shot idea that TRP might pursue - a JV with the Alliance pipeline as a way of getting around the enviro-Nazi roadblock. 

The Alliance pipeline is a wet gas line that runs from BC to Chicago. It is a "bullet" pipeline that has a bunch of receipt points in BC and Alberta and one delivery point in Chicago. Alliance is owned by a JV between ENB and Veresen. Alliance itself has some interesting existential issues as all of its existing shipper contracts expire in 2015 and 92% of its shippers have indicated they will not renew (they had to give notice last December) so they have an interesting challenge on their hands in terms of refilling the pipe. To date, they have been targeting wet gas coming out of the Bakken to help backfill the pipe. 

So the idea would be to use a middle segment of the Alliance from Hardisty to the southeast corner of ND as the northern part of the Keystone path and then follow the existing Keystone right of way down to the Gulf. I don't know what the technical limitations of the Alliance pipe are that may impinge on this sort of a plan. This idea has some interesting leverage to it, but also a few flies in the ointment.

-It would eliminate the entire conversation with Nebraska since no one there is (so far) complaining about the path of the existing Keystone pipe.

-It would take the decision out of the hands of the state department and put it into the DOE since Keystone XL would become a US only pipeline from ND to the gulf and would follow the existing Keystone ROW along its entire path - there would be no credible environmental issues with that path.

-It would materially improve the supply/demand balance of NG pipes coming out of Canada. It would put a bunch of gas onto TRP's Mainline, Great Lakes and Northern Border pipes and help their economics.

-It would leave more wet gas in Alberta which is short of NGLs for the petchem plants up there.

-It would probably reduce the cost of Keystone substantially.

There are several flies in the ointment:

-At the end of the Alliance pipe is a large wet gas processing plant named Aux Sable (which is a JV of an ENB MLP and Veresen) that would lose its supply. This could be dealt with by looping the Alliance pipe along most of its path in ND to carry the wet gas from ND down to the point at which it intersects with Keystone and then use the existing Alliance pipe the rest of the way to Chicago. That would cost some money, but not as much as would be saved by eliminating the northern third of the Keystone build. 

-Existing Alliance shippers would need to be displaced before 2015 for the plan to make sense. Conceptually, this shouldn't be a problem given the excess pipe capacity out of Canada, but it would depend on the specific paths that existing shippers need and what would happen to their costs. Perhaps laterals to other pipes in AB would need to be built. It would probably cost some money to settle those contracts early, though some shippers might jump at the chance to exit early.

-ENB would have to be motivated to do this in some fashion. This would eliminate the need for their Wrangler pipeline. It would also increase the effective competition for their existing oil pipes out of Canada. Most likely, all of Keystone would have to become a JV with ENB (or the Alliance JV) and that could possibly raise antitrust issues.

-TRP would have to write down the ROW that it has purchased for Keystone XL and perhaps some of the pipe as well, though there are probably buyers for the pipe given the amount of pipeline construction going on. 

This is some blue sky thinking on a Friday. It would involve lots of complex negotiations between the parties involved, but it would also put the onus back on Obama to fish or cut bait on the pipeline since it would remove the Nebraska objection.


----------



## ddkay

http://www.reuters.com/assets/print?aid=USTRE7AA5FL20111111



> "Oil traders anticipate that *with or without Keystone XL, there is likely to be a resolution*," said Matt Smith, analyst for Summit Energy in Louisville, Kentucky.
> 
> "There's a lot of talk about Wrangler as a pipeline network that could step up and be an adequate replacement for Keystone XL."
> 
> The discount of U.S. crude, also called West Texas Intermediate, to Brent expanded to a record $28 a barrel in October, but has steadily declined since, even as the threats to the timeline for Keystone XL mounted.
> 
> This week, when the delays were confirmed, the spread narrowed more than $3 to $15 a barrel on Friday, an indication that traders are betting the Midwest crude glut was still expected to ease.





> *The delays in Keystone XL* -- which some experts say could kill the project entirely -- *benefit alternative proposals, some of which have shorter timelines*.
> 
> *Enterprise is in talks to buy out its partner Conoco COP.N. in the 350,000 bpd Seaway pipeline, which ships crude from Freeport, Texas, to Cushing, Oklahoma, the delivery point for U.S. crude oil futures. Enterprise could then reverse the flow of the pipeline and send crude away from Cushing.*
> 
> "One of the implications of the potential delay would be to accelerate other pipeline solutions, including the potential Seaway solution," said Ed Morse, global head of commodities research at Citigroup.
> 
> *"That could mean instead of waiting until 2013 for an evacuation of crude out of Padd 2 (Midcontinent) into Padd 3 (Gulf Coast) it might happen in 2012 instead."*





> Enbridge (ENB.TO: Quote, Profile, Research, Stock Buzz) announced this week it will likely proceed with Wrangler, an 800,000 bpd, $2 billion pipeline that would shift crude from the Cushing to the giant U.S. Gulf Coast refining hub after receiving strong shipper interest. Enterprise is also a partner in Wrangler, which could be in service by mid-2013.
> 
> Confidence that one of these pipelines will help alleviate the Midwest glut can also be seen further out in the oil futures curve. The premium of December 2013 Brent to December 2013 WTI, which topped $17 a barrel in September, has dropped more than $3 this week to $8.35 on Friday.





> Further relief to the Midwest crude glut has come from alternative shipping methods. As the disconnect between Cushing and Gulf Coast markets grew this year, *shippers and producers scrambled to find new ways to capture the tempting arbitrage of more than $20 a barrel available for those who could get crude to the coastal refining hub.
> *
> Companies have been shipping crude by rail and barge and business is expected to be healthy in the medium term, and potentially more profitable amid Keystone XL's delay.
> 
> Routt said new rail terminals in North Dakota hold capacity to ship up to 350,000 bpd and that those volumes could double by 2013.
> 
> "If no pipeline solutions occur in the next few years, we are likely to see a very significant build out of rail capacity, which has higher transportation cost than pipelines, *to bring Canadian oil sands and Midcontinent tight oil to new markets*," IHS Cera said in a note to clients.


Note that last bolded text, this has very little to do with North American energy security. The propaganda machine runs strong...


----------



## ddkay

If KXL or any other pipeline solution goes through I presume this will be bearish for CN and CP as they transport 10,000-20,000 bpd by rail


----------



## equityval

True, but their volumes of frack sand to the US will grow a lot going forward. Also to the extent that the oil sands consume more gas that would have otherwise flowed south, that will increase US gas production and the need for frack sand.


----------



## Homerhomer

Indeed a worthwhile read, special thanks to Equityval.


----------



## spirit

*A non board room viewpoint*

First of all I do not favor either side of the Keystone project. The Edmonton Journal ran a well documented story today about one protestor. He is a rancher who took issue with the way the project was handled. According to him there were high handed tactics used that painted any protesters as wild eyed radicals. Did not go over to well with some of these people who considered themselves stewards of the land. The bottom line was Obama went with those who brought him to the dance. The others would not have voted for him anyways. I'm simplifing the story a bit but I can see the board room heavy armtwisting type methods did not go over well with the landowners groups. We in Alberta have had issues like this with well head flaring. Just saying.


----------



## doctrine

NIMBY at its best. Can't wait until oil hits $150 again, which will happen, and then watch Americans demand answers. Hopefully by then someone in Canada has started laying pipe through the Rockies, although that will have its challenges too.


----------



## underemployedactor

Putting a gas line through an aquifer strikes me as the worst idea since Lord of the Rings the Musical. Not surprised at all it was up against opposition. Makes me wonder what TRP's management was thinking? Either they were so arrogant as to think they could just bulldoze through opposition or they were too duderheaded to realize there would be any.
Share price rebound I chalk up to relief that there finally has been some sort of decision. I expect SP to drift lower over the next few weeks.


----------



## dubmac

*Nov 11th Analyst update (Feinberg) on TRP - posted on Morningstar*

All TRP holders - keep the faith says Feinberg - he says KXL will be approved - ultimately...

Interesting to see the stock is now 4 stars (as rated by Moringstar), not 3.

Analyst Note Nov. 11, 2011
We were somewhat but not overly surprised to learn that the State Department has punted on its long-anticipated decision of whether to approve TransCanada's CAD 7 billion Keystone XL pipeline. The given rationale, "to undertake an in-depth assessment of potential alternative routes in Nebraska," could push back the approval decision until at least the first quarter of 2013--about the time TransCanada had planned to place the pipeline in service. This comes on the heels of vociferous protests against the pipeline in Nebraska and Washington, D.C., following a final environmental impact statement from the Department of State concluding there would be no significant environmental impact from the pipeline. The proposed pipeline route was one of 14 potential routes. 

*At this point, we are not adjusting our fair value estimate for TransCanada, as we still expect the pipeline will ultimately be approved, even if after the 2012 presidential election. *To date, TransCanada has spent CAD 1.9 billion on the pipeline, a large chunk of which has gone toward steel and other raw materials for the pipeline and its facilities. Some of the remaining development costs are truly sunk costs, but we expect that TransCanada could recover a fairly significant amount of its investment to date if push came to shove, by selling or finding alternate uses for the raw materials. *Even if TransCanada lost its entire investment to date, which we consider very unlikely, it would amount to only CAD 2.70 per share.* On its own, Keystone XL doesn't have particularly compelling project economics; TransCanada expects a 7%-9% unleveraged internal rate of return. What would hurt most, in our view, if the pipeline were not approved would be
lost future opportunities to expand capacity very economically via pumping stations and to build storage facilities that leverage the pipeline's footprint. It could be difficult to allocate this amount of capital as efficiently in
North American natural gas pipeline infrastructure. We'll keep our ears peeled, as TransCanada remains committed to the project and is working with the State Department to determine the next steps.


----------



## KaeJS

dubmac said:


> All TRP holders - keep the faith says Feinberg - he says KXL will be approved - ultimately...




I'm keeping the faith!


----------



## equityval

*The Road Not Taken*

Maybe Russ has been reading a little too much Robert Frost lately. 

It appears that TRP had a chance to take a route that was less controversial though one that would have added about $300MM to the cost of the project and, because it was longer, more nominal environmental impact though ultimately far less fodder for Baghdad Betty and her band of merry pranksters down at the White House. In hindsight, it appears that TRP was penny wise and pound foolish. That $300MM is looking like it would have been money well spent at this point. 

That route would be to follow the path of the Northern Border pipeline until it intersected the existing Keystone pipe and then run south parellel to the existing Keystone footprint from there to the Gulf.

This document is part of TRP's application for the KXL permit with the state of Montana: http://deq.mt.gov/mfs/keystonexl/majorfacilitysitingpdf/Chapter1.pdf . On page 16, section 1.3.7 discusses alternative right of way options in the state and mentions Northern Border but rejects it as it would lengthen the pipeline thereby increasing its cost and environment footprint.

Here is a little more inside baseball on the path of the pipe. http://kevincramer.org/2011/11/a-pr...ion-for-the-transcanada-keystone-xl-pipeline/
A few caveats are in order. Those cavaeats are: a) this guy is a politician so we should take whatever he says with a large grain of salt, b) he's running for Congress now, so you can double that dose of salt, c) he is, as we say, "talking his book" - he's from North Dakota where they are short of pipeline capacity to take away oil from the Bakken, and following the Northern Border path would provide more jobs and taxable real property in ND, and d) he's part of the ND PUC so this project would enlarge his bureaucratic domain which is, at the end of the day, the primary (and often only) thing bureaucrats think about when they get out of bed in the morning. That said, he makes some very good points, the most salient of which is there aren't likely to be many environmental issues raised by following an existing pipe that has already been vetted. Further, given its need for takeaway capacity, ND would be an enthusiastic supporter of this path. Finally, the official position of Nebraska, is that they don't object to the pipeline as long as it doesn't go through the Ogallala. The "tar sands are evil, we'd rather live in the dark" crowd will of course still be protesting even with such a change, but it would remove the Ogallala fig leaf for Obama and force him to explain why forcing the Canadians to sell their oil to the Chinese make more sense than allowing them to sell it to us.

So Russ, perhaps you should put down the Robert Frost book and take the path _more_ travelled by. It could make all the difference


----------



## equityval

Spirit,

The PR and optics of all this was badly mishandled by TRP almost from the start. They obviously missed some signals along the way and were way way too slow in rallying support for the pipeline as the State Dept deliberated. I also think they overplayed their hand with the landowners. My sense is there is an arrogance to the company (reminds me of AT&T back in the Ma Bell days) because I'm sure it has enormous political clout in Canada and is used to throwing its weight around (that's one of the conclusions I'm drawing from the way it has played its hand on the Mainline). That isn't going to carry a lot of water down here, and as important as the jobs are and as much inside baseball as there is to the permitting process for pipelines, it still makes sense to charm the locals whenever possible, particularly in a place as litigious as the US. Sounds like they dropped the ball on that one.


----------



## equityval

This is a pretty good survey of the options and pitfalls that TRP faces with Keystone:

http://www.canada.com/nationalpost/financialpost/story.html?id=bfa67d6f-6c82-4475-af7c-e021484d4bc9


----------



## underemployedactor

That 300 mil would have gone a long way toward PR. Can you imagine how it would have taken the wind out of the sales of opposition if TRP had been able to say, "look, we spent 300 million more than we had to just to avoid the sensitive aquifer." That would have allowed political wiggle room for all concerned with each being able to claim a victory. Perhaps Russ should have broadened his reading of Frost to include "The Need of Being Versed in Country Things".


----------



## HaroldCrump

I thought I heard a news blip that TRP is ready to re-route the pipeline.
Although the new route hasn't been determined yet, it sounded like they were ready to bend it backwards (so it speak) as much as necessary.

Would it help expedite the approval, or would some other state now scream NIMBY.


----------



## humble_pie

val has spotted at least one other route through montana - please see upthread.

but if obama's reasoning is to keep the democrats out of a contentious scuffle until after the election, there would be no approval of anything until late november 2012, no ?

(lol val probably knows more about keystone than harper & flaherty combined)


----------



## dubmac

equityval said:


> True, but their volumes of frack sand to the US will grow a lot going forward. Also to the extent that the oil sands consume more gas that would have otherwise flowed south, that will increase US gas production and the need for frack sand.


val...where / who produces frac sand? Is it a specialty product? Any idea? just curious


----------



## equityval

*Frac Sand*

Dubmac,

I was told by someone from Haliburton that Chesapeake has a source in Alberta that they insist on working with, but I don't know which firm. 

There are different sizes of sand grains that can be used and they sift it so that it meets certain specs. There are even some preferred storage silos so that the sand stays properly mixed. I don't know a great deal about it, but some of the producers are pretty particular about their sand.

If you do a Google search on Alberta Frac Sand you'll get a few hits.


----------



## equityval

*Nebraska Two Step*

Humble Pie & Harold,

I wouldn't expect TRP is going to get the drive through treatment on this re-route. I'm thinking more like the DMV or the wait at the doctors' office. 

As I understand the "agreement" that they have forged with the state of Nebraska, there is some third party consultant, that will be controlled and paid for by the state, that will determine the new path. So you can bet that it will happen on the state's timetable and not TRP's.

Beyond that, there is a very well prescribed, and arduous, process for any pipeline to get FERC approval. Since they will be covering new ground, they will have to do a separate environmental impact statement, will have to survey the area to see if there are any endangered species, will have to check for native american burial grounds and other areas of anthropological significance. They'll have to get wetlands permits for stream crossings, they'll need to meet with the people in the communities that the pipeline runs through, they will need to have a public comment period and hold some public meetings. To cite just one example, during construction of the Ruby pipeline, which went into service this year they had over 200 archeologists in the field at one point as part of the survey process. This is why it takes 4-5 years to build a pipeline.

Finally, the only reference to Keystone that Obama wants to hear for the next twelve months will be when someone talks about campaigning in Pennsylvania (the Keystone state).


----------



## equityval

*OT - Toronto Housing Bubble?*

I was in Toronto today (for a gas industry conference - will post more about this soon) and on my way out to the airport was stunned by the forest of cranes I passed that were all furiously building condos. I think I counted 15 projects, none small, in an area that was about one linear mile on the western edge of downtown (just what I could see from the highway). These did not appear to be primo sites either from what little I know of the city.

Any of you Leafs fans worried that you are overdoing it a little on the housing front? I emailed a buddy of mine who tracks the housing market who claims there are over 70K units in the development process (I haven't verified that number) which would make the city this decade's Miami (without the fashion models). 

Is there anyone else on CMF talking about this - any housing related threads? I know nothing about that housing market, but the visuals were not comforting.


----------



## equityval

Speaking of stream crossings, here's an example of the heightened scrutiny pipelines are under when it comes to their rights of way.

http://online.wsj.com/article/SB100...fff4e118cbb5a0892Z3&mod=WSJ_hps_sections_news


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## ddkay

Well there's always this thread how to short GTA residential real estate market?

Speaking of Miami, this photo was recently taken there. All is well.


----------



## HaroldCrump

equityval said:


> Is there anyone else on CMF talking about this - any housing related threads? I know nothing about that housing market, but the visuals were not comforting.


There are many threads on that topic.
Rental properties, upgrading to larger houses, "specuvesting" etc.
Check out the section "Real Estate".


----------



## ddkay

Seaway it is...



> CALGARY, ALBERTA --(Marketwire - Nov. 16, 2011 ) - Enbridge Inc. (TSX:ENB) ( NYSE:ENB) announced today that it has entered into an agreement to acquire ConocoPhillips' (NYSE: COP) 50 per cent interest in the Seaway Crude Pipeline System for US$1.15 billion. On closing, Enbridge will become joint owner of the pipeline with Enterprise Products Partners L.P. (NYSE: EPD) ("Enterprise"). Enterprise will continue to operate the pipeline system and storage facilities.
> 
> "The Seaway Pipeline is a key strategic asset in the US Gulf Coast and an excellent fit with Enbridge's existing pipeline system," said Patrick D. Daniel, President and Chief Executive Officer, Enbridge Inc.
> 
> The 670-mile (1,078-kilometer) Seaway Crude Pipeline System (SCPS) includes the 500-mile (805-kilometer), 30-inch diameter Freeport, Texas to Cushing, Oklahoma long-haul system, as well as the Texas City Terminal and Distribution System which serves refineries in the Houston and Texas City areas. SCPS also includes 6.8 million barrels of crude oil tankage on the Texas Gulf Coast and four import docks at two locations.
> 
> Closing of the transaction is subject to normal closing conditions and customary regulatory approvals and is anticipated by early 2012.





> Citigroup has published a research report on ConocoPhillips (NYSE: COP) after the company announced it's agreement to sell its interest in the Seaway to Enbridge (NYSE: ENB).
> 
> In the report, Citigroup writes, "COP entered into an agreement to sell its 50% interest in the Seaway (Cushing to Houston) pipeline for $1.15 billion to Enbridge (ENB). This is much higher than our estimate of over $500 million that we outlined in our Brent-WTI exit strategy piece on November 1. Enbridge can now piece together a route for its Canadian customers from the Midwest to the Gulf of Mexico."
> 
> Citigroup maintains its Neutral rating and $71 price target on ConocoPhillips, which is currently trading down $0.65 from yesterday's $71.99 closing price.


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## equityval

*Seaway*

And they announced that they would reverse the flow of the pipe so it flows down to the Gulf.

The plot has certainly thickened for Keystone XL.


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## zylon

*good time to invest in pipelines?*

Is It a Good Time to Invest in Pipeline Companies?
Marin Katusa, November 16, 2011
http://www.caseyresearch.com/articles/it-good-time-invest-pipeline-companies












> We're looking for a low ratio, because a low EV could mean a company is undervalued, while a high EBITDA indicates good profitability and ability to service debt. With that knowledge, *which one stands out? The problem is that none of them do!* These companies are virtually all trading at the sector average or above. We'd like to see an EV/EBITDA ratio in the range of 6 to 8. The lack of deviation is in fact remarkable, but unfortunately for us that means there are no good deals.


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## dubmac

zylon..many thanks for this post.
I have been mulling over when to buy ENB as I want to have a solid utility (oil/gas pipeline) in my pf -I was ready to buy thinking ENB was a good choice, but having seen this chart and read the quote - I realized that it is overpriced, so I'll wait...til when..I don't know


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## Sampson

I don't view this data as evidence that all pipeline co's are overpriced or that there is no value. My investment style relies on assessment of the co's ability to increase earnings, and not on previous ones. All this figure shows me is that the authors feel that all these companies share equal ability to grow, this is what I disagree with.


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## ddkay

I just had a look at IPL.UN, and wow, that is a completely unreasonable valuation. Energy and consumer nondiscretionary leading the market is usually a harbinger of disaster. One by one these rush to safety stocks will fail.


----------



## Betzy

ddkay said:


> I just had a look at IPL.UN, and wow, that is a completely unreasonable valuation. Energy and consumer nondiscretionary leading the market is usually a harbinger of disaster. One by one these rush to safety stocks will fail.


Yup i owned this one a while back and sold off at $14.00 Love hindsight...it does seem ready to fall back since its late rise is pretty sharp.


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## equityval

I think you may be waiting a while. Helicopter Ben (Bernanke) has pushed a lot of people to reach for yield and MLPs and pipelines have become a favorite of people who used to be able to get 4-5% on CDs at the local bank. Inevitably, it will end in tears as rates rise, but that day seems like it is at least a few years off, unless, of course, the bond vigilantes start to focus on our budget deficit at 10% of GDP. For now, there are enough malefactors in Europe to keep them busy and we are the least dirty shirt in the hamper.


----------



## doctrine

Yeah, gotta be careful with these pipelines and the price you pay. Being patient helps, its certainly far more likely ENB and TRP will be available again at less than $30/$40 respectively, so just have to wait and buy in the panic. ENB dipped below $30 for a few days in August, and TRP was at $37 around the same time.


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## Jungle

What is with the recent surge in ENB? Not that I am complaining, but just curious.


----------



## HaroldCrump

Jungle said:


> What is with the recent surge in ENB? Not that I am complaining, but just curious.


Speculations about the building of the other pipeline going west.
Also, ENB acquiring a stake in Seaway from COP and reversing the flow away from Cushing.


----------



## londoncalling

Betzy said:


> Yup i owned this one a while back and sold off at $14.00 Love hindsight...it does seem ready to fall back since its late rise is pretty sharp.


It dropped 54 cents today (2.93%). It's like ddkay can will the markets to do what he wants   I think/hope this is just a temporary setback as I don't have much more cash(currently 4% cash in my equity portion of portfolio) to deploy so I have no need for this stock to come back down for the time being.

Cheers!


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## ddkay

TRP wants to make a run in the next few hours, from $40 my 2-3 week max price target on the high end is $48 (+20%) and the low end is $36.50 (-8.70%). If you're thinking about adding, wait, you miss the first few % but you can catch more later. Current price mostly just a function of global credit availability so let's see how many more injections the bankers can give.


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## equityval

*Back to the Mainline*

The Mainline rate case is going to come down to one key economic issue - which is what the Northern Ontario (NOL) segment of the pipeline is worth. There will also be a fight over who should pay for the stranded cost that is embedded in this portion of the pipeline's capital base.

Here is a map of the 3 segments of the pipeline that are used to develop depreciation rates for the different segments that drive much of the toll for each region:










(The graphics in this post come from TRP's amended filing with the NEB. The portion of the filing that deals with depreciation of the pipe can be found here: https://www.neb-one.gc.ca/ll-eng/li...Depreciation_(Revised)?nodeid=745406&vernum=0 )

Below is a graph of the throughput of the NOL segment since the pipeline went into operation. You can see there has been a dramatic falloff in volume in the last 5 years, and TransCanada's forecast, which is probably optimistic, doesn't foresee much recovery. This segment accounts for 36% of the net book value of the pipeline (more than $2B). TransCanada's proposal is to transfer accumulated depreciation from the two other segments of the pipeline to the NOL which would have the effect of increasing the book value of those two segments and thus increasing the depreciation charge (and toll) for those segments. So the NOL in effect becomes a millstone that the shippers on the other two segments of the pipeline, most of whom don't use any part of the NOL, have to drag around and pay for. This is the crux of the reason that the Mainline's toll has been escalating - this segment of the pipe has lost its intrinsic value due to changes in gas flows around the continent, yet its legacy cost base must still be paid for under the current toll and regulatory scheme. I'll have more to add later, including some interesting history about how the Mainline got started.


----------



## equityval

*Republicans introduce bill to force Keystone decision in 60 days*

This is more political Kabuki theater. Most likely, the Republicans don't have the vote to overcome a filibuster in the Senate. There are 4 Democratic senators in the states along the pipeline that could conceivably be picked off with an argument of getting construction going and creating the resulting jobs. While this could give the GOP more than 50 votes, they are still well short of getting past a filibuster, and most likely there would be heavy pressure from the White House for these Democrats to be team players and not embarrass Obama.

http://www.bloomberg.com/news/2011-...ll-would-force-u-s-permit-within-60-days.html


----------



## equityval

*Enbridge making progress with First Nations*

My guess is there is still a fair bit of wood to chop on these negotiations, but this seems to be at a variance with some of the pessimistic assessments of getting to yes with the First Nation groups. Of course, it only takes one holdout to stymie a pipeline, as we saw in Nebraska, but at the margin, this is more bad news for Keystone.

http://www.bloomberg.com/news/2011-...rom-some-native-groups-on-pipeline-route.html


----------



## humble_pie

here's yesterday's detailed update to the gitxska'an story:

http://www.vancouversun.com/news/th...Gateway+pipeline+announced/5808263/story.html

evidently the nation - powerful though only 13,000 strong - is divided on the issue. Perplexing network of hereditary chiefs, a system not well understood by the white man, with some gitxska'an chiefs opposing northern gateway & demanding that chief elmer derrick who dealt with enbridge step down.

in addition there are more than 60 other nations along the gateway route that have jointly signed against.

couple days ago the globe published a story w details of first nation opposition to northern gateway:

http://www.theglobeandmail.com/news...ock-northern-gateway-pipeline/article2257573/

please forgive if this sounds like total cynicism here, but in every country in the world, opposition to mining/energy enterprises is frequently spearheaded by indigenous groups or landed interests who frankly Want. More. Money. 

it is a kind of honest blackmail, if you please, & it is very fun to watch, as the local groups get their demands for more money, more concessions & better environmental practices together.

most of the time, when the shouting dies down & they all get together at the table, the indigenous groups do indeed turn out to have intelligent & justified concerns. Most of the time, the big enterprises know this, so they have additional war chests of $$$ plus oceans of patience to offer at the deal table.

however the shouting stage often takes years to resolve, is my observation.

the big companies, like rio tinto in mongolia, are usually cool with this long-drawn-out process. I am much more dismayed & often disgusted with small canadian resource companies that pirate around in 3rd world countries, taking the attitude that their mere glorious presence for a few years plus the pitiful dollars-per-hour they are prepared to pay for untrained indigenous labour are supposed to make the host country swoon with delighted welcome.

the planet has shrunk so fast, communication is so much better now, that there is no corner left anywhere in the world where the natives don't already know in their bones, blood & DNA that Big Oil and Big Mining are Going to Pay Big.


----------



## equityval

Humble Pie,

I hear your cynicism and raise you one. Rather than handing out cash down here south of the border, we tend to hand the Native Americans a casino license which in turn showers money on the few dozen tribe members who have organized themselves to claim sovereignty over a particular area. Some of those claims have been very dubious in my opinion, but the casino gambit seems to work for everyone, expect for the neighbors in the immediate vicinity who get hosed in the process. Amazingly, a few of these casinos have managed to get themselves into financial difficulty by overexpanding and taking on debt, but I'll leave that rant for another thread and another day.

At the conference I attended last month, one of the people I spoke to expressed a lot of skepticsm that the Enbridge pipe would be approved in any near term scenario, so I was a little surprised to see Friday's news. The sense I got was that the pipeline was bound up in a much larger discussion between the First Nations and the provincial/federal govt about reparations and other issues related to sovereignty and past sins of the white man. 

Indeed, the Sun story references this with one of the two Gitxsan dissenters apparently one of the drivers of this litigation with the federal govt:
_
Stephens is part of a group of chiefs that are plaintiffs in a lawsuit against the B.C. Treaty Commission and the Gitxsan Treaty Society over problems with ongoing federal and provincial treaty negotiations._

No doubt given the Keystone news and the added urgency of a west coast outlet for oil sands crude, the asking price in the settlement talks is now much higher (for the cynics among us). Something tells me Harper is going to find some extra money in the budget to come to terms with the First Nations, the Save the Fraser protests notwithstanding.


----------



## Assetologist

Everything has a price! 
This will be solved,,,,, eventually and very possibly in a very different form then what is on the table or not.


----------



## humble_pie

salut val i didn't mention mongolia by chance. In the decade-long on-again-off-again battle to develop oyu tolgoi, rio tinto & ivanhoe granted mongolia 36% of the giant mine outright, working up to 50% over the mine's life (the deal includes contiguous properties with inferred ores which could be even more prolific than the original mine, as often happens.)

plus rio agreed to build the smelter within mongolia. Smelter workers are more highly trained & better paid, so host nations always bargain to keep these within the national economy.

so this is what i see as smart negotiating from people who host significant deposits or whose land offers a unique opportunity to Big Oil or Big Mining. The best deal will always be to get their hands on a portion of outright ownership. The worst deal will be a bunch of dollars or a casino license.

in northern gateway the gitxska'an are to be part owners of the pipe & of the LNG terminal to be built at kitimat, i believe.

but obviously the gitxska'a are divided, with different hereditary chiefs pulling this way & that.

i don't know how hereditary chiefs are determined out west, only know a bit about one or 2 iroquois nations. It's a matrilineal line of descent. The clan mothers appoint the chief, who is usually the nephew of one of them. Among the eastern nations, the power is actually in the mothers' hands. The job of the hereditary chief is merely to carry out their wishes & edicts.


----------



## equityval

*Equity vs Cash*

HP,

I agree, better to have equity in something than payola to stand aside.

That is actually what the casino deals in the US represent. Since gambling is illegal in most states in the US, the Indian casinos are usually the only game in town (or part of a small oligopoly of other Indian casinos). They're actually even better than mines as there is no ore depletion and seemingly a new sucker born every minute for the lure of a casino. It's an income stream in perpetuity IF they don't do anything stupid.

The numbers I've seen give the First Nations a 10% stake in the pipeline.

I've got no clue as to how the FN governance works, but it sounds complicated from the Vancouver Sun story. Sounds a little like the clan governance in the middle east, without the camels.


----------



## equityval

*More Keystone Follies*

The Republicans have now tied the passage of a bill to permit the extension of a payroll tax reduction (which Obama wants passed) to the permitting of the Keystone pipeline. Sounds like Boehner (speaker of the House) is ready to lock horns with Obama on this one:

http://online.wsj.com/article/SB100...1ad7eb2d93120d063Z3&mod=WSJ_hps_sections_news

"House Republicans linked a payroll-tax cut to approving construction of the Keystone XL oil pipeline on Thursday, in effect making the tax break dependent on a showdown over a separate, highly contentious issue....Mr. Obama's threat seemed to embolden House Republicans, who cheered House Speaker John Boehner (R., Ohio) Thursday when he told them in a closed-door meeting that he would take the pipeline fight to the president by writing the issue into the payroll-tax-cut proposal. Republicans say the project would create thousands of jobs."

You'll know this is getting serious when Obama starts spouting off about the "millionaires and billionaires" helped by the pipeline. When all else fails invoke class warfare.


----------



## kcowan

Gotta admit that it is a good strategic move by the GOP.


----------



## dubmac

Tho not related to val's recent post, this GM article has some conenction to earlier posts on the "fracking" debate (HP & val - take note) - last 3 paragraphs significant in the article...
http://investdb1.theglobeandmail.co...RACKINGENCANAMCCARTHYVANDERKLIPPEATL/GIStory/


----------



## KaeJS

Approaching a new 52 week high. 

Sitting pretty at $43.80.


----------



## doctrine

Quite happy with an ACB of $38


----------



## Jungle

I got in over one year ago and wish I got more


----------



## larry81

*Source: Congress to Approve Keystone Pipeline Provision in Budget Deal*

http://www.weeklystandard.com/blogs...ne-pipeline-provision-budget-deal_613448.html


----------



## Jungle

But it says Obama has promised to veto it. This will cause more delays.


----------



## KaeJS

Either way, it will be approved.


----------



## zylon

*things that make you go hmmmm*

Listened to at least 10 hours of audio from various sources this weekend;
someone, somewhere mentioned this regarding Keystone xl


guess who lives in Nebraska
know who recently bought a railroad?
who would like to ship heavy crude via tanker car?
Answer to all 3 is Uncle Warren

hmmmm ...


----------



## Miser

Rail transport would be expensive compared to a pipeline.
Buffet does have a ton of pull though.


----------



## doctrine

Of course it's more expensive. But if it's profitable, it'll happen.


----------



## equityval

*Rail is a stopgap*

In the long run, pipelines are far more cost effective than rail. You are seeing rail in the Bakken due to the short run constraints of pipeline capacity and the arbitrage between WTI and Brent. 

Keystone will eventually be built, adding takeaway capacity from the Bakken. Enbridge has also been adding take away from the Bakken (both laterals and long haul) and with its pending reversal of the Seaway pipe will either eliminate or substantially reduce the arbitrage profits between WTI and Brent. 

Shipping coal to the west coast and eventually on to China is probably a better reason to own a railroad.

So the GOP is apparently picking up its marbles and heading home for the holidays without passing the payroll tax extension and, as a result, have allowed Obama to continue to play Hamlet on the Keystone application for a while longer (the Senate had agreed to put the Keystone fill or kill provision into its version of the bill).

Here's a good discussion of the costs and benefits of Keystone. So far, Obama has proven resistant to rational economic thought on the proposal. http://www.econbrowser.com/archives/2011/12/costs_and_benef.html

Regarding the EPA "findings" on fracking in Colorado, there is more to the story than the headlines capture. When I have a little more time, I'll post some of the details.


----------



## equityval

*The Fifth Dimension*

Dubmac,

A while ago you asked what TRP would do with their cash given that they were stymied with KXL...so this may be part of the answer:

http://www.thestar.com/business/com...da-buys-solar-energy-projects-for-470-million

Most likely this is opportunistic as that giant sucking sound you hear is the solar industry imploding as subsidies around the world dry up. As that has happened, a nice arbitrage has opened up between the cost of solar panels (dropping like a stone in the face of massive overcapacity) and the few remaining fantasist feed-in tariffs that offer a guaranteed 20 year revenue stream. 44 cents per kwh, thank you very much we'll take that. Buffett saw the chance to run the same scam in California and swooped in to take a project off the hands of First Solar at the standard WEB discount.

I doubt this is a major new line of business for TRP. There aren't going to be many large scale solar projects built given the wilting of the subsidies in the face of fiscal constraints around the world, and the proliferation of shale gas around the world is making rate payers rightly ask why they need to pay solar a 700% premium to market. Instead, TRP is putting some capital to work, likely at a good return, and this lets them look a little bit greener as they dig up the ground to bring the evil tar sands oil to the rest of the world (hey, don't yell at me, I'm just quoting your very own Lois Lane from north of the border.) 

Bonus points for the thread reader who can connect the title of the post to the topic.


----------



## dubmac

equityval said:


> Bonus points for the thread reader who can connect the title of the post to the topic.



I think I got it!
The 5th dimension was a 70's band who wrote the "age of aquarius" etc, and eveyone wore beads, grew long hair and wore t-dye shirts and blue-jeans. the song has a verse in it that states - let the sun shine in"..etc etc a reference to TRP's solar biz ...
http://www.metrolyrics.com/aquarius-let-the-sun-shine-in-lyrics-the-fifth-dimension.html


----------



## humble_pie

thanks black mac it's grand to be able to think of val in beads, tie-dyed tees & torn jeans.

although i'm not quite getting zyl's post. If dick holland is a principal driver of the keystone plus a good longtime friend of warren buffett who's allegedly scheming to transport the alberta tar sands oil by rail, how does that conflict add up for poor mister holland.

please keep hitting us up w the genius insights laddies.

gaelic toast:

hair's tae us
wha's lich us.


----------



## equityval

*The age of aquarius*



dubmac said:


> I think I got it!
> The 5th dimension was a 70's band who wrote the "age of aquarius" etc, and eveyone wore beads, grew long hair and wore t-dye shirts and blue-jeans. the song has a verse in it that states - let the sun shine in"..etc etc a reference to TRP's solar biz ...
> http://www.metrolyrics.com/aquarius-let-the-sun-shine-in-lyrics-the-fifth-dimension.html


Well done Dubmac....the man knows his music! The song was actually a hit in 1969, and the band wasn't really into the hippie look, they were more into the pre-disco, mod look of the late 60s. As for myself, I keep all my beads and tie-dye t-shirts in a special closet. They only come out when the Dead are touring.

Peace out.


----------



## equityval

*Enbridge Claims Progress with First Nations*

According to this they have deals with 40% of the FirstNations along the Northern Gateway path to Kitimat. That said, the path to approval looks torturous - a small town's worth of people has signed up to testify at the NEB. Keystone XL is likely to beat it to market, but it appears the political class in Canada is coalescing behind the need for a pipe to the west coast. Both pipes are probably needed at the end of the day and Canada would be wise to diversify its export options for the next time a fossil fuel hater occupies the White House.

http://online.wsj.com/article/SB100...14798.html?mod=WSJ_hp_LEFTWhatsNewsCollection


----------



## dubmac

Is it possible that Obama could approve Keystone XL any day now? If so, could this be considered a good time to...*ahem*...speculate that TRP stock price could get a sudden boost?

http://www.torontosun.com/2012/01/12/pipeline-pressure-piling-up-on-obama


----------



## KaeJS

I think that's a pretty powerful ad.

Doesn't make Obama look very good at all.

Let's get this approved already. We all know it's going to be approved sooner or later.


----------



## doctrine

Given that its up 15% in the last year, it is more or less built in. TRP does trade at a premium to many companies in the pipeline business. Although not as much as ENB.


----------



## humble_pie

val next time you are passing by here, i would appreciate so much - & i'm sure many others would appreciate also - any comments you may have on the natural gas glut.

in another thread i posted up link to a US EIA gas storage report out this week. The charts did not look too hair-raising. Inventories did seem to be declining in line with a 5-year seasonal turndown from a midwinter peak.

alarmists seem to be sayinlg that all gas storage depots will fill by summer 2012 while LNG export will not be able to ramp up any time soon.

i'm just a poor dumb crumb, but if the alarmist view has merit then i wonder, would that mean gas below $2, would that mean gas below $1.59, where could all that lead.

salut.


----------



## equityval

*Profitless Prosperity*

HP,

I think the gas market is headed for a moment of reckoning. I had some hope that we would find a floor not too far below $3 but that was wishful thinking. My expectation was that we would see a pretty good drop out of the Haynesville (which we will, but probably not fast enough to help) and that might offset the incremental production from the Marcellus and other places. However, it looks like the associated gas coming with all the liquids drilling is going to keep the production machine going for a while longer. 

Bentek, whose tracking of gas flows, production and drilling is second to none, in my view, came out last week and said they think we could see a $1 handle on gas before it hits bottom (which takes into account the storage runneth over scenario) YIKES! That seems a little extreme, but funny things have a history of happening in the gas market. For sure LNG won't be here to save the day, that is still years off.

All that said, drilling budgets are going to have a "come to Jesus" moment this year, I'd guess probably sometime in Q2. The NYMEX strip has come down a lot in the last 6 months. Not too long ago, you could hedge out for a while at $5 NYMEX. The entire 2012 strip is below $4 now. There are very few places where you can make money (on full cycle costs at $4 gas) certainly the only dry gas field that has a hope of that is NE Marcellus. So you are going to see a lot of recast capex plans that cut off marginal fields and scale way back on the ones that have promise. You are probably also going to see people run into debt covenant problems and revolver availability if prices stay down here - reserve numbers are going to take a hit as the more marginal reserves become uneconomic. 

Having said all of that, if you can stay alive through the end of the year, we will probably be set up for stronger gas prices going forward as we will have lower capex budgets (and remember that shale wells fall off in volume pretty quickly) and increased gas burn in the power sector as coal plants are shut down. LNG export may also help on the demand side eventually though I think it is still speculative. I've also seen a report that says we may have an ethane glut coming into focus, so even the liquids oriented plays may have more challenging economics, which would also help on the supply side. 

I think the news could be really grim for the Alberta gas sector. It was already one of the marginal supply areas when gas was around $4 and with NYNMEX starting to eye the low $2s, the math for a lot of gas producers is going to get overwhelming. I know a lot of them are drilling for liquids now, but there is still a lot of dry gas activity. They have to hope that oil sands demand grows quickly. Martin King is a well respected gas market analysis is forecasting widespread shut-ins: http://www.ifandp.com/article/0015146.html

That's what I think. Promises to be an interesting year.

Hey, how bout them Rangers!

PS: For those of you wondering about the wisdom of a pair trade/hedging strategy, the last couple of weeks have shown the value of a hedging strategy with respect to gas oriented E&P names.


----------



## equityval

*Obama lowers the boom on Keystone*

Dow Jones and Bloomberg running headlines that Keystone approval will be vetoed.

Time to get on the road to Kitimat.


----------



## ddkay

I just got hit with "Obama administration said to reject Keystone XL pipeline. Story to follow." from Bloomberg

Edit: Story is up now http://www.bloomberg.com/news/2012-...eject-transcanada-s-keystone-xl-pipeline.html


----------



## Jungle

Yup. Time to sell?

EDIT
Shares are tanking!


----------



## KaeJS

For F Sakes!

I just can't catch a break. What's up with Obama?

I'm not selling.


----------



## HaroldCrump

There was an immediate knee-jerk reaction down 5%.
But it's recovering now, down only about 2.5%.
I think the upside of this stock will be constrained until this issue is resolved one way another after the Nov. elections.


----------



## equityval

*What's up with Obama*



KaeJS said:


> For F Sakes!
> 
> I just can't catch a break. What's up with Obama?
> 
> I'm not selling.


He's a hydrocarbon hating weanie who's trying to get a bunch of people who think you can run the economy on solar and wind to vote for him. 

He also thinks you can negotiate with the Iranians (how's that going?) and that his health plan will save money. Rumor has it he believes in the Easter Bunny too.


----------



## ddkay

Why aren't any of your politicians taking nuclear seriously? meanwhile 50 year old plants are rotting away.. time for an upgrade


----------



## humble_pie

morning, val, or rather good afternoon.

always a surprise on the way to the strawberry patch, right. But today's hiccup was not unexpected. As our member spirit observed at the time of the 1st veto, you dance with the one what brung you; & obama cannot afford to lose a single voter. November is a long way off. Plenty of time to relaunch.

could i thank you indeed for your value-packed message on natural gas. Everyone appreciates your posts so much. And YIKES as you say, re $1 natgas, but forewarned is forearmed. If & when the $1 handles occur - bentek is calling for 2 of them i see - it won't seem so shocking.

bentek energy looks like an excellent reference, all of it research generated for the industry, i assume, but with enough news & research description on the public website to make visits very worthwhile.


----------



## Cal

Even if it is rejected, 3 months and they will re apply for a new line/route.


----------



## equityval

*Obama's spin on KXL*

This is a rumor that I've heard, it is unconfirmed, but comes from a source that appears pretty well informed. 

Obama is supposed to make an announcement at 3PM and will say that the language the GOP attached to the payroll tax cut bill didn't give them enough time to consider the issues raised by the State Dept re: Nebraska aquifer.

Rumor has it that the White House will ask TransCanada to re-apply and that having enough time to consider the application given the re-route in Nebraska is the only thing standing in the way of approval. 

I wouldn't trade on that as it is fairly speculative, but it's not a random rumor from a trader trying to talk his book. 

I continue to think it will get aproved, but at a time that is politically convenient to Obama. In the meantime, Seaway is trying to lock up as many shippers as possible.


----------



## equityval

*Climbing on the $1 handle nat gas bandwagon*

Looks like the street is, in usual herd like fashion, piling on with forecast of sub $2 gas. From Bloomberg:

Jan. 18 (Bloomberg) -- Natgas has “no short-term floor”
as producers unlikely to slash production in response to prices of $2/Mmbtu or lower in 2012, Barclays analyst Shiyang Wang last night wrote in note.

* Sees “misconception” by analysts, traders as many expect
producers to shut in supply if prices plunge to $2/Mmbtu,
halting downward slide and creating “ultimate price floor”

* Calls 2009 supply response to sub-$3 prices
“insignificant”

* Expects demand side (ie. coal displacement) to respond first
followed by producers cutting drilling plans

* Natgas up 3c to $2.51/Mmbtu, leads CRB index

* Goldman yesterday said sees natgas prices entering
“bottoming phase" 

* Simmons & Co. said 1/11 sees 2012 spot Henry Hub ‘‘at
some point’’ this year falling below $2


----------



## equityval

*Hamlet (pipeline version)*

From Dow Jones: 60 days is just not enough time! Much more deliberation needed. The three years we've spent studying the proposal simply isn't sufficient.

That's their story and they are sticking to it.


DJ UPDATE: State Department To Deny Keystone Pipeline Proposal


--State Department is expected to announce Wednesday it is denying the Keystone XL pipeline for now
--State Department is expected to say it can't make an informed decision within 60-day deadline imposed by Congress
--Pipeline proposal could be revisited at a later date, people familiar with the matter say 

By Tennille Tracy 
Of DOW JONES NEWSWIRES 

WASHINGTON (Dow Jones)--The Obama administration plans to announce Wednesday it is denying for now the controversial Keystone XL oil pipeline TransCanada Corp. (TRP, TRP.T) wants to build from Canada to the Gulf Coast, people familiar with the situation said. 
The announcement doesn't necessarily mean the administration is abandoning the pipeline proposal for good, people familiar with the situation said.
Rather, the administration could say it will revisit the proposed project once alternative routes are reviewed. 
The U.S. government has been reviewing the 1,700-mile Keystone XL pipeline since 2008. Republicans tried to force the Obama administration to make a final decision on the project by passing a law late last year that imposed a 60-day deadline, which expires in February. 
White House officials already indicated Tuesday the administration wouldn't approve the pipeline in that timeframe. 
The administration has made clear that "a political effort to short-circuit that [review] process for ideological reasons would be counterproductive because a proper review that weighed all the important issues in this case could not be achieved in 60 days," White House spokesman Jay Carney said Tuesday. 
The State Department is expected to confirm Wednesday that it will drop the pipeline application for now because it can't make an informed decision in the timeline imposed by Congress, a person familiar with the situation said.


----------



## equityval

*Back to Go*

State department is not committing to any kind of an expedited review...is going to treat the refile as a new application. In other words, they can run out the clock until deep in the second term if it suits them.

From Dow Jones:

DJ US Cannot Guarantee Expedited Review Of Future Keystone Proposals -State Dept Official


By Tennille Tracy 
Of DOW JONES NEWSWIRES 

WASHINGTON (Dow Jones)--The Obama administration cannot guarantee an expedited review of future proposals for the Keystone XL oil pipeline, a State Department official said Wednesday, even though TransCanada Corp. (TRP, TRP.T) has asked the U.S. for speedy consideration of a new application it intends to file for the 1,700-mile pipeline. 
TransCanada said Wednesday it planned to resubmit an application for the Keystone XL pipeline, which would stretch from Canada and Texas and wind through six U.S. states, after the State Department rejected its current proposal. 
TransCanada Chief Executive Russ Girling said he wants the pipeline to be in service by late 2014. Girling said a new application should be processed in an "expedited manner" given that U.S. officials have been analyzing the company's current proposal since 2008. 
"Plans are already underway on a number of fronts to largely maintain the construction schedule of the project," Girling said. 
In a conference call with reporters, Kerri-Ann Jones, assistant secretary in the Bureau of Oceans and International Environmental and Scientific Affairs, said a new application from TransCanada will be treated as a fresh proposal and not merely an amended application. 
Jones said the State Department can use the information it has already gathered on the pipeline, but declined to commit to any expedited review. 
"It would be a completely new application and new review process," Jones said.


----------



## equityval

*BMO says "Dead Money" if KXL can't be salvaged*

Jan. 18 (Bloomberg) -- TransCanada Corp. may lag other energy-infrastructure companies as it seeks new growth prospects to restore investor confidence after President Barack Obama’s rejection of the Keystone XL oil-sands crude pipeline.
The $7 billion project had the potential to add $10 a share to TransCanada’s stock price in 2012 and continue the transformation of the Calgary-based company from a gas and nuclear utility to an oil-pipeline powerhouse, Carl Kirst, an analyst with BMO Capital Markets in Houston, said in a telephone interview.
“If the rejection is permanent, the stock becomes dead money for a time and the company may have to reposition for investors,” he said. “The question would be, ‘When does TransCanada come forward with enough projects to convince people that yes, indeed, there is growth on the horizon?’”

http://www.bloomberg.com/news/2012-...d-money-if-keystone-xl-can-t-be-salvaged.html


----------



## equityval

*Washington Post spanks Obama*

When DC's bastion of liberalism calls the opposition to an oil pipeline pointless, it really tells you how pathetic Obama's process has been. 

"We almost hope this was a political call because, on the substance, there should be no question. Without the pipeline, Canada would still export its bitumen — with long-term trends in the global market, it’s far too valuable to keep in the ground — but it would go to China. And, as a State Department report found, U.S. refineries would still import low-quality crude — just from the Middle East. Stopping the pipeline, then, wouldn’t do anything to reduce global warming, but it would almost certainly require more oil to be transported across oceans in tankers.

Environmentalists and Nebraska politicians say that the route TransCanada proposed might threaten the state’s ecologically sensitive Sand Hills region. But TransCanada has been willing to tweak the route, in consultation with Nebraska officials, even though a government analysis last year concluded that the original one would have “limited adverse environmental impacts.” Surely the Obama administration didn’t have to declare the whole project contrary to the national interest — that’s the standard State was supposed to apply — and force the company to start all over again."

http://www.washingtonpost.com/opini...rd-to-accept/2012/01/18/gIQAf9UG9P_story.html


----------



## equityval

*Meanwhile, back in BC, the Gitxsan chiefs say, "not so fast"*

Turns out the deal Enbridge had with the Gitxsans wasn't really done after all. Second pipeline veto of the day.

(Canadian Press) -- TERRACE, B.C. -- A B.C. First Nation group has reversed its support for the Enbridge (TSX:ENB) Northern Gateway pipeline project, but the company says it still has the support of almost half the bands along the corridor.
Gitxsan Treaty Society negotiator Elmer Derrik signed the agreement last month, but 36 Gitxsan hereditary chiefs voted to officially reject it during a meeting Tuesday night.

http://www.canadianbusiness.com/art...eal-with-enbridge-on-gateway-pipeline-project


----------



## Gdc

equityval said:


> Turns out the deal Enbridge had with the Gitxsans wasn't really done after all. Second pipeline veto of the day.


Well, of course. Their price just went up.


----------



## Jungle

If not selling, would anyone here add more? What price?
No doubt they can get another route planned.


----------



## KaeJS

The smart thing would have been to add yesterday when the stock died.

If you haven't added already, you better do it quick. This thing has pretty much already rebounded.

I thought about adding more yesterday, but I don't have the capital.


----------



## HaroldCrump

KaeJS said:


> The smart thing would have been to add yesterday when the stock died.


I won't call it "dying" - far from it.
In the minutes immediately following the news, the stock went down maybe -3.50% at most.
Soon it rebounded and closed down maybe -1.50%.
Hardly a "dying".
It indicates that all this drama and the rejection by Obama has been priced into the stock for months now.
I believe this drama has been suppressing the price of TRP by at least $8 - $10.


----------



## equityval

*Anadarko CEO sees gas price rebound*

Similar to what I mentioned yesterday, drilling is going to slow down pretty quickly at these prices. NYMEX down to $2.35 this morning and still dropping.



"HOUSTON – The price of natural gas, which this week hit its lowest level in more than a decade, won't continue to be depressed for much longer as companies will have to stop drilling due to economic reasons, Anadarko Petroleum Corp. (APC) Chief Executive Jim Hackett said Wednesday.

Natural-gas prices are likely to rebound in the near future to more than $6 per million British thermal units as an increasing number of energy companies stop drilling because current prices--at around $2 per MMBtu--make their operations uneconomical, Hackett said. The move would reduce natural-gas supplies, which have jumped in recent years due to the shale boom.

"I don't think it will be for an extended period of time," Hackett said after being asked how long he thought natural-gas prices could trade under $3 per MMbtu."



http://www.foxbusiness.com/news/201..._Won't_Be_Depressed_Much_Longer#ixzz1jvHD5WAx


----------



## equityval

*Don't forget the Mainline*



HaroldCrump said:


> I believe this drama has been suppressing the price of TRP by at least $8 - $10.


No doubt Keystone has been weighing on the stock, but remember they have the Mainline toll hearing to go through this summer. I doubt they are going to come out whole on that one. That pipe is >20% of EBITDA and as we have discussed up thread is in a death spiral. These low gas prices aren't going to help its throughput as they start shutting in wells in Alberta.


----------



## humble_pie

have all forgotten equityval's substantial warnings about trp back in this same thread ?

many well-documented posts from an industry insider.

all boils down to whether trp is a legacy dinosaur operating the Mainline at 50% or whether it can reinvent itself as a future energy transport power.

i continue to hold trp although i've sold 15% of the original inventory. Because i believe that, in the end, kxl will be approved.

it's interesting how minority voices pipe up, here & there, usually from parties outside the O&G industry, asking why we don't build refineries in canada instead of exporting the crude.

ddkay asked that question here in this thread. It's a great question. Equityval's answer, as best i can recall, was that the economic times are not right for building refineries now, and Big Oil such as sunoco is, in fact, closing many refineries.


----------



## equityval

humble_pie said:


> the economic times are not right for building refineries now, and Big Oil such as sunoco is, in fact, closing many refineries.


HP, indeed that is the case. 

This is a chart of idle US capacity:










Mind you, this chart uses October as its last data point. There are three refineries in the Philadelphia area that are in the process of closing, that will add 695K barrels of idle capacity. Hess announced yesterday that it will close its refinery in St. Croix, that's another 350K barrels. http://www.marketwatch.com/story/hess-shutting-st-croix-refinery-due-to-losses-2012-01-18

So we'll have over 2MM barrels of idle refining capacity just in the US alone! That will exceed the previous 25 year high in idle capacity (excepting two months of storm related closures) by 33%. They are also shutting refineries in Europe and refined products do get shipped back and forth across the Atlantic if there is an arbitrage to be had after shipping costs. Hess said it lost $1.3B in the last three years on the St. Croix refinery!

Only an economic madman (or Hugo Chavez - nevermind, same thing) would be building a new refinery in this market. I know you Canucks are all proud of your economy, and would love to have a shiny new refinery with maple leafs and hockey sticks painted on the storage tanks, but that makes as much sense as Obama saying no to Keystone. Just get Keystone built and send us the oil, we'll get you a good price for it. You guys will be making much more money digging it up and putting it in the pipe than we will refining it. Refining has pretty much always been a low return business, other than about three years in the last decade.


----------



## equityval

*TransCanada Mulls Building Keystone Alternative*

This is not a good sign...they are starting to waffle a little bit on completing the Alberta to US leg. Sorry no link for this yet.


TransCanada Mulls Building Keystone Alternative From Bakken
2012-01-19 17:51:28.638 GMT


By Bradley Olson
Jan. 19 (Bloomberg) -- TransCanada Corp., the company whose Keystone XL pipeline proposal was rejected by President Obama yesterday, is weighing a plan to build a line from Montana to the Gulf of Mexico that wouldn’t require federal approval.
Alex Pourbaix, TransCanada’s president of energy and oil pipelines, commented in a telephone interview

“There certainly is a potential opportunity to connect the Bakken to the Gulf Coast,” Alex Pourbaix, TransCanada’s president of energy and oil pipelines, said in a telephone interview today. “That is obviously something we’ll be looking into over the next few weeks.”



http://www.businessweek.com/news/20...horten-keystone-xl-bypass-federal-review.html


----------



## equityval

*How long will shippers wait?*

This is one of the key issues for Keystone as Obama plays red light/green light with the project. Analysts are divided over how long the approval of the new application takes and how many shippers will defect to alternatives in the interim. The commentary out of the State Dept yesterday wasn't very comforting about speedy review. This could all change if Obama loses the election of course.

_While a green light is "likely," the question is "when and how many" shippers take their business elsewhere if a decision on the US$7.6-billion Alberta-to-Texas line is pushed past early 2013, wrote UBS Investment Research analyst Chad Friess in a note to clients...

In a research note, FirstEnergy Capital analyst Steven Paget wrote: "We were surprised that TransCanada did not publicly condemn the political gamesmanship surrounding the imposition of this 60-day deadline as it was obviously counterproductive.

Reapplying for a new permit will likely push an approval "well beyond" 2013, with an in-service date possible in 2016, he said.

"TransCanada can certainly reapply for a permit for a modified pipeline, but we foresee several possible problems with this: for instance, shippers may walk away from their contracts with TransCanada," he wrote. 

"If this happens, another pipeline company could lure away these shippers if it could convince them that it could deliver a functioning pipeline sooner than TransCanada has done."

A majority of customers who had signed up to ship their crude on Keystone XL could live with an early 2013 State Department decision, said Friess, the UBS analyst.

"But we do expect some migration of commitments towards Enbridge's Gulf Coast alternative, though not enough to condemn the project."
_

http://www.canadianbusiness.com/art...-shippers-wait-for-keystone-xl-to-be-approved

The boys from Dejardins offer their two cents - paraphrasing, in the words of Monty Python: "it's only a flesh wound" (cultural reference here: http://www.youtube.com/watch?v=zKhEw7nD9C4 )

_Commenting on a timeframe for when the new pipeline could see approval, based on the new route, analysts with Desjardins Capital Markets pointed to the first half of 2013.
"Although the permit denial constitutes a setback for [TransCanada], as more work will likely be required to re-file full documentation, including the new route proposal around the Sand Hills area of Nebraska, we are confident that the process can be completed fairly quickly (i.e. by the end of 2012) based on the amount of work completed over the last three years," 
Desjardins said in a note.
"The typical review by the DOS would then be followed by a presidential permit approval sometime in [the first half of 2013]," Desjardins added.
_


http://business.financialpost.com/2...ock-out-the-noise-pipeline-still-likely-a-go/


----------



## humble_pie

*oh no, not another alternate route*

here's yesterday's story on alternate route from the globe:

http://m.theglobeandmail.com/globe-...d-within-weeks/article2300748/?service=mobile

pourbaix also spoke jan 11/12 in bismarck ND - introduced by senator john hoeven - about this new route. No exact location details yet, though.

val, how many alternate routes are there by now ? let's hope, if they ever get to build, they'll follow the right map.

(a carverman dialogue situation)
(oops)
(girling here: did we just bust open the ogalalla aquifer)
(pourbaix: drat, sir, we must have been drilling with the wrong map)
(carverman out)


----------



## doctrine

I still like TRP. If it goes below $40, I'll defintely add 50% to my position. If it doesn't, I still might buy a 25% position at current levels in a few months. This stock will heat up in the fall so get your buys in before July.


----------



## equityval

*Nebraska Gov: "we may have to start over" // GOP may give FERC approval authority*

From Bloomberg:

_Nebraska Governor Dave Heineman said today that the decision brought to a halt the environmental-review process underway in the state for a new pipeline route. Heineman, a Republican, says it’s unclear if the permit process must start over or if Nebraska can continue working on a route that takes the pipeline away from an environmentally sensitive region. 

“It certainly is a major step backwards,” Heineman said in a telephone interview. “We need to make contact with TransCanada. We need to review our statutes relative to what the president did. We need to figure out if this means we have to start all over again.”
_

http://mobile.bloomberg.com/news/20...-xl-pipeline?category=/news/emerging-markets/

Meanwhile, the GOP isn't taking this sitting down, they are looking for ways to take the decision out of the hands of the administration and give it to FERC:

_congressional Republicans are looking for other ways to push through approval of the pipeline. The House Energy and Commerce Committee may consider legislation as early as next week that would require the Federal Energy Regulatory Commission, a panel that regulates electricity and natural gas markets, to issue a permit for the pipeline within 30 days of receiving a new application._

http://www.bloomberg.com/news/2012-...-alternatives-after-keystone-xl-rejected.html


----------



## equityval

*Barclays on Nat Gas: "We don’t believe there is a short-term floor for prices"*

There has been a massive shift in market psychology on gas prices in the last two weeks. The warm winter and fears of inadequate storage capacity seem to be the straws that broke the camel's back. 

There is no denying that the fundamentals are ugly, and while it is hard to see a path to $5 gas anytime soon, psychological capitulations like this are the stuff that bottoms are made out of. Clearly not time to go all in, but the prerequisites of a bottom are being put into place.

_Producers may not reduce output by a “meaningful” amount this year even if prices slip below $2 per million Btu, according to Barclays Capital. Companies will probably cut plans for drilling rather than shut wells already in operation, said Michael Zenker, a New York-based analyst at the bank.
“We don’t believe there is a short-term floor for prices,” Zenker, ranked fifth among gas-price forecasters by Bloomberg, said in a telephone interview yesterday.
_

http://business.financialpost.com/2012/01/20/gas-rout-not-over-as-bofa-sees-prices-below-2/


----------



## equityval

*More pain for oil refineries: NGLs stealing share in petrochem feedstocks*

Another reason why life is hard for oil refineries and why buidling them in Canada instead of a pipeline to export crude to the Gulf is a bad idea:

_The U.S. natural gas industry, reborn through the shale gas revolution, has emerged as another source of pain for beleaguered oil refineries as natural gas liquids (NGLs) grab market share from petroleum in America.

As the market for liquid fuels in the United States has declined in recent years, petroleum has borne more of the brunt, losing share to biofuels and, increasingly, NGLs.

This is starting to hurt. Already battered by dreadful margins for making gasoline, refineries’ main product, they are now being attacked in the specialty market for petrochemicals feedstocks as well as in the cutthroat propane business.

Atlantic basin refineries have lost market share permanently in the petrochemicals sector, adding to the competitive pressures that look set to force the closure of a number of plants in Europe and the Americas this year_



http://www.calgaryherald.com/story_print.html?id=6009586&sponsor=curriebarracks


----------



## dubmac

val..
what are the indicators that the floor for gas prices have been reached? Is there some kind of "momentum indicator" or "measure of volume among gas co stocks that indicate a subtle transition? - or is it more likely just wait and see?


----------



## equityval

*Finding a bottom*

Dubmac,

I think the best way to think about it is that forming is a bottom is a process rather than an event. There will be a specific day that is the bottom, but there will likely be a lot of failed rallies and sideways movement after that before the price really turns and sustains an advance. 

Psychology is one thing to look out for and I think there are a lot of signs that many people have capitulated, whether we've reached maximum pessimism is hard to say, but I think we're heading in that direction.

The other thing to watch are fundamentals. We'll need to see rigs start to be put down and we may have to wait until drillers give up some of the liquids plays. They are certainly not there yet, but there may be some early signs that NGLs are heading in the direction of a glut as well. We'll see, but that's still some distance in the future.

Here's one example of a marginal shale play that a driller pulled out of on Friday. These were shallow, low volume wells that were fairly low risk at $4-5, but at these prices they don't make sense:

_EQT Corp. said Friday it will stop drilling natural gas wells indefinitely in the Huron shale in Kentucky because of decade-low prices, a move that might signal a major course correction for shale drillers, experts said._

Note this comment as a indication of psychology:

_"I think the gas market's broken," said David Pursell, managing director and head of securities at Tudor, Pickering, Holt. "You're in a world where the economics of the liquids are strong enough to keep me drilling, and the gas is kind of an afterthought."_

http://www.pittsburghlive.com/x/pittsburghtrib/news/s_777737.html?_s_icmp=NetworkHeadlines

Here's another sign of capitulation - this guy makes some good points about why it is going to take a while to find a bottom, but here's his concluding point - the price of gas won't have an impact on production - clearly not true - _no matter the price_:

_producer behavior towards the production of gas isn't going to change in the coming years no matter the pricing crisis in the natural gas market._

BTW, note the change in rigs operating in the Haynesville over the last year (table at top of the post):

http://www.haynesvilleplay.com/2012/01/bullish-on-natural-gas-prices.html

Finally, a little perspective on the weather lately. This map is kindof like Armageddon if you are a gas producer - I haven't looked up the stats but it hard to imagine a much warmer winter:


----------



## gibor365

Looking at the chart, TRP broke 50day SMA and closed exactly on 200 day SMA, before it rebounded 4 times of 200 SMA... but if it breaks 200 SMA it can fell much lower


----------



## equityval

*Chesapeake cries uncle*

Major annoucement out of Cheasapeake today on their drilling and production plans.

-They are going to cut rigs drilling for dry gas from an average of 75 last year to 24 rigs by Q2, and reduce dry gas capex from $3.1B in 2011 to $0.9B in 2012

-They will curtail existing dry gas production by a half a BCF immediately and are prepared to take that up to 1BCF if conditions warrant. They are also planning to defer completion (fracking) of dry gas wells that have already been drilled and to defer dry gas pipeline connections of completed wells.

-They will reallocate capital that would have gone to dry gas wells to liquids oriented plays

-They will reduce investment in undeveloped acreage to $1.4B down from $3.4B last year and $5.8B in 2010.

They believe that US gas production will be flat or lower in 2012

Looks like Aubrey is a) facing the reality that drilling in places like the Haynesville doesn't make any sense and b) is trying to engineer a bit of a short squeeze on the NG futures by curtailing production. So far it hasn't moved move the front month contract by even a dime, so the bears aren't exactly running scared. Note that CHK is also moving the funds from dry to wet gas and oil, and as discusssed upthread, those liquids plays will still produce plenty of associated gas. Nontheless, this is a major reallocation of spending by the leading gas producer in the US which suggests that at the margin, the supply equation is starting to change. CHK can't change the supply dynamic by iteself, but is another sign that the current investment level in gas production isn't sustainable at these prices.

http://www.chk.com/News/Articles/Pages/1651252.aspx


----------



## humble_pie

val could you note down the price of gas yesterday or today ... we'll compare in a year but you might have just called it ... we'll offer you the silver cup in a year if so.

thinking about gassy one can only become FM as ddkay would say over eca. I have a small startup position in eca & looking to increase. If it were not for the options which generate favourably-taxed income along the way i might not be so enthused.


----------



## equityval

*NG Price*

HP,

It's $2.52 USD at the moment, that is the NYMEX contract based on Henry Hub price, up from $2.34 Friday and a low of $2.23 early today before the CHK announcement.

RE: ECA, I'd spend some time looking at their Haynesville acreage. I think you are going to see writedowns there, perhaps in CBM assets as well. The Montney is better rock than the Haynesville for sure, but I'd worry that with US prices so low, and with the traditional AECO discount factored in, that dry gas in the WCSB is going to be a real challenge from an investment standpoint.

If you want dry gas exposure, I'd think about COG, UPL. They both have heavy exposure to the Marcellus in NE PA where the gas is dry. That will probably be the last place where cut backs take place in NA on the dry gas side. There are other players focussed on the Marcellus, but they tend to have a lot of wet gas exposure.


----------



## equityval

*A $1 handle on AECO Gas*

_
Spot prices for gas at Alberta’s benchmark storage hub AECO plunged to $1.92 per gigajoule, the lowest seen since the summer of 2002, before rebounding to close the day $2.10 per GJ._

The last time prices were this low was when the Mainline was down for maintenance.

Not surprising given what has happened to Henry Hub price. This is going to mean a drop in drilling. That won't help TransCanada's pitch that it can increase volumes on the Mainline. Shippers will renew their call for a fundamental restructuring of the tariff as the TRP plan is based on a recovery in volume.

Note Martin King's prediction of widespread shut-ins:

_“The extent of the oversupply in North America is so large, even a hot summer isn’t going to get us out of this,” King said. “The arithmetic says there has to be shut ins probably for a good portion of the injection season, even if we get a relatively hot summer.”
_




http://www.calgaryherald.com/Natural+prices+Alberta+drop+below+year/6063602/story.html#ixzz1knN0h5tH


----------



## zylon

*note to self:*

NATURAL GAS FUTR (USD/MMBtu) 2.756 (16:00 mst Jan 28th)

one Btu = 1055 joules
one Btu = 1.055 kJ (kilojoule)
MMBtu = 1.055 GJ (gigajoule)

1.92 per GJ = 2.026 per MMBtu


----------



## newbie

equityval said:


> _
> Spot prices for gas at Alberta’s benchmark storage hub AECO plunged to $1.92 per gigajoule, the lowest seen since the summer of 2002, before rebounding to close the day $2.10 per GJ._
> 
> The last time prices were this low was the Mainline was down for maintenance.
> 
> Not surprising given what has happened to Henry Hub price. This is going to mean a drop in drilling. That won't help TransCanada's pitch that it can increase volumes on the Mainline. Shippers will renew their call for a fundamental restructuring of the tariff as the TRP plan is based on a recovery in volume.
> 
> Note Martin King's prediction of widespread shut-ins:
> 
> _“The extent of the oversupply in North America is so large, even a hot summer isn’t going to get us out of this,” King said. “The arithmetic says there has to be shut ins probably for a good portion of the injection season, even if we get a relatively hot summer.”
> _
> 
> 
> 
> 
> http://www.calgaryherald.com/Natural+prices+Alberta+drop+below+year/6063602/story.html#ixzz1knN0h5tH


what does spot pricing have to do with TRP?
just curious here.
since when is TRP an NG E&P company?
enlighten me here .
besides i really can't reasonably grasp your comparison here.
apparently u r an "NG insider"
wow


----------



## newbie

zylon said:


> NATURAL GAS FUTR (USD/MMBtu) 2.756 (16:00 mst Jan 28th)
> 
> one Btu = 1055 joules
> one Btu = 1.055 kJ (kilojoule)
> MMBtu = 1.055 GJ (gigajoule)
> 
> 1.92 per GJ = 2.026 per MMBtu


and
so what ?
what is the point of ur quote?


----------



## equityval

*Gas prices and TRP*



newbie said:


> what does spot pricing have to do with TRP?


Over 20% of TRP's EBITDA comes from the Mainline pipeline which is operating at 50% of capacity. Under the "rate of return" regulatory system in Canada, TRP is entitled to an essentially fixed amount of income on the pipe, irrespective of volume, so when volume falls, tolls go up. Tolls are now 2.5X what they were 5 years ago, and any shipper that can is moving its gas on other, cheaper pipes. Since the toll is way above market, as current contracts expire, more shippers will leave forcing the toll higher still - a phenomenon know as a "death spiral".

TRP has a plan to restructure the toll, which is complex, but basically involves annexing other pipes that it owns into the Mainline and spreading the cost over a wider base. A key to this plan is that volumes will increase and thus help bring tolls down eventually. 

So what does the price of gas have to do with this? As the prices falls, the marginal (least productive/profitable) gas wells will not be drilled. We saw round one of this process happen when shale gas drilling ramped up 4-5 years ago and the price of gas went from $6 to $4, at which point it became uneconomic to drill for conventional gas. We are now seeing a shale induced glut drive prices below $3 to the point where even some shale fields become uneconomic (hence CHK's decision to essentially abandon drilling in the Haynesville and Barnett - the least economic US shale plays). 

Alberta's gas production has been from shallow conventional wells and shales such as the Horn River and Montney. Due to its location, Alberta's gas is at a disadvantage due to the cost of transporting it to market (unless it is destined for the oil sands) and, aside from US conventional wells, it has been the marginal (high cost) producer that has lost share in the last 4-5 years as cheaper substitutes from the Marcellus and mid-continent have pushed Alberta gas out of its traditional Eastern US and Chicago markets.

So, as prices fall, drilling in the industry will fall generally, but more rapidly in the least economic fields, such as the Haynesville, Barnett and Alberta. In fact these fields are likely to see a non-linear change in drilling activity and eventually in production.

So my point, to wrap this up, is that the coming drop in drilling activity in Alberta will make the shippers sitting across the table from TRP in the toll negotiations more skeptical of the volume projections in TRP's toll proposal. The shippers are thus more likely to turn up the political heat on the NEB to intervene in a more robust fashion to change the toll design on the Mainline, in a manner not favorable to TRP, or its shareholders.


----------



## newbie

equityval said:


> Over 20% of TRP's EBITDA comes from the Mainline pipeline which is operating at 50% of capacity. Under the "rate of return" regulatory system in Canada, TRP is entitled to an essentially fixed amount of income on the pipe, irrespective of volume, so when volume falls, tolls go up. Tolls are now 2.5X what they were 5 years ago, and any shipper that can is moving its gas on other, cheaper pipes. Since the toll is way above market, as current contracts expire, more shippers will leave forcing the toll higher still - a phenomenon know as a "death spiral".
> 
> TRP has a plan to restructure the toll, which is complex, but basically involves annexing other pipes that it owns into the Mainline and spreading the cost over a wider base. A key to this plan is that volumes will increase and thus help bring tolls down eventually.
> 
> So what does the price of gas have to do with this? As the prices falls, the marginal (least productive/profitable) gas wells will not be drilled. We saw round one of this process happen when shale gas drilling ramped up 4-5 years ago and the price of gas went from $6 to $4, at which point it became uneconomic to drill for conventional gas. We are now seeing a shale induced glut drive prices below $3 to the point where even some shale fields become uneconomic (hence CHK's decision to essentially abandon drilling in the Haynesville and Barnett - the least economic US shale plays).
> 
> Alberta's gas production has been from shallow conventional wells and shales such as the Horn River and Montney. Due to its location, Alberta's gas is at a disadvantage due to the cost of transporting it to market (unless it is destined for the oil sands) and, aside from US conventional wells, it has been the marginal (high cost) producer that has lost share in the last 4-5 years as cheaper substitutes from the Marcellus and mid-continent have pushed Alberta gas out of its traditional Eastern US and Chicago markets.
> 
> So, as prices fall, drilling in the industry will fall generally, but more rapidly in the least economic fields, such as the Haynesville, Barnett and Alberta. In fact these fields are likely to see a non-linear change in drilling activity and eventually in production.
> 
> So my point, to wrap this up, is that the coming drop in drilling activity in Alberta will make the shippers sitting across the table from TRP in the toll negotiations more skeptical of the volume projections in TRP's toll proposal. The shippers are thus more likely to turn up the political heat on the NEB to intervene in a more robust fashion to change the toll design on the Mainline, in a manner not favorable to TRP, or its shareholders.


equity
i wont disregard ur long answer which 'seems' to be well elaborated.
It is not.
In regards to "falling price' on a temporarily basis and toll charged by TRP still has no attachment as to spot pricing.
i am sorry but "SPOT" is next delivery day , and not prompt, prompt +1 or cal 20 for crying outloud.
all ur connotations still have no connection with spot.
all u r saying above is related to infrastrucure.
u forgot to mention storage also for which TRP accounts for a large volume..... in CANADA.
Just so u know , producing region in the USA reached 75% capacity last week, which also has no relevance with TRP.
we are aproximately 600 bcf YOY higher as compared to july last year where we had closed the gap.
all i am saying is also related to NG not TRP and other non E&P companies.
u are connecting red dots with yellow dots to try and make it look orange , but the real colour is not orange.
wish u luck if u want to correlate "spot" pricing with TRP.
i am sorry but ur looking in the wrong direction.


----------



## equityval

*Even a blind man knows when the sun is shining*

Newbie,

If you don't like spot, then look at what's happened to the strip. The point is price is impacting drilling plans, production and pipeline flow soon to follow.

You might want to look into how much of TRP's EBITDA storage contributes.

Beyond that, I refer you to the title of the post.

In the interest of not feeding the trolls, I'll leave it at that.

Best of luck in your investing.


----------



## newbie

equityval said:


> Newbie,
> 
> If you don't like spot, then look at what's happened to the strip. The point is price is impacting drilling plans, production and pipeline flow soon to follow.
> 
> You might want to look into how much of TRP's EBITDA storage contributes.
> 
> Beyond that, I refer you to the title of the post.
> 
> In the interest of not feeding the trolls, I'll leave it at that.
> 
> Best of luck in your investing.



in response to ur quote above i will post the strip graph for anyone to see.
everyone in the NG industry knows where it is at, it is no secret.
u made a correlation with spot.
we in the industry know the impact on drilling plans etc.
EQT is not cutting their output.
u and i are having an argument and I have no reason for it since I DO NOT OWN TRP.
i have quoted in several threads that i trade spreads.
GL in ur endeavours
for ilustrative purposes and for the rooks here is the strip chart 

http://www.bloomberg.com/quote/NRGSNG12:IND

p.s
i just forgot to add one thing , it does not regard TRP.
NG saw a low on the 2.26 on G12 not ONLY due to S/D issues, but mostly due to option sellers.
CHK is the Lucy for ur charlie brown , in fact i would not be surprised to see a retest of 3 bux on H12.
would u care to tell me why i actually see this ?
if u dont GL anyway ion ur endeavours.
ur title above ........ what is that for ...pleasure ? Trolls ? pleasure also.


----------



## newbie

equityval said:


> Dubmac,
> 
> I think the best way to think about it is that forming is a bottom is a process rather than an event. There will be a specific day that is the bottom, but there will likely be a lot of failed rallies and sideways movement after that before the price really turns and sustains an advance.
> 
> Psychology is one thing to look out for and I think there are a lot of signs that many people have capitulated, whether we've reached maximum pessimism is hard to say, but I think we're heading in that direction.
> 
> The other thing to watch are fundamentals. We'll need to see rigs start to be put down and we may have to wait until drillers give up some of the liquids plays. They are certainly not there yet, but there may be some early signs that NGLs are heading in the direction of a glut as well. We'll see, but that's still some distance in the future.
> 
> Here's one example of a marginal shale play that a driller pulled out of on Friday. These were shallow, low volume wells that were fairly low risk at $4-5, but at these prices they don't make sense:
> 
> _EQT Corp. said Friday it will stop drilling natural gas wells indefinitely in the Huron shale in Kentucky because of decade-low prices, a move that might signal a major course correction for shale drillers, experts said._
> 
> Note this comment as a indication of psychology:
> 
> _"I think the gas market's broken," said David Pursell, managing director and head of securities at Tudor, Pickering, Holt. "You're in a world where the economics of the liquids are strong enough to keep me drilling, and the gas is kind of an afterthought."_
> 
> http://www.pittsburghlive.com/x/pittsburghtrib/news/s_777737.html?_s_icmp=NetworkHeadlines
> 
> Here's another sign of capitulation - this guy makes some good points about why it is going to take a while to find a bottom, but here's his concluding point - the price of gas won't have an impact on production - clearly not true - _no matter the price_:
> 
> _producer behavior towards the production of gas isn't going to change in the coming years no matter the pricing crisis in the natural gas market._
> 
> BTW, note the change in rigs operating in the Haynesville over the last year (table at top of the post):
> 
> http://www.haynesvilleplay.com/2012/01/bullish-on-natural-gas-prices.html
> 
> Finally, a little perspective on the weather lately. This map is kindof like Armageddon if you are a gas producer - I haven't looked up the stats but it hard to imagine a much warmer winter:


have u participated in EQT last conference call?
apparently not


----------



## equityval

*GOP To Tie Keystone to 2nd Jobs Bill*

Republicans are not going down without a fight. Looks like they will keep forcing Obama to turn this down from now until the election. I doubt Barry will change his mind at this point, but it will keep the issue in the news, which probably doesn't help TRP at the end of the day. Generally, the less pipelines are seen and heard about in the media, the better.

_WASHINGTON - Congressional Republicans are refusing to back down in their attempts to win speedy approval of TransCanada's Keystone XL pipeline, vowing to link approval of the controversial project to a new jobs bill being introduced next week.

_

http://www.winnipegfreepress.com/bu...n-to-tie-approval-to-jobs-bill-138289719.html


----------



## zylon

*research: who builds tanker cars*



> “Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”
> http://mobile.bloomberg.com/news/20...jection-of-pipeline?category=/news/insurance/





> The availability of tanker cars will surely cause problems because there is already a shortage because of the North Dakota oil fields are sucking up every available tanker car. The Dakota oilmen have pushed rail car production to a three-year high as manufacturers expand to meet demand Railroads are being used in North Dakota where oil producers have spurred a quintupled increase in output by using innovative drilling techniques in the Bakken. During 2011, the railroads have increased their capacity to almost 300,000 barrels a day. Obama’s buddy Warren Buffet’s Burlington Northern carries about 25 percent of the oil from the Bakken and can carry higher volumes from North Dakota or Alberta said a railroad spokesman.
> http://www.examiner.com/orange-coun...rren-buffet-s-pockets-again-keystone-pipeline


----------



## equityval

*CRS says Congress can approve the pipeline*

_The CRS, a nonpartisan outfit that advises Congress, says in a report that the whole international pipeline permitting process led by the State Department is an invention of the executive branch dating to 1968, with no legal backing beyond the "president's recognized authority in the area of foreign affairs." 
The executive branch can get away with that, say the CRS lawyers, because Congress hasn't lifted a finger to stop it. But if the legislative branch chose to act, it would have the ironclad backing of a clause in the Constitution that gives Congress the power "to regulate Commerce with foreign Nations," says the CRS. 
If it wished, then, Congress could pass a law saying any pipeline fitting the description of Keystone XL must be approved, according to this analysis.
_

http://blogs.wsj.com/law/2012/01/31/when-it-comes-to-this-pipeline-congress-can-do-as-it-pleases/


----------



## equityval

*Railcars*

Zylon,

TRN, GBX, ARII, and RAIL all make make railcars and I think they all make tank cars. I don't think I would be buying them on the hope that a lot of oil will move by rail. Enough pipes will be built soon enough to take that business away from the rails. 

Where they will have more success, and are seeing it already, is in frac sand. That has been a growing business for several of the rails so covered hopper cars are a better bet. 

I do think you will see some increase in rail traffic to haul some chemicals and NGLs as petchem capacity ramps. Again, most of that will move by pipe, but you will see some one off plants that are better served by rail or some things like butane moving to refineries from NGL processing plants that are a long distance from a refinery, but that is not going to be the norm. 

I think shale gas will help rail cars a lot, but it will be mostly for frac sand and drilling pipe.


----------



## equityval

*BooYah!*

OK all you TRP longs, enjoy your sugar high this morning. The one and only Jim Cramer was bullish on the stock in the lightning round last night. This should be good for a bump for a day or two, but is usually the kiss of death for most stocks a month or two down the road. 

BUY, BUY, BUY!


----------



## doctrine

I'm a TRP long, would like to see it pushed down below $40 so I can pick up some more.


----------



## zylon

*old news, and off topic; with apologies to o/p*

In 2008 Warren (Berkshire Hathaway) bought 60% of *Union Tank Car*, a large manufacturer of rail tank cars.
http://www.showusthetaxbreaks.org/about/

I knew this but had forgotten: Bill Gates started buying CN Rail in 2006. After Bill and Warren's visit to Fort McMurray in 2008, Gates bought more CN Rail.
http://www.cbc.ca/news/business/story/2011/04/25/gates-cn-railway-shareholder.html
http://www.cnbc.com/id/26302230/War...North_to_See_Neat_Alberta_Oil_Sands_Firsthand

As the title says, that's old news. The thing to watch now is, who's buying natural gas companies? *Baker Hughes US Gas* directed rig count is down to 800 from the 1,600 high in 2008. "_Now we get to see if there is a similar response in supply_". ~Darren Gee, Pres & CEO Peyto Exploration
http://www.peyto.com/ia/PMR/20120201PMR.pdf










Aerial view of Fort McMurray


----------



## humble_pie

hello zylon would you be willing to tell us us why you are so enthused about transporting O & G by railcar. 

i've noticed 3 or 4 posts of yours - all very well presented - but equityval has zapped the idea as it is a far more costly alternative.

wondering if that leaves you holding up the green flag for rail transport, ie railcars = reduced toxic leakage risk.

ps if i were to hear that WB is snapping up natgas companies, i would think it's only because they fit his deus ex machina profile, ie swoop down on distressed & needy industries to buy or acquire or finance w new issue of convertible preferreds just when everybody else is running away ...


----------



## zylon

Hi Humble; I wouldn't go so far as to say that I'm “enthused” about transferring bitumen via rail, but one way or another, that oil will find it's way to market, and smart investors position themselves to take advantage of the prevailing winds from whichever way they may blow, and do so years in advance; not when the the issue is mentioned by every reporter on BNN, and stocks are jumping 5% per day.

There's no doubt that transferring oil by rail is more expensive than by pipeline, and likely a lot less friendly to the environment as well, even if there's never a derailment and spill.

I found it interesting that on the day Obama said “no – maybe – not yet” to keystone XL, BNN ran many stories about it and not once did they mention Buffett, his friend and business partner Dick Holland, or BOLD Nebraska, the organization opposing the pipeline which is funded by Holland. When I mentioned it to one of the BNN producers, she said, “thank you – we may use it in the mailbag”. They didn't. Yet, when I listen to business programs in the south such as “Butler on Business”, they mention it often, doing so again today.

Having lived in Fort McMurray for a time, I can attest to the fact that many people there would welcome a slow-down in order to give infrastructure a chance to catch up. No new pipelines and a shortage of rail tank cars would certainly accomplish that slow-down – eventually. Today there is still room to ship more oil via existing pipelines; I forget the figures, but the unused capacity is quite substantial.


----------



## equityval

*Keystone Kabuki Kronicles*

We now have a game of tit for tat going on in Congress between the GOP and the Democrats. Ed Markey, liberal senator from Massachusetts, and one who never passes up an opportunity to meddle in the functioning of an efficient market, has introduced a bill to require that any oil shipped on Keystone remain in the US. Not a chance that this will pass, but they may use it as a foil to the GOP proposal that would require that FERC approve it or that ties a Keystone decision to the payroll tax cut extention.

Sorry, no link for this yet:

_11:52 (Dow Jones) Crude oil carried by the proposed Keystone XL pipeline would have to stay in the US under a bill introduced by House Democrats. It's the latest maneuver in the political fight over TransCanada's (TRP) effort to ship crude from Canada to Texas. Rep. Ed Markey (D., Mass.) is attacking the company's assertion that the pipeline will provide a stable US energy source by saying TRP actually plans to sell to refiners who will export the fuel. The bill may have some legs as lawmakers wrangle over the pipeline, which the administration last month declined to clear. Senate Majority Leader Harry Reid (D., Nev.) is reportedly open to Markey's idea. Republicans, meanwhile, have their own bill to force approval of the pipeline over Obama's objections._


----------



## equityval

*Trans Mountain stealing a march on Enbridge?*

KMP's Trans Mountain has the only working route to the west coast of Canada. They would like to ramp its capacity and beat Enbridge to the punch. Much easier to loop a pipe on an existing ROW than cut a new path. Stay tuned sports fans:

_Feb. 2 (Bloomberg) -- Kinder Morgan Inc., which this year will become the largest U.S. pipeline company after its $20.7 billion purchase of El Paso Corp., aims to extend its lead over competitors in transporting oil across Canada for export to higher-paying markets in Asia.
Kinder is pressing forward with plans to expand its Trans Mountain pipeline, the only conduit connecting Canada’s oil- sands region to the Pacific Coast, to take advantage of regulatory setbacks that stalled competing projects at TransCanada Corp. and Enbridge Inc., both of Calgary.
_

http://www.bloomberg.com/news/2012-...nbridge-in-canadian-pipeline-race-energy.html


----------



## equityval

*SocGen eyes $1.50 gas*

The latest 1-handle prognostication:

_Feb. 2 (Bloomberg) -- Natgas may “easily” hit $1.50/Mmbtu in spring if supply continues to rise, SocGen analyst Laurent Key writes in note; cuts 2012 natgas forecast to $2.40/Mmbtu vs prior $2.90.

Says if production remains at 64bcf/d in 2012, prices likely range-bound b/w $1.80-$2.20 until next winter
_


----------



## AltaRed

equityval said:


> KMP's Trans Mountain has the only working route to the west coast of Canada. They would like to ramp its capacity and beat Enbridge to the punch. Much easier to loop a pipe on an existing ROW than cut a new path. Stay tuned sports fans:


The primary problem they have is the bottleneck in Vancouver. Don't know how they will solve that.


----------



## dubmac

TRP earnings report comes out tomorrow - ....


----------



## newbie

dubmac said:


> TRP earnings report comes out tomorrow - ....


waiting patiently for the "obscure" 1 dollar handle


----------



## equityval

*Earnings - Good News/Bad News*

The good news is they raised the dividend to $.44. The payout ratio is now at 85%.

The bad news:

-They missed consensus estimates $.52 per share vs $.55

-The capital cost of Keystone XL is now $7.6B, that looks to be up about $700MM from what they expected back in April, but also includes the Houston Lateral, which I believe is incremental, so a net increase of $100MM (_there appears to be some fuzzy math here, not sure how you delay a project for two years where you have $2.4B invested and only have an increase of $100MM_)

-The in-service date for Keystone is now "early 2015"

-Mainline volumes received at Alberta border were 1160 Bcf (for the year) vs 1228 Bcf in 2010. The death spiral continues.

Conference call at 3PM, EST.


Finally, they are still "all in" on KXL: "The Company, while disappointed, remains fully committed to the construction of Keystone XL."


----------



## doctrine

Now yielding 4.2%. Well below its 52 week high of $44.75, so this is a decent buy point.


----------



## dubmac

Not so sure about that - val mentions "the bad news" above that still may not be fully factored into the price. I seem to recall val mentioning Spring 2012 as being a significant period when the Energy Board will make some key decisions on the prices that TRP can bill the (remaining users) users of it's mainline - worst case scenario - sees the mainline "mothballed" with a potential write-down of 3B. Granted that KXL will (likely) go ahead, but what about the mainline & it's fate? I'm not biting yet.


----------



## hboy43

doctrine said:


> Now yielding 4.2%. Well below its 52 week high of $44.75, so this is a decent buy point.


Don't know if I'd call $42 "well below" the high of $44.75. I am tossing around selling to raise boat funds as it looks overvalued with the rush to "safety".

hboy43


----------



## newbie

equityval said:


> The good news is they raised the dividend to $.44. The payout ratio is now at 85%.
> 
> The bad news:
> 
> -They missed consensus estimates $.52 per share vs $.55
> 
> -The capital cost of Keystone XL is now $7.6B, that looks to be up about $700MM from what they expected back in April, but also includes the Houston Lateral, which I believe is incremental, so a net increase of $100MM (_there appears to be some fuzzy math here, not sure how you delay a project for two years where you have $2.4B invested and only have an increase of $100MM_)
> 
> -The in-service date for Keystone is now "early 2015"
> 
> -Mainline volumes received at Alberta border were 1160 Bcf (for the year) vs 1228 Bcf in 2010. The death spiral continues.
> 
> Conference call at 3PM, EST.
> 
> 
> Finally, they are still "all in" on KXL: "The Company, while disappointed, remains fully committed to the construction of Keystone XL."


hmmm
what a candle formation today.
hey i am still waiting for the 1 dollar handle lady.
when is that happening? prompt, prompt +1 , cmon ur the NG wizard.


----------



## Eder

hboy43 said:


> I am tossing around selling to raise boat funds as it looks overvalued with the rush to "safety".
> 
> hboy43


What kind of boat? We are looking at 37' Island Packet...our funds are in several Ally HISA's already so I can ride the bull longer.

I'm thinking of buying in Florida since so many boats for sale & close to the Carribean...


----------



## sags

*Ted Turner - Keystone XL*

Once thought a slam dunk to build, the Keystone XL pipeline is running into some serious opposition.

Ted Turner pens this article, which does contain some interesting infomation.

http://www.cnn.com/2012/02/22/opinion/turner-keystone-pipeline/index.html

12 spills in 12 months for the Keystone 1 pipeline?

Building the pipeline to the Gulf coast refineries so they can ship it out?

Maybe the US won't be allowing the pipeline after all...........


----------



## ddkay

There's a great discussion about this in the Transcanada thread. KXL is meant to narrow the WTI-Brent spread since Cushing has a glut of supply and that depresses WTI prices. As of today the spread is $16.80 wide, the record last summer was $28.00. WTI priced less than the world benchmark, Brent, is bad for refiners because they have to sell product to America at a discount. By building KXL to Port Arthur, refiners achieve their goal of leveling out prices for US and the world, and have the additional luxury of tax exemptions on imports/exports to Europe and LatAm.

Short version: It's not so much about energy security as it is about coddling whiny oil companies & refiners, and taking away arbitrage opportunities from oil traders. Also Obama just prefers to work on natural gas stuff.


----------



## humble_pie

could the moderator please add this thread to the transcanada thread.

or failing that, ddkay could you please post your valuable message in the TRP thread.

btw do you think that northern gateway would benefit the oilcos any less than keystone.

it's all such an important topic because all will affect everyone's lives for generations to come. As some have opined, rims & apples may come & go, but the pipelines will be here at least into the 2nd half of the century.


----------



## dubmac

Equityval..where are you?
Here we are in mid-Spring 2012 - I'm curious to learn your take on the larger issues that involve tolls, gas volumes and TRP's mainline. 
Do you (or any other TRP watchers) have any nuggets of information/points of view to share with the forum as the gas companies start to negotiate toll prices with TRP and the feds?
TRP says by 2012 gas will hit $6.30 per GJ. Are they sniffing too much gas here?

This was in the globe today...
http://www.theglobeandmail.com/repo...ture-of-transcanadas-mainline/article4227774/


----------



## dubmac

Is this news to anyone - could be competition for enbridge
http://www.thestar.com/business/art...da-to-build-4-billion-gas-pipeline-across-b-c


----------



## Sampson

Not really. Enbridge's West-bound pipe would carry crude.

I know many people that work in both companies and it really seems management at both firms are happy to deal with each of their own sides of the business, TRP primary in Nat Gas, and Enbridge primarily in crude.

Depending on where you live in the Country, people have very different perceptions of these companies, as many out East consider Enbridge a nat gas Co. due to their Nat Gas Distribution / Utility side of the company, but if you look at the balance sheets, a big majority of their earnings come from their crude pipelines.


----------



## Sampson

The greater competition for Enbridge going West is probably from Kinder Morgan's plan to expand their pipeline AND the possibility of CNR getting into the crude transport business.


----------



## zylon

*TransCanada’s Mainline gas pipeline at risk, hearing told*

Snip:


> The Mainline has warmed up homes and fuelled factories in Ontario and Quebec with Western Canadian gas since the 1950s, but loads have declined sharply due to the discovery of new shale gas deposits closer to consumers.
> 
> Increasing gas demand in Alberta and gas producers’ interest in exporting to Asia rather than Eastern Canada are also contributing to low usage, Mr. Lohnes said.
> 
> TransCanada said the Mainline was transporting 6 billion cubic feet a day of gas in 2007. In 2011, volumes declined to 3.2 billion cubic feet a day.
> 
> ~Claudia Cattaneo Jun 4, 2012


http://business.financialpost.com/2...pipeline-at-risk-hearing-told/?__lsa=5d57f462


----------



## humble_pie

hi zylon, this is exactly what equityval was predicting months ago, here in this thread.

but trp has at least one ace up its sleeve, which would be conversion of the transcanada Main to oil instead of gas.

we all miss val & his expert knowledge, but perhaps alas he is gone for good. In his place, sampson & dubmac are our top energy patch trainspotters ...


----------



## doctrine

TRP seems to be on the ball though with its $4B pipeline to Kitimat. When that is eventually built, they will have the ability to sell to either Asia through Kitimat or if prices rise on the east coast, start pumping through Mainline, provided they don't convert it to oil.


----------



## zylon

*I'm comfortable with holding my TRP*

Another snip from above linked article:


> Calgary-based TransCanada is proposing to increase tolls on its busy Alberta network by about 25% to subsidize the reduction of Mainline tolls by 40%.
> 
> TransCanada is also in “active pursuit” of a conversion of parts of the Mainline system to oil service to move oil from Alberta to the East Coast, Mr. Lohnes said.
> 
> The switch would provide a new market for Alberta oil in Eastern Canada as oil sands production increases, and an alternative to other oil sands pipeline proposals to the United States and to the West Coast that are bogged down by environmental opposition.


Nice shot of Red Deer River down stream from today's oil spill
*NOT* related to TransCanada.










http://www.theprovince.com/news/spill+Deer+Alta+threatens+pristine+wilderness/6751862/story.html


----------



## dubmac

doctrine said:


> TRP seems to be on the ball though with its $4B pipeline to Kitimat. When that is eventually built, they will have the ability to sell to either Asia through Kitimat or if prices rise on the east coast, start pumping through Mainline, provided they don't convert it to oil.


Interesting point doctrine.
This got me thinking a bit - TRP has 4 pipes (26 inches diameter each) that each move gas across canada. I'm not sure how many pipes are part of the mainline (thru N. Ont), but if they have more than 1 then they could, presumably, convert one to oil and leave the other(s) to move gas. I'm not an engineer, and I have no idea whether something like this could be done, but, if it could, then TRP could negate the issue of "mothballing" the mainline. 

Also - I friend told me that Painted Pony Gas (PPY) has many reserves in the Montenay Shale - a deposit that, quite literally, is on the doorstep to feed gas into TRP's proposed gas line to Kitimat. Could this change PPY's value as a good asset to own given TRP is building this pipeline?


----------



## humble_pie

huh ? trp is sponsoring the northern gateway pipeline to kitimat ??

silly me, i've always been thinking it was rival enbridge ...

plus i've always been thinking that trp wanted to sponsor the keystone ...

you know, the one that goes south. To louisianer. Over the ogalalla.


----------



## daddybigbucks

zylon said:


> Another snip from above linked article:
> 
> Nice shot of Red Deer River down stream from today's oil spill
> *NOT* related to TransCanada.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> http://www.theprovince.com/news/spill+Deer+Alta+threatens+pristine+wilderness/6751862/story.html


zylon, not sure where you live but that picture is over 100km downstream of the spill, and it has to pass thru a huge lake and a dam and thru the city of red deer before it gets to that point.
Red deer river is almost to the point of massive flooding right now due to spring runoff in the mountains and 3 days of heavy rains.

I have a camp right on the red deer river probably 15km downstream from the spill site. We have a spill every couple years and the first couple got me worried but i never every seen a glimpse of oil on the grass or anything.
I'm not trying to minimize it but these oil spills aren't as bad as the media makes it out to be. Dilution is the solution to pollution, and hydrocarbons are natural. I feel much more comfortable with hydrocarbons being spilled then some synthetic chemical with a half life of 100 years.

I hope they do come up with a regualtion that oil companies have to visual inspect the pipelines every week, more frequent near sensitive areas but i dont know the industry that well to comment on a solution.


----------



## Sampson

humble_pie said:


> but trp has at least one ace up its sleeve, which would be conversion of the transcanada Main to oil instead of gas.


This WOULD be very interesting. I think both TRP and ENB would suffer from this competition, but if TRPs hand's are forced...
What we all need is nat gas prices to increase.

I wish either myself or dubmac had nearly the knowledge of val.


----------



## zylon

daddybigbucks said:


> zylon, not sure where you live but that picture is over 100km downstream of the spill, and it has to pass thru a huge lake and a dam and thru the city of red deer before it gets to that point.


Yep, yep I know. I just wanted an excuse to post the picture and show off some of our countryside. 
I think the photo was taken somewhere between Red Deer and Drumheller.

The spill went into Jackson Creek, a tributary of Red Deer River.

A two minute news clip with this article.
http://www.cbc.ca/news/canada/edmonton/story/2012/06/08/calgary-sundre-oil-spill.html?cmp=rss


----------



## londoncalling

humble_pie said:


> hi zylon, this is exactly what equityval was predicting months ago, here in this thread.
> 
> but trp has at least one ace up its sleeve, which would be conversion of the transcanada Main to oil instead of gas.
> 
> we all miss val & his expert knowledge, but perhaps alas he is gone for good. In his place, sampson & dubmac are our top energy patch trainspotters ...


I would agree that we all miss val but I doubt 10 days of inactivity = left the forum. Sampson and Dubmac are definitely good sources for this sector...


----------



## daddybigbucks

zylon said:


> Yep, yep I know. I just wanted an excuse to post the picture and show off some of our countryside.
> I think the photo was taken somewhere between Red Deer and Drumheller.
> 
> The spill went into Jackson Creek, a tributary of Red Deer River.
> 
> A two minute news clip with this article.
> http://www.cbc.ca/news/canada/edmonton/story/2012/06/08/calgary-sundre-oil-spill.html?cmp=rss


Ahh yes i quite agree. It is awesome, having the transition between parkland and prairie being the Badlands
We go out to Dry island buffalo jump once a year. Very scenic.


----------



## dubmac

daddybigbucks said:


> Ahh yes i quite agree. It is awesome, having the transition between parkland and prairie being the Badlands
> We go out to Dry island buffalo jump once a year. Very scenic.
> 
> 
> awesome view...(I'm envious)
> I enjoy living in van city, but when i sit on my deck, I don't have a view of a river and vista quite like that - very nice bucks


----------



## zylon

*daddybigbucks* - nice view of the valley :encouragement:

*humble* - you are not mistaken; Northern Gateway is Enbridge's project (oil & diluent)

TransCanada was recently contracted by Shell to build a natgas pipeline.


> TransCanada has won a contract to
> build and operate a $4-billion, 700-kilometre
> pipeline for Shell Canada and its partners Korea
> Gas, Mitsubishi and PetroChina.
> The pipeline will pump natural gas from the
> Montney region of eastern B.C. to a proposed
> liquefied natural gas facility at the port of
> Kitimat, B.C. From there, tanker ships will
> transport the liquefied gas to customers in Asia.
> TransCanada aims to begin operating the new
> line by 2020.
> ~source: June 2012 Canadian Wealth Advisor












http://www.theglobeandmail.com/glob...s-4-billion-pipeline-contract/article4231488/


----------



## humble_pie

fantastic, thanks zylon.

(to daddybucks) never mind the river in the view. Are those little blonde angels your girls ? they are absolutely beautiful, both of them.


----------



## daddybigbucks

humble_pie said:


> fantastic, thanks zylon.
> 
> (to daddybucks) never mind the river in the view. Are those little blonde angels your girls ? they are absolutely beautiful, both of them.


thanks for the compliment.
They are a little bigger now but still have the blonde hair.


----------



## dubmac

more...downward...expectations....from....trans.....Canada....

http://www.theglobeandmail.com/glob...s-as-industry-malaise-deepens/article4353327/


----------



## zylon

*TransCanada urged to ‘Go East’*

a few snips:


> Calls for TransCanada Corp. to stop focusing on the Keystone XL pipeline and instead turn its attentions east grew louder Wednesday.
> ...
> The idea of converting one of the Mainline’s five existing gas lines to oil service was first floated in late April by TransCanada as a potential solution to the pipeline’s waning competitiveness. Just one line could allow for up to 900,000 barrels per day of oil to ship from Alberta to eastern Ontario, RBC estimates.
> 
> From there, a planned reversal of Enbridge Inc.’s Line 9 could move the crude even further, from Sarnia to Montreal. TransCanada could drive up to $8 per share in additional value if it moves forward with that plan, RBC said.
> 
> Producers in the west would then be able to access the east coast refinery sector, which has been struggling in recent months from shrinking margins due to a reliance on expensive Brent crude. Those refineries would stand to save millions of dollars in costs, allowing them to retain hundreds of employees, by purchasing Western Canadian Select crude for more than $20 per barrel less than Brent.
> 
> http://business.financialpost.com/2...rce=dlvr.it&utm_medium=twitter&__lsa=de6bb956


----------



## zylon

*Keystone XL perspective from HotAir.com*

*"Keystone XL moving forward… maybe"*

Snip:


> So… good news, right? Environmental challenges have been answered, political blockades hurdled (at least for the moment) and permits have been issued. The changes to the overall business arrangement have been quite favorable to the United States, since our own oil will also be traveling to Gulf Coast refineries, along with Canadian synthetic crude from the oil sands fields. The potential for jobs is very encouraging. So have all the challenges been met and can we close the books on this one? Not quite. There are three primary legs to the full route which are under scrutiny from both sides of the border, and each of them has a few wrinkles left in the fabric.
> 
> Continued here: http://hotair.com/archives/2012/07/29/keystone-xl-moving-forward-maybe/


----------



## doctrine

TRP has been hitting all time highs for the last week and hit another today. They are getting good publicity for their safety record, which while not perfect, is better than ENB's. The stock is definitely ahead of its earnings, but its a nice hold from where I bought it at 36-37.


----------



## maxandrelax

I have been wanting to buy on pullback, but it hasn't come. Pretty good breakout for sure. I'll be patient, usually the resistance becomes support.


----------



## Jungle

+1, been waiting for that pull back to add positions, but it just keeps going up.


----------



## doctrine

Expensive for sure at these levels. They aren't going to have solid growing revenues and earnings for a few more years, so I am fairly certain the patient investor wins out here.


----------



## zylon

*Northern Courier Pipeline Project*



> TransCanada has recently been selected by the Fort Hills Energy Limited Partnership (FHELP) to develop and operate the proposed Northern Courier Pipeline project. The proposed project will be a 90-kilometre pipeline system that will transport bitumen and diluent products between the Fort Hills Mine site and the Voyageur Upgrader, located north of Fort McMurray, AB.


http://www.transcanada.com/northern-courier-pipeline-project.html



> Pending all required regulatory and project approvals, construction of the proposed pipeline is expected to begin in early 2014, with pipeline operations beginning in time to meet the in-service requirements in mid 2016.


____________________
- meanwhile, back at the ranch ...


----------



## dubmac

*Marcellus gas flows into Ontario thru TRP on Nov 1st*

Not sure how many were aware (I wasn't) on Nov 1st that TRP "flipped the switch" on the flow of gas - now Marcellus shale gas pumped from PA now warms homes in Ontario! TRP has reversed the flow of it's pipeline to move 1 bcf of gas per annum to Ontario. This is some 16% of the total gas entering Ont. (see article). ENB plans to do the same later in 2013. Who wins? The consumer. Who loses? gas producers in Alta (says the article). The "politics of energy", has very quietly turned a page on Thursday. 
http://www.theglobeandmail.com/glob...s-pennsylvania-gas-to-ontario/article4898339/


----------



## Jungle

Just hit a two year anniversary holding this stock. Total return = 31.26%


----------



## BRS9

Jungle said:


> Just hit a two year anniversary holding this stock. Total return = 31.26%



That is awesome! Where do you guys see it going near term? Will the move be that big when the project is approved?


----------



## thenegotiator

a new 52 week high.
and boy i am bearish NG going forward providing certain things fall in place.
and one would ask why is TRP trading here:rolleyes2:


----------



## Eder

Yield,growth,low volatility...nice for widows & orphans (and me!) This will do fine as the GOP tries to put the USA into default territory.


----------



## thenegotiator

equityval said:


> OK all you TRP longs, enjoy your sugar high this morning. The one and only Jim Cramer was bullish on the stock in the lightning round last night. This should be good for a bump for a day or two, but is usually the kiss of death for most stocks a month or two down the road.
> 
> BUY, BUY, BUY!



apparently CRAMERICA was right.
you were not.
where are you?
come back now so we can talk Ng spot price , valuations and to finalize the 1 dollar handle.
before you do come back equityval let me assure you that short term i am BEARISH Ng .
but as a futures trader I booked my profits on G3..... today.
been riding this pup for awhile by the way.

would i buy TRp at these levels?
hmmm... let me see if equityval can answer that:rolleyes2::biggrin:


----------



## thenegotiator

doctrine said:


> Expensive for sure at these levels. They aren't going to have solid growing revenues and earnings for a few more years, so I am fairly certain the patient investor wins out here.


i am reading more and more posts from you.
u are a very savvy investor.
much luck.


----------



## zylon

Analysis: Keystone XL pipeline would generate $1.8 billion for Nebraska

http://www.omaha.com/article/20130117/NEWS/701179912/1707

Based on the comments at the end of the article, there isn't much public support Stateside for Keystone XL.

- via Twitter @710KNUS


----------



## dubmac

I did some research to explain why TRP is nearing the 50 level - Read the entry below by David McNicoll - Morningstar Analyst - on the subject. It seems TRP has more "going on" to support is dividend than Keystone -BUT these plans still require a robust NG market

"TransCanada TRP has announced the Prince Rupert Gas Transmission Project, in addition to an extension of its NOVA
model from the investor day, we are raising our fair value estimate to CAD 50 from CAD 44 per share.

PRGTP is a CAD 5 billion contract for a natural gas pipeline connecting the North Montney (natural gas) with the
proposed Pacific Northwest LNG export facility. The liquefaction facility would be located near Prince Rupert, in
northern British Columbia, and is expected to come on line in 2018. While we do not believe there will be significant
opposition to the pipeline or liquefaction facility, it is not a done deal. The project still needs to clear regulatory hurdles,
in addition to securing the appropriate offtake agreements. Needless to say, failure to secure approvals or commercially
viable agreements would put the project in jeopardy. 

While we tend to prefer liquids over natural gas projects in the near term, we view this announcement as positive for several reasons: the timeline associated with the PRGTP (2018), connection to a liquefaction facility, and our expectation that this project will include some form of take-or-pay agreements (a moat-enhancing feature). To support the development of the liquefaction facility, TransCanada has announced the extension of the NOVA system in northeast British Columbia, with an in-service date of late 2015. The extension will connect the PRGTP to various supply sources (expected) within the North Montney, in
addition to providing it with access to additional supplies that flow through the NOVA system and trading hub. The extension and supporting infrastructure is estimated to cost approximately CAD 1 billion-1.5 billion. We view this project as a bit of a hedge against the PRGTP; if the liquefaction facilities don’t come to pass, gas from the North Montney still needs to reach a market, and this extension should provide such access."

Analyst note: Jan 14 2013


----------



## zylon

*Nebraska governor approves Keystone XL route through state*

Snips:


> Nebraska Gov. Dave Heineman approved a new route for the Keystone XL oil pipeline on Tuesday that avoids the state’s environmentally sensitive Sandhills region.
> 
> Heineman sent a letter to President Barack Obama confirming that he would allow the controversial, Canada-to-Texas pipeline to proceed through his state.
> 
> “Governor Heineman just performed one of the biggest flip-flops that we’ve in Nebraska political history,” said Jane Kleeb, executive director of the group Bold Nebraska.
> 
> Heineman said previously that he would oppose any pipeline route through the Sandhills region. In his letter to Obama, he said the new 195-mile route through Nebraska avoids the Sandhills but would still cross part of the aquifer. Heineman said any spills would be localized, and the clean-up responsibilities would fall to TransCanada.
> 
> http://www.argusleader.com/viewart/...rnor-approves-Keystone-XL-route-through-state


----------



## thenegotiator

dubmac said:


> I did some research to explain why TRP is nearing the 50 level - Read the entry below by David McNicoll - Morningstar Analyst - on the subject. It seems TRP has more "going on" to support is dividend than Keystone -BUT these plans still require a robust NG market
> 
> "TransCanada TRP has announced the Prince Rupert Gas Transmission Project, in addition to an extension of its NOVA
> model from the investor day, we are raising our fair value estimate to CAD 50 from CAD 44 per share.
> 
> PRGTP is a CAD 5 billion contract for a natural gas pipeline connecting the North Montney (natural gas) with the
> proposed Pacific Northwest LNG export facility. The liquefaction facility would be located near Prince Rupert, in
> northern British Columbia, and is expected to come on line in 2018. While we do not believe there will be significant
> opposition to the pipeline or liquefaction facility, it is not a done deal. The project still needs to clear regulatory hurdles,
> in addition to securing the appropriate offtake agreements. Needless to say, failure to secure approvals or commercially
> viable agreements would put the project in jeopardy.
> 
> While we tend to prefer liquids over natural gas projects in the near term, we view this announcement as positive for several reasons: the timeline associated with the PRGTP (2018), connection to a liquefaction facility, and our expectation that this project will include some form of take-or-pay agreements (a moat-enhancing feature). To support the development of the liquefaction facility, TransCanada has announced the extension of the NOVA system in northeast British Columbia, with an in-service date of late 2015. The extension will connect the PRGTP to various supply sources (expected) within the North Montney, in
> addition to providing it with access to additional supplies that flow through the NOVA system and trading hub. The extension and supporting infrastructure is estimated to cost approximately CAD 1 billion-1.5 billion. We view this project as a bit of a hedge against the PRGTP; if the liquefaction facilities don’t come to pass, gas from the North Montney still needs to reach a market, and this extension should provide such access."
> 
> Analyst note: Jan 14 2013


hmmm..
that is it ?
u know this is a 10 year high do u not?
u found the golden pot then?
i see.


----------



## dubmac

thenegotiator said:


> hmmm..
> that is it ?
> u know this is a 10 year high do u not?
> u found the golden pot then?
> i see.


you're welcome


----------



## doctrine

> Fourth quarter financial results
> 
> Comparable earnings of $318 million or $0.45 per share
> Net income attributable to common shares of $306 million or $0.43 per share
> Comparable earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.1 billion
> Funds generated from operations of $818 million
> 
> For the year ended December 31, 2012
> 
> Comparable earnings of $1.3 billion or $1.89 per share
> Net income attributable to common shares of $1.3 billion or $1.84 per share
> Comparable EBITDA of $4.2 billion
> Funds generated from operations of $3.3 billion
> 
> Announced an increase in the quarterly common share dividend of five per cent to $0.46 per share for the quarter ending March 31, 2013


A lot of mixed feelings on this one. Profits are down and the dividend is going up 5%. This will bring their payout ratio from 97% to 102%. The trailing 12 month P/E is 25. They have a lot of growth ahead of them, but are struggling to increase revenues and earnings but are trading near all time highs. I'd rather be in at lower prices.


----------



## Jungle

I have this one dripping now, but I won't be adding anymore at this price point.


----------



## thenegotiator

doctrine said:


> A lot of mixed feelings on this one. Profits are down and the dividend is going up 5%. This will bring their payout ratio from 97% to 102%. The trailing 12 month P/E is 25. They have a lot of growth ahead of them, but are struggling to increase revenues and earnings but are trading near all time highs. I'd rather be in at lower prices.


Doc
we are going lower here.
still a favorite of mine.


----------



## doctrine

I owned them in the mid $30s but sold at $46 when the P/E started popping past 25. They've still gone up, but I just prefer to own companies at lower valuations. If I could get back in at a P/E of 20, I would consider it ($37.8).


----------



## thenegotiator

doctrine said:


> I owned them in the mid $30s but sold at $46 when the P/E started popping past 25. They've still gone up, but I just prefer to own companies at lower valuations. If I could get back in at a P/E of 20, I would consider it ($37.8).


dunno
if ur replying to my quote or not but 37.8 is not bad at all for this giant.
remember the spike to 30 bux back in 2010.
believe it or not i always have a buy order at that price at all times for the past 3 years .
it would be a lottery ticket to get it at that price and not have the order cancelled.

GL.


----------



## Ethan

*Keystone XL to have minimal impact on environment, assessment says*



> The long-awaited supplementary environmental impact statement report suggested that many environmental effects of the project could be mitigated, while downplaying the potential economic impacts of the project on the Canadian industry.
> 
> “Construction and operation of the proposed Project would result in numerous impacts to the environment,” said the report. “The proposed Project Construction, Mitigation, and Reclamation Plan … includes procedures that Keystone would follow to reduce the likelihood and severity of, or avoid impacts from the proposed project.”
> 
> One of the world’s most respected scientific journals says U.S. President Barack Obama should focus on coal-gorging power and utility companies in the United States, instead of appeasing environmentalists by turning down the Keystone XL pipeline.
> 
> But whether Keystone is approved or rejected is “unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area,” it adds.
> 
> The report said that greenhouse gas emissions from the Canadian oil sands industry, considered to be the fastest-growing source of heat-trapping pollution in Canada, could be reduced by up to five million tonnes of carbon dioxide equivalent emissions annually if all new pipeline proposals were denied in the future.
> 
> The report also noted that the environmental footprint of the world’s supply of crude oil was increasing since the reserves require increasingly energy-intensive extraction processes, but that these could also be mitigated through new regulations and technology.
> 
> The proposed multibillion-dollar pipeline, if approved, would open up new routes and markets for Canadian oil sands companies to ship their heavy oil to refineries in the gulf coast of Texas and expand production levels over the next decade.
> 
> A consultation period will be expected over the coming weeks and months before the Obama administration makes its final decision to approve or reject the project, which has both vigorous proponents and critics.
> 
> Obama unexpectedly delayed approval before last year’s presidential election over environmental concerns along the proposed route, prompting Alberta-based TransCanada, to draw up a new proposal.
> 
> Keystone XL has long been a flashpoint for environmentalists, who have been cheered by Barack Obama’s public pledges to combat climate change since his re-election in November.
> 
> Bill McKibben, founder of environmental group 350.org, called the State Department’s assessment “silly” in a tweet Friday afternoon.
> 
> 
> I hope the State Dept is better at the rest of its work than it is at climate change. No wonder Copenhagen was a botch; this EIS is silly
> 
> — Bill McKibben (@billmckibben) March 1, 2013
> 
> The report acknowledges that Alberta’s oil sands are carbon-intensive.
> 
> But the State Department assessment also makes clear that all modes of transportation are risky and the pipeline itself isn’t any more of a threat to the environment.
> 
> The analysis means that Calgary-based TransCanada has cleared a significant hurdle in its marathon bid to win approval for Keystone XL from the Obama administration.
> 
> Now it’s up to the president himself to decide whether to approve the pipeline, which would transport bitumen from Alberta’s carbon-intensive oil sands to Gulf Coast refineries.
> 
> Natural Resources Minister Joe Oliver said Thursday that the Canadian government is hopeful the U.S. will do the “right thing” and approve the pipeline.
> 
> Oliver told reporters in Ottawa that approving the pipeline is in the best interests of the U.S. and that failing to approve it would cost Canada jobs and revenue.
> 
> “The immediate cost would be the employment in Canada that would be lost and the revenue from the additional sales,” Oliver said. He reiterated that building additional pipeline capacity to transport crude to ocean ports from Alberta’s oil sands is a “strategic objective” of Canada.
> 
> Other key findings of the report:
> •“Approval or denial of any one crude oil transport project, including the proposed project, remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the U.S. “
> 
> •“Given that production of WCSB and Bakken crude oil will proceed with or without the proposed Project, the denial of a Presidential Permit would likely result in actions by other firms in the United States (and global) petroleum market, such as use of alternative modes to transport WCSB and Bakken crude oil.”
> 
> •“In response to public comments, the Department considered two alternative pipeline designs: an aboveground pipeline and an alternative using smaller-diameter pipe. The Department determined that both alternative designs were not reasonable alternatives for the proposed Project; they were not considered further in the draft Supplemental EIS.”
> 
> •If Keystone XL and other pipeline were restricted in the medium-to-long-term, “the incremental increase in cost of the non-pipeline transport options could result in a decrease in production from the oil sands, perhaps 90,000 to 210,000 bpd (approximately 2 to 4%) by 2030.”
> 
> •“WCSB crudes are more GHG-intensive than the other heavy crudes they would replace or displace in U.S. refineries, and emit an estimated 17% more GHGs on a life-cycle basis than the average barrel of crude oil refined in the United States in 2005. If the proposed Project were to induce growth in the rate of extraction in the oil sands, then it could cause GHG emissions greater than just its direct emissions.”
> 
> •However, the State Department report ”concludes that approval or denial of the proposed project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area.”
> 
> •“The incremental indirect life-cycle emissions associated with those decreases in oil sands production are estimated to be in the range of 0.07 to 0.83 million metric tons CO2 equivalent (MMTCO2e) annually if the proposed Project were not built, and in the range of 0.35 to 5.3 MMTCO2e annually if all pipeline projects were denied.”


It will be interesting to see what moves Obama makes after the release of this report. I'm wagering he will find a way to delay the decision a little longer.

http://business.financialpost.com/2...ine-assessment-friday-groups/?__lsa=f85a-f79c


----------



## dubmac

Daniel McNicoll writes the following in a Morningstar report on TRP Jan 13th 2013. The recent update (Feb 13th) offers little new news on TRP - See boldface type below - I expect that Obama will delay (given the political cost of a decision now).

_Following the U.S. presidential election, we believe the XL Pipeline will be approved, allowing TransCanada to embark
on one of its most ambitious pipeline construction projects since Keystone. The pipeline project is estimated to create
more than 20,000 jobs in the United States, generate long-term state and federal tax revenue, enhance U.S. oil
supply security, and continue to support oil sands development, which supports hundreds of thousands of U.S.
jobs. *We recognize that the current political climate almost requires the incumbent to pander to environmental groups.
However, with no requirement to secure support for a third term after the presidential election is complete, the equation
changes, and it makes sense for the incumbent to support the pipeline and claim a victory on job creation.* More than
90% of the Keystone Pipeline capacity is contracted for 18 years. The XL Pipeline has contracted approximately 60% of its
capacity, leaving 40% uncontracted, which should result in higher returns on the pipeline if it transports volumes at or
near its capacity. Including the Keystone System and new liquids pipelines tied into shale-related plays, we look for
EBITDA to increase from CAD 587 million in 2011 to more than CAD 1.4 billion in 2016, representing a 19% CAGR. If
the XL pipeline is delayed, the CAGR could be cut in half._


----------



## fatcat

agree with dubmac
obama will approve keystone
he needs the economic activity and the jobs 
and he doesn't need the environmental vote

i would bet my house that the fix has been in on this from the very beginning
whisper whisper posture posture posture whisper whisper
keystone !!

too much money involved here
plus energy security


----------



## humble_pie

dubmac said:


> The [Keystone XL) pipeline project is estimated to create more than 20,000 jobs in the United States, generate long-term state and federal tax revenue, enhance U.S. oil supply security, and continue to support oil sands development, which supports hundreds of thousands of U.S. jobs.



republicans in the US & both large-C conservatives in canada - such as natural resources minister Joe Oliver - & small-c conservatives here have minted the above twin claims that 1) keystone XL will deliver oil security to north America & 2) that tens of thousands of new US jobs will be created.

but everything i've ever read says the exact opposite. Says that keystone oil will slosh through the XL to refineries in Port Arthur texas. Specifically, to the specialized Valero refineries that were built to handle high-acid dirty oils such as tar sands bitumen (we don't have refineries like this in canada.)

from the port arthur refineries, oil will be exported as diesel & jet fuels to world markets. Not one drop is destined for US markets, says Valero.

everything i've ever read also says that permanent jobs, after the initial XL build-out, will be very few. How many jobs can possibly be tied to an unmanned pipeline? are we seeing 20,000 workers beavering away across the true north to maintain the transCanada pipe? no, we certainly are not.


----------



## dubmac

I took that quote from Morningstar. I don't know much (frankly -I don't know anything) about the refineries and fate of keystone oil at Valero. But, as I understand it, Bakken oil (not as dirty) will also be moved via KXL. And - one other important point is that the pipeline will produce increased "federal tax revenue" - which relates to your point that the pipeline is less about jobs than income to a tax hungry administration.


----------



## humble_pie

absolutely, the twin claims that XL-means-oil-security-for-the-US plus XL-will-create-20,000-US-jobs came from an analyst in Morningstar & you said so. Sorry i didn't make the source clear.

but these are nonsense claims imho. I feel that everyone should focus on the facts. To repeat nonsense claims without comment appears to sponsor or validate them. Which is why i wanted to flag those 2 claims as being of questionable merit.

here in cmf forum, the first to spot that all - 100% - of XL oil will be exported once it goes through the texas refineries was ddkay. Probably right here in this humungous thread. Long time ago, maybe a year or 2 ago. Ddkay asked Why Not Canadian Refineries? & Equityval replied that costs for new refineries are prohibitive, economic climate not right, canada could not raise the capital. Somewhere i've read - or equityval said - that china has recently built mega-refineries that are capable of processing bitumen & dirty oils though.

i imagine that by now the majority of canadians & americans totally believe that XL is going to guarantee domestic energy security, maybe even lower costs for consumers. I was surprised & sorry to see natural resources minister Joe Oliver johnny-on-the-spot confirming this last week. But then i'm a naiive dumb crumb who still does get surprised by politicians ...

i certainly believe obama will approve XL, there's no alternative.


----------



## humble_pie

an argument in favour of pipelines including Keystone. Pollution costs from pipeline spills will tend to be more contained, less apocalyptic than train accidents.

this am a freight train of tanker cars carrying crude oil exploded at lac Mégantic, quebec. He says the entire downtown core of the town either blew up or else is on fire.

the Chaudiere river running through the heart of town is already contaminated. I don't know where this town gets its water from. Safety of water supply could now be an issue.


----------



## My Own Advisor

True humble but also sad. What a disaster. Hopefully people will be OK.


----------



## dubmac

Not sure who is following the political "poker game" that is Keystone, and some of the moves that CEO Gurling is taking with TRP. Things took a subtle turn today with TRP approving the converson of one pipe to carry Alberta oilsnads crude from west to east to Atlantic provinces Que and NB. http://ca.reuters.com/article/businessNews/idCABRE9700OZ20130801. The project has yet to obtain regulatory approval. Should the project go to completion and crude does flow in 2017, it makes me wonder which companie.s would prosper.


All this goes on whilst Obama and the Republicans exchange barbs over jobs that the prject will produce- Obama seems to be hinting against approving KXL (he says he will base his decision on the amount of carbon that project will generate - which - is probably a considerable amount!). Gurlings announcement today seems to be a way of saying - "If you won't approve KXL - then we'll move oil elsewhere - at "better" (undiscounted) prices"

Regardless, TRP has had a modest gain so far today. This west to east pipe conversion should help TRP to counter arguments to mothball portions of it's mainline - but - I doubt it's all as simple as that.


----------



## fatcat

it is my guess obama is talking nice to the greenies but will approve in the end
not to approve and cut off a solid and reliable supply of oil from canada to the usa would be folly
he knows that every alternative energy source on earth doesn't fill 5% of our needs

i may be wrong and it's good to see TRP has a plan B


----------



## dubmac

TRP profit up 30% - all this while Keystone lingers unapproved by Obama & Co.
Bruce Nuclear Plant helped to raise profits as well
All things considered, Girling has managed this company rather well during times of record low gas prices. He has diversified the company well. stock was up today. ENB holders, however, are richer than TRP holders given the past 5 yrs! ENB up 120% over 5 yrs, TRP up only 32% over 5.
http://www.4-traders.com/TRANSCANAD...Canada-3rd-Quarter-Profit-Climbs-30-17431468/


----------



## dubmac

You'd think that state dept report would finalize the pipeline - but - according to this source, the debate and final approval is still questionable and unresolved! 
http://www.bloomberg.com/news/2014-01-31/this-is-not-the-keystone-decision-that-you-think-it-is.html


----------



## Nemo2

dubmac said:


> You'd think that state dept report would finalize the pipeline - but - according to this source, the debate and final approval is still questionable and unresolved!
> http://www.bloomberg.com/news/2014-01-31/this-is-not-the-keystone-decision-that-you-think-it-is.html


Approval conflicts with Obama's ideology.


----------



## dubmac

Here we are - 3 months later. Keystone "delayed", Obama punts. Hard to say what the future holds for TRP's share price tomrrow, and whether this p/l will get finished. It would appear that Keystone has become the poster child for climate change among the greens south of the border - and politics delayed this. I wonder whether a new prezzie would change things after the election? and whether the House of Representatives will get ornery on Tuesday. http://www.cbc.ca/news/world/u-s-to-delay-keystone-xl-decision-1.2615062


----------



## AltaRed

I would think/hope there would be no impact on TRP share price... as Keystone should not be part of the forward earnings/dividend growth projections. These kind of projects are simply 'inventory' in potential growth plans, along with the other multitudes of possible projects like the Alaska Gas Pipeline from Prudhoe Bay to Valdez LNG terminal.

If Keystone XL does not get built, the railroads will make even more commitment to move heavy Canadian crude by rail. US Gulf Coast refineries need Canadian heavy to offset declining Venezulan and Mexican production and Midwest refineries continue to re-configure for Canadian heavy. Ultimately, there will also be another US pipeline of some sort to move Bakken crude from the Dakotas to Cushing, Nebraska be damned.


----------



## Nemo2

AltaRed said:


> I would think/hope there would be no impact on TRP share price...


A great deal of knee-jerking today, it would appear......and here's us with little available cash and nothing that we really want to sell in order to take advantage of the drop.


----------



## Kaitlyn

I'm liking the drop but hoping for a bigger one. Not sure if I should buy (some) today, or hope for a better opportunity tomorrow...


----------



## Synergy

I would have thought that "no Keystone" would have been priced into the stock by now - obviously not completely.


----------



## AltaRed

Synergy said:


> I would have thought that "no Keystone" would have been priced into the stock by now - obviously not completely.


It should have been. It must be the momentum buyers who are now exiting. This too will pass.


----------



## My Own Advisor

Agreed, "this too will pass".


----------



## Nemo2

My Own Advisor said:


> Agreed, "this too will pass".


Oh Jeez...for a moment there I thought we were back on the bidet thread. :biggrin:


----------



## Moneytoo

Nemo2 said:


> Oh Jeez...for a moment there I thought we were back on the bidet thread. :biggrin:


lol!

Entered a limit order $2 below Ask last night, will see if/when it goes through...


----------



## My Own Advisor

Too funny Nemo!


----------



## Ethan

The pop up ad when I entered this thread was a TransCanada ad for Keystone XL.


----------



## Dibs

High volume today and +3.31% on news that TRP may be on the radar of some hedge funds:

TransCanada Corp could be target of activist U.S. hedge funds - Financial Post


----------



## Nordic

Just curious if anyone is investing in this for the possibiity of a Keystone approval pop?
Pays a pretty solid dividend while you sit on it as well.


----------



## OnlyMyOpinion

Never considered TRP to be a short term trading stock, low volatility and slow steady growth (looking at 5yrs+) seems better suited to buy, hold and DRIP?
Would you turn this into a long term hold if it doesn't pop?


----------



## Nordic

OnlyMyOpinion said:


> Never considered TRP to be a short term trading stock, low volatility and slow steady growth (looking at 5yrs+) seems better suited to buy, hold and DRIP?
> Would you turn this into a long term hold if it doesn't pop?


I own 240 shares myself (doubled my holdings today) and I'm not intending on selling even if it does jump related to keystone developments. You are correct that it's an appropriate low-risk long-term hold. I like how they increase their dividend every year as well. 

I am hoping to see 70's within the next two years (13% annualized return).


----------



## My Own Advisor

Only happy to DRIP this guy


----------



## moisimplementmoi

Nordic said:


> I own 240 shares myself (doubled my holdings today) and I'm not intending on selling even if it does jump related to keystone developments. You are correct that it's an appropriate low-risk long-term hold. I like how they increase their dividend every year as well.
> 
> I am hoping to see 70's within the next two years (13% annualized return).


bought and held... can't even tell you what the price is


----------



## Nordic

moisimplementmoi said:


> bought and held... can't even tell you what the price is


Half at 50 in October and half today at 54.52.


----------



## OnlyMyOpinion

Patience and a steady drip are a beautiful thing. 
The small drop in Sept on the attached graph is our sale of 100 shares to lower our TRP exposure a bit. It was difficult to do but in hindsight well timed at $63.73. 
Current yield on total cost (incl drip) is 5.34%. 
View attachment 3026


----------



## Nordic

OnlyMyOpinion said:


> Patience and a steady drip are a beautiful thing.
> The small drop in Sept on the attached graph is our sale of 100 shares to lower our TRP exposure a bit. It was difficult to do but in hindsight well timed at $63.73.
> Current yield on total cost (incl drip) is 5.34%.
> View attachment 3026


Wow that's a hell of a lot of shares...


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## OnlyMyOpinion

Its not the # shares but the divvies we count, $2961yr or $247/mo, pays for beer eh.


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## My Own Advisor

Sweet. That's an awesome beer fund


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## sags

Obama gave his end of year interview..........and his opinion on Keystone is the same.

There isn't much benefit to the US............and he doesn't sound like he will sign the bill.

I think he may be hoping to pacify his Democratic supporters..........but still have the pipeline approved.........by refusing to sign the deal but having Congress over-ride his veto.

Only fly in the that ointment............is the pocket veto. It will no doubt be pointed out to him, that he could stuff the bill in his pocket and never get around to signing it.

It is coming down to the next Presidential election politics now............


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## dubmac

...and every year it goes unused, the costs to install the pipeline go up! Not sure what the cost would be now.
I wonder whether TRP has moved the it's operations focus to the new "east line" and away from Keystone X/L


----------



## humble_pie

Energy East is presently a primary focus of TRP.

the existing trans-canada gas pipe would be partly converted, as far as its terminus near the quebec border, to bitumen transport. New pipeline will have to be built from montreal to the deep-water port of saint john NB, where it will be exported by tanker ship.

diverse constituents in both quebec & new brunswick are opposing such a new pipeline, enough to block its permitting for the time being.

in addition, across canada the usual anti-tar sands suspects are opposing the proposed new Energy East pipe.

one argument that is raised is that traditional west-to-east gas flow via the trans-canada pipeline will be disrupted if the greater number of pipes are converted to bitumen (my understanding is that there are 3 inner pipes bundled into the single outer shell known as the trans canada & 2 of these would change to bitumen.)

this could force ontario & quebec to pay for imported frack gas from the US northeast, goes the debate.

although to a certain extent this may already be happening.

obviously there are many vital aspects to Energy East that need to be discussed. I haven't decided myself, i think the times right now are calling for an open mind & an airing out of much relevant info.

here's a map showing the affected communities along the route, plus the new pipeline that would have to be built montreal to st. john.

.


----------



## zylon

Following @TransCanada twitter feed, mostly tweets about Keystone XL, some about LNG, but I don't recall the last time Energy East was mentioned, if ever.

Seems kinda strange.

https://twitter.com/TransCanada

Edit:
Never mind; @EnergyEast has it's own account.

https://twitter.com/EnergyEast


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## dubmac

Does anyone have any opinion on the impact of Obama's Veto on KXL pipeline in the near and not-so-near future?
http://www.washingtonpost.com/blogs...ill-a-k-a-veto-bait-heads-to-presidents-desk/


----------



## AltaRed

I would suggest the market has already assumed no Keystone XL pipeline, at least as far as TRP metrics go. Don't know if the same holds true for the oil production industry....but many have committed to rail loading facilities that are coming on stream on a regular basis to move production and expansions of same are in the works. 

What a f*ckup... Obama would rather have rail derailments than a safe pipeline, but this has always been about politics. An R president will fix that starting early 2017, but by then TRP will have walked from the unbuilt sections of Keystone XL and the industry will have moved elsewhere.


----------



## Nordic

This one is currently at a very nice entry-point; super cheap at $48.25 and 4.31% dividend. People selling it off because of the upcoming Keystone rejection must be dumb as rocks.


----------



## doctrine

52 week low, starting to look better here.


----------



## sags

Thanks for the map Humble..........

A few years ago, a bunch of us went to a buddy's cottage near Deep River and rode our ATVs down a pipeline right of way for a ways, and I never knew what it was until now.


----------



## gardner

TRP new issue at C$58.50, Nov 16. Anyone buying this? Any thoughts on what it means for the company?


----------



## dubmac

http://www.theglobeandmail.com/repo...e-xl-permit-by-monday-report/article34394972/
could it be true? After tall the ups and downs.


----------



## doctrine

Easily true. Not the end though, they still need state and landowner approvals - a closer date to full approvals is the fall.


----------



## zylon

*Keystone XL approval*
Published Mar 24, 2017

"Trump's administration granted permit for the Keystone XL pipeline. Hear what *Dennis McConaghy*, retired Canadian energy executive, a former executive vice-president of Corporate Development at TransCanada, as well as the author of _Dysfunction: Canada after Keystone XL_, thinks about that decision."

12 minutes

https://omny.fm/shows/danielle-smith/keystone-xl-approval


----------



## james4beach

The stock did not move at all after the approval was announced. Does this mean it was already priced into the stock?


----------



## AltaRed

Yes and 1) actual construction start is an unknown, 2) it may be tied up in the Nebraska courts a long time aka DAP, and 3) there is a risk of it not happening. It will likely only be when construction is substantially underway that the market may reflect some confidence of an actual conclusion and a cash flow stream showing light at the end of the tunnel. I wouldn't pay a nickel more for TRP stock today that I would have done last October.


----------



## zylon

james4beach said:


> The stock did not move at all after the approval was announced. Does this mean it was already priced into the stock?


I'd say _approval_ was priced in Nov 9th.
XL revenue will only be a small percentage of TRP total revenue.





> "Transcanada will finally be allowed to complete this long-overdue project with efficiency and with speed," Trump said in the Oval Office before turning to ask TransCanada Chief Executive Officer Russell Girling when construction would start.
> 
> "We've got some work to do in Nebraska to get our permits there," Girling replied.
> 
> "Nebraska?" Trump said. "I'll call Nebraska."
> 
> http://www.4-traders.com/TRANSCANAD...tone-XL-pipeline-but-obstacles-loom-24099959/


----------



## OnlyMyOpinion

TRP announces Energy East is dead.
And ******* Montreal mayor Coderre crows.
(can an ******* crow or is it just called a fart?)


----------



## Dilbert

OnlyMyOpinion said:


> (can an ******* crow or is it just called a fart?)


I don't know, but I'm sure Jargey will come up with an answer for that one!


----------



## AltaRed

Doesn't surprise me that TRP raised the surrender flag. There is just no political support for it, regardless of how strategic it would be to get crude to Atlantic tidewater. May Coderre freeze in the dark.

No corporate entity is going to continue to pour hundreds of millions of dollars into headwinds like that when there is no light at the end of the tunnel in ANY of the major pipeline proposals. As a shareholder, I would rather TRP take on some more economic propjects in USA and Mexico. The market is pushing up TRP's stock price this morning so far.


----------



## hboy54

Yup, Canada is no longer open for business in energy, except for government electricity boondoggles.


----------



## humble_pie

OnlyMyOpinion said:


> TRP announces Energy East is dead.
> And ******* Montreal mayor Coderre crows.
> (can an ******* crow or is it just called a fart?)




congratulations for pushing another rude ignorant remark of the type that really helps to break up canada

in your book the mayors of vancouver, burnaby, coquitlam etc can all oppose the transMountain pipeline with impunity. In fact they are heroes & martyrs for defending their turf.

but when quebec speaks up to postpone a monumental ecodecision - it's the natural gas pipeline that will have to accompany energy east, along with its controversial LNG terminal that will have to be built on the lower south shore of the st-lawrence that is causing the dilemma for quebec - then all the anti-french ******** in the ROC go berserk

.


----------



## AltaRed

No idea what you are talking about wrt gas and LNG. As for crude oil, tankers bringing in imported crude ply the St. Lawrence to Montreal all the time. Energy East would have eliminated tankers to both Montreal and into Saint John (albeit there could be crude exports out of Saint John and Quebec if Coderre wanted the jobs). With possible exports to Europe under CETA, that would have been a win-win. Anyways, as a TRP shareholder, it is best to stop wasting shareholder money on this one.


----------



## gardner

CNR is still servicing all those areas.


----------



## humble_pie

AltaRed said:


> No idea what you are talking about wrt gas and LNG. As for crude oil, tankers bringing in imported crude ply the St. Lawrence to Montreal all the time. Energy East would have eliminated tankers to both Montreal and into Saint John (albeit there could be crude exports out of Saint John). With possible exports to Europe under CETA, that would have been a win-win. Anyways, as a TRP shareholder, it is best to stop wasting shareholder money on this one.



no, Energy East would *not* have eliminated tankers to montreal. You yourself have always been the authority on this issue.

refineries in montreal cannot process the alberta bitumen that would pass via energy east. Neither can refineries in new brunswick. Alberta heavy oil has to be exported from an east coast deepwater port like saint john, for transport by sea to the big refineries in texas that are capable of handling it.

eastern canada is 100% dependent on light sweet crude from the middle east. Although some does arrive by tanker, the bulk is transported to montreal refineries via pipelines from northeastern USA. This would continue even if Energy East were to be built.

.


----------



## AltaRed

Yes to some degree initially, but Suncor (Montreal) and Irving (Saint John) would have installed cokers or hydrocrackers eventually to take advantage of at least some of the much cheaper heavy western crude feedstock to blend with Portland imports, and possibly even light Canadian shale oil production that is (will be) increasing. That would elminate crude by rail (as in Megantic). There clearly are scenarios to eliminate any tanker imports. I don't know about Valero (Ultramar) and what they might do in the future. 

All refineries optimize their crude slate feedstock via blending, and they re-configure when there are economics to do so. That is what the PADD II refineries did, and Western Canadian refineries

Added: Not overly relevant but here is the current status of oil refining in Canada in both ownership and capacity http://www.oilsandsmagazine.com/projects/canadian-refineries Generally speaking, any refinery under about 200,000 bpd capacity would have a hard time competing if it is on tidewater with access to cheap marine shipping. Hence why there have been Eastern Canada closures AND why Eastern Canada is in a net deficit product situation (net product imports). Landlocked refineries can be economic at smaller scale because of 'captive' market, but even then anything under about 100,000 bpd is generally on the margin and would not have the economics to be built today.


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## tygrus

humble, calm and inform yourself. The west has tons of light sweet crude. Always has. We could have displaced those tankers, filled those refineries, cut carbon emissions and gave a big FU to those nasty dictators you love in one fell swoop. I thought you were a SJW? This was the perfect project for you to latch on to.


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## OnlyMyOpinion

humble_pie said:


> congratulations for pushing another rude ignorant remark of the type that really helps to break up canada... but when quebec speaks up to postpone a monumental ecodecision - it's the natural gas pipeline that will have to accompany energy east, along with its controversial LNG terminal that will have to be built on the lower south shore of the st-lawrence that is causing the dilemma for quebec - then all the anti-french ******** in the ROC go berserk.


Humble, you are reading too much into my comment. My comment had nothing to do with anywhere or anyone except the mayor of Montreal. I find him an irritating, mouthy imbecile. His gleeful 'tweet' (like those of Trump) was that of a crowing ******* (if such things exist).
P.S. Your Enery East facts are sorely outdated and wrong. TRP announced 2 yrs ago that a Quebec port was being removed from the scope of the project. And I'm sure TRP would have been interested to know that the 3 destination refineries wouldn't have been able to handle their pipeline product.


----------



## tygrus

T2 could have taken this project around to the UN and Paris and wherever and spouted "look what canada did", but instead he decides to pit west vs east again like his dad, give the west the finger. Now the west will give it back to sesspool quebec and canada takes another step toward disintegration, just so the Liberals and Coderre can win some seats there next election. Thats real good govt. 

And then like the hypocrites these people are, spent countless hours bashing trump. Trump gets that tax reform bill passed Canada is going to be just a shell of itself.


----------



## humble_pie

AltaRed said:


> Yes to some degree initially, but Suncor (Montreal) and Irving (Saint John) would have installed cokers or hydrocrackers eventually to take advantage of at least some of the much cheaper heavy western crude feedstock to blend with Portland imports, and possibly even light Canadian shale oil production that is (will be) increasing. That would elminate crude by rail (as in Megantic). There clearly are scenarios to eliminate any tanker imports. I don't know about Valero (Ultramar) and what they might do in the future.




isn't the above all just conjecture though. Originally you were totally black-&-white. Irving had exactly one solitary refinery in saint john that might be even capable of being upgraded to process alberta bitumen, you said. Montreal had no such refineries, you said. 100% of alberta crude would have to be exported from saint john, you said.

me i think it looks awkward to suddenly change the argument & go Ha-Ha-surely-eastern-refineries-would-have-retrofitted-eventually-in-order-to-process-alberta-bitumen-from-energy-east; when what is really being said is just another ugly venting of anti-french prejudice from the ROC.

why not focus on the BC mayors who are opposing transMountain oil in burrard inlet? how come the strong insults are reserved only for the francophone leaders of quebec?

i'm asking because there is a great deal of anti-quebec vitriol in cmf forum. It's what one would expect from a group with a predominant proportion of aging conservative - some would say rightwing - males.

normally i never say anything. I'm mostly anglophone by origin but my family is 100% intermarried with both la vieille souche & with new canadians who have arrived in canada in the years after WW II. Including the heroic french-born RCAF fighter pilot who flew with the RAF in the rommel campaign over north africa. He's now 94 years of age & still going strong in quebec. Brain & memory are sharp as a tack. He was a brilliant industrialist who is widely regarded as the founder of industrial design in canada.

french, first nations, scots, english, irish, yankee loyalists, all played such rich roles in the founding of canada. Soon to be followed by waves of welcome migration from northern europe, russia, southern europe, south asia. This century we are wrestling with new waves of migration from africa & the middle east. It always disappoints me when so many in cmf forum speak out so cruelly against fellow canadians, for no reason whatsoever.


.


----------



## Eder

I'm thinking on moving to Quebec to help elect a new separatist government to finally get the job done. Politicians there have been an embarrassment to confederation and in the case of "Energy East" have not even tried to hide their disdain for the rest of us.


----------



## humble_pie

Eder said:


> I'm thinking on moving to Quebec to help elect a new separatist government to finally get the job done. Politicians there have been an embarrassment to confederation and in the case of "Energy East" have not even tried to hide their disdain for the rest of us.



sorry i don't get your point, what disdain?

local politicians are mandated to provide the leadership their voters want. The give-&-take between provincial autonomy & federal power is a neverending part of canadian history. The oil pipelines are one aspect of it. 

are you finding the coalition of vancouver area mayors to be disdainful also?


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## fatcat

Eder said:


> I'm thinking on moving to Quebec to help elect a new separatist government to finally get the job done. Politicians there have been an embarrassment to confederation and in the case of "Energy East" have not even tried to hide their disdain for the rest of us.


could you stop by my house and give me a lift ? ... i’m moving too, one more “yes” vote ... hope you don’t mind traveling with an aging, rightwing, cisgendered white male ...


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## OnlyMyOpinion

Myself, I'll let Rick Mercer, an anti-Quebec, aging conservative, right-wing male have the last rant and move on:


----------



## AltaRed

humble_pie said:


> isn't the above all just conjecture though. Originally you were totally black-&-white. Irving had exactly one solitary refinery in saint john that might be even capable of being upgraded to process alberta bitumen, you said. Montreal had no such refineries, you said. 100% of alberta crude would have to be exported from saint john, you said.
> 
> me i think it looks awkward to suddenly change the argument & go Ha-Ha-surely-eastern-refineries-would-have-retrofitted-eventually-in-order-to-process-alberta-bitumen-from-energy-east; when what is really being said is just another ugly venting of anti-french prejudice from the ROC.
> 
> why not focus on the BC mayors who are opposing transMountain oil in burrard inlet? how come the strong insults are reserved only for the francophone leaders of quebec?
> 
> i'm asking because there is a great deal of anti-quebec vitriol in cmf forum. It's what one would expect from a group with a predominant proportion of aging conservative - some would say rightwing - males.
> 
> .


Over time, perhaps upwards of 10 years as cokers and/or hydrocrackers were installed, imports would mostly likely be eliminated. Until then, much of the heavy crude portion of Energy East would have been exported. Suncor has every reason to upgrade in Montreal, and Irving has the size and scale (and thus economics to do so). I don't see any inconsistency at all albeit I should have inserted the word 'eventually' in my first post. True, I don't know what Valero ulltimately would do except why buy the Quebec refinery if not for access to Canadian crude? Better wording perhaps, but I don't see any conflict or contradiction in what I've posted.

I have no specific hate for Quebec. I do have frustration at what would have been such an economic decision both for itself and Canada as a whole. BTW, my wife is a former Montrealer with a Quebecois background (albeit not ex-Montreal style) and her bro has lived there all his life. The issue is Coderre seeks to divide (and cater to his base), and perhaps a strategy of 'support to be bought' by graft from Ottawa. I confess to not having much clue what his real problem is. The sentiment in the circles my wife's family runs in is that Coderre will most likely not be re-elected.

Added: The mayors of Montreal, Burnaby and Vancouver should be in the process of 'extracting' what they can in terms of job assurrances and environmental protection certainties to support their residents. They don't have a right, legal or otherwise, to undermine their provincial and federal counterparts. Their behaviour is misguided and they will ultimately lose in their relationships with provincial and federal counterparts. Morgan and his Green sidekick, OTOH, do have a rightful interest in how the TransMountain project proceeds.


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## humble_pie

fatcat said:


> could you stop by my house and give me a lift ? ... i’m moving too, one more “yes” vote ... hope you don’t mind traveling with an aging, rightwing, cisgendered white male ...




:biggrin: eder has to travel by water, he lives on his yacht remember; so needs to voyage to quebec via the panama canal

eder is a big fan of la joie de vivre & living it up in the bars & fine restos of the port cities, so in fact one has to wonder if he'd ever arrive off the coast of nova scotia, let alone sail up the st-lawrence like jacques cartier

a year or 2 for the voyage, would you 2 be happy together in the close confines of the yacht's cabin quarters? cat i can't see any sea captain taking you on as permanent passenger for 24 months, you complain too much


.


----------



## fatcat

OnlyMyOpinion said:


> Myself, I'll let Rick Mercer, an anti-Quebec, aging conservative, right-wing male have the last rant and move on:


hah ! quebec is always in favour of ... well ... quebec !


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## humble_pie

fatcat said:


> hah ! quebec is always in favour of ... well ... quebec !



has fatcat ever *not* been in favour of ... well ... fat cats?


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## humble_pie

tygrus said:


> Trump gets that tax reform bill passed Canada is going to be just a shell of itself.



suppose you are right. Isn't it time to take action? ie take your brand-new fortune from selling your land property & go down to the nearest US consulate & apply to immigrate there.

by the time you get your visa, korea, japan, mongolia, northeastern china & even eastern russia will be radioactive waste zones but the US won't have developed maximum cancers from prevailing westerly wind-borne radioactive dust yet, so you could expect to enjoy a few years under gestapo trump.

.


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## Dilbert

Based on the share growth today, I'd say the street liked the news.


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## tygrus

Bad day all around for Canada today, more expenses, more payments, more taxes and no more development to pay for it all. Nice going SJWs.

http://www.cbc.ca/news/politics/ottawa-settle-60s-scoop-survivors-1.4342462


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## hboy54

tygrus said:


> Bad day all around for Canada today, more expenses, more payments, more taxes and no more development to pay for it all. Nice going SJWs.
> 
> http://www.cbc.ca/news/politics/ottawa-settle-60s-scoop-survivors-1.4342462


Of course my experience in school is different than theirs, but I still consider it 13 years of state sponsored child abuse. The amount awarded seems to me to be an order of magnitude to little, not that any amount of money can fix the damage.

Hboy54


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## fatcat

tygrus said:


> Bad day all around for Canada today, more expenses, more payments, more taxes and no more development to pay for it all. Nice going SJWs.
> 
> http://www.cbc.ca/news/politics/ottawa-settle-60s-scoop-survivors-1.4342462


i’d rather pay this ten times than 10M to that traitor khadr ... at least these kids, who were treated so badly, deserve this award


----------



## doctrine

Energy East has been a pipe dream ever since Trudeau slapped on the responsibility for upstream greenhouse gas emissions on it. Social license was an excuse to add taxes, it's a total farce. Canada has been had. Maybe people will wake up, but I doubt it. Gulf refiners will be laughing all the way to the bank. 

Fortunately, Transcanada is about two years ahead of Canada with their acquisition of Columbia Pipelines in the US. Better to invest money there, and in Mexico. Non-reaction in the stock, because this has been known for over a year.


----------



## tygrus

fatcat said:


> i’d rather pay this ten times than 10M to that traitor khadr ... at least these kids, who were treated so badly, deserve this award


Yes but here is the failure of imagination and leadership. Why didnt the govt make the settlement through a resource sharing partnership. ie, we greenlight x number of projects, you dont interfere, and we give you 10% royalty off the revenues dedicated to residential school survivors - win,win,win. 

Now project is dead, we have more expenses and no more resources coming out of the ground to pay for it. You cant pay for this stuff off the goodwill of others - that wont last. Tack it on to the deficit which wont be clear for 40 more yrs.

And now, people are emboldended to kill off other projects like TransMountain. This would be so sad if it wasnt such a tragedy.


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## humble_pie

tygrus said:


> ie, we greenlight x number of projects, you dont interfere, and we give you 10% royalty off the revenues dedicated to residential school survivors




could you please clarify. Which party is telling the other party "you don't interfere & we give you 10% royalty off the revenues"

once upon a time the federal gummint talked to the band councils like that, under the indian act. Long time ago. Don't hear such talk any more. "You don't interfere" ... somebody talk like that nowadays he'd be run out of town.


.


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## fplan

I am not an expert but I think Alberta needs to work with BC and build pipelines towards west. West coast is closer and Alberta may need to share some royalty revenues with BC to make that happen.. for BC , they are high on RE ..until that goes south nothing can change.. something is serious wrong in Canada now... govt want to legalize pot to increase revenues while stop business activity.. Exporting finished products will create job and improve economy .. Canada so far just exporting raw materials/minerals..


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## Mechanic

fplan said:


> I am not an expert but I think Alberta needs to work with BC and build pipelines towards west. West coast is closer and Alberta may need to share some royalty revenues with BC to make that happen.. for BC , they are high on RE ..until that goes south nothing can change.. something is serious wrong in Canada now... govt want to legalize pot to increase revenues while stop business activity.. Exporting finished products will create job and improve economy .. Canada so far just exporting raw materials/minerals..


Since the greens threw in with the NDP I think that will be a little tougher now. Very unfortunate that it is being so difficult to get the resources from Alberta to market as it would benefit all of Canada.


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## londoncalling

Not sure if it has been proposed or even feasible but what about a pipeline from Alberta through Sask and over to Churchill Manitoba? As far as I know there is still a port there and it is historic shipping route.


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## OnlyMyOpinion

londoncalling said:


> Not sure if it has been proposed or even feasible but what about a pipeline from Alberta through Sask and over to Churchill Manitoba? As far as I know there is still a port there and it is historic shipping route.


This was recently proposed. According to this article, the locals have a big problem with economic prosperity if it involves oil:
http://www.cbc.ca/news/canada/edmonton/alberta-oil-port-of-churchill-callaway-1.4270157

But they do expect the feds (read you) to be willing to pay the $60 million(?) if necessary to repair the washed out rail line:
http://www.cbc.ca/news/canada/manitoba/via-rail-churchill-omnitrax-1.4330403

Better start putting down the winter's firewood and moose. Talk to you in the spring.


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## londoncalling

Thanks OMO. I knew someone would have some insight. Better hunker down for a long cold winter.


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## humble_pie

londoncalling said:


> Thanks OMO. I knew someone would have some insight. Better hunker down for a long cold winter.




if one would read onlyMO's linked articles one can see that the vengeful interpretation - ie "get ready for long cold winter" - is not applicable to the innocent citizens of Churchill Falls.

the railway repair got bogged down in a dispute over costs because the owner of both the railway & the port is a US company located in colorado (how that happened, i do not know.)

the repair dispute is split 3 ways, between colorado's OmniTrac, the federal gummint & the city of churchill falls. Unfortunately the three haven't been able to settle it in time to get the railway back up & operating before winter sets in.

guys don't you think it's a wee bit distasteful to chortle & gloat over certain hardships that innocent northern communities will have to suffer when vital transport is either cut off or becomes too costly. It's never been normal for canadians to chortle over the ill fortunes of others, it makes me uneasy to witness the same.

on a related point - the building of a bitumen slurry pipeline from alberta to an expanded port of churchill falls - costs are a fatal obstacle. The 3 pipelines already proposed are/were build-outs of existing infrastructure. The terrain to churchill falls is mostly swampy muskeg, which is why no road has ever been built. The muskeg waterway also means that any pipeline rupture would instantly spread, would be impossible to clean up. 

the CBC link mentions that thousands of indigenous trappers are still working in northern manitoba. Damaging their trapline enviroment is taboo in contemporary canada. It means destroying their livelihood. After residential schools & youth suicides by the hundreds across northern communities, what are southern communities thinking of when they call for pipelines across trapping territory?


.


----------



## tygrus

humble_pie said:


> guys don't you think it's a wee bit distasteful to chortle & gloat over certain hardships that innocent northern communities will have to suffer when vital transport is either cut off or becomes too costly. It's never been normal for canadians to chortle over the ill fortunes of others, it makes me uneasy to witness the same.
> 
> ....what are southern communities thinking of when they call for pipelines across trapping territory?


So you dont mind Coderre cheerleading the fall of this project while he collects 10 billion in transfer money. Geez humble, you defy all reason and logic. Are you just going to troll now?

I just joined an animal rights group and I oppose all trapping hunting and fishing in this country. I also oppose bashing baby seals heads in and I oppose tax payer money being used to prop up stone age cultures. Its offensive to me as pipelines/oil are to others and my rights need to be respected.


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## londoncalling

With all due respect HP you are mistaken and quick to judge. I am not gloating whatsoever.

Manitoba is part of my work territory. Our organization spends a lot of our time working with First Nations communities across the West. Our staff spend several months during the year living and integrating with the people living in the north that experience the youth suicides you reference (Laloche for example). In the next couple of weeks I will be in an isolated Northern Manitoba community. I can identify with the folks of a similar lifestyle that you are so quick to defend because I will be meeting with the community leaders to discuss training and infrastructure development. Their reality is quite similar to the community of Churchill. Northerners are a resilient bunch whom have lived in these adverse conditions with far less amenities than we currently have for many many centuries. There is a lot of hardship in these locales but there is also a rich culture and unique sense of humour amongst these people. Many of them see the potential opportunities before them. There is development(water treatment plants, medical clinics) taking place by some of the FNs that have embraced collaborative partnerships. It is unfortunate that it has taken several hundred years to get to where we are today and we have a long long way to go. It will be a tough winter and I do sympathize but they will overcome this unfortunate circumstance that was imposed upon them. 

Pipelines can be built on First Nations lands. Many of these nations are in favour of northern development. What they would like is be a partner in the process. This is essential to integrate their traditional way of life, preserve their hunting, trapping and sacred burial grounds. They will be key in ensuring the environment will be protected by safeguards. The problem is not pipelines. The problem is that governments have decreased regulations and reduced the number of officers available to inspect and enforce safety in the industry.

The problem with written communication is that it is often difficult to convey emotion. My post was not to mock or belittle. My post was to point out that it will be a difficult season for the people of Churchill.


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## tygrus

london, having worked directly with oil companies and major pipeline companies, they would rather not build a project at all if it has a FN component. FN have not shown themselves to be a reliable partner with resource companies and none of them would ever put infrastructure on reserve lands. They look for farmers and ranchers to deal with. 

FN just shot themselves in the foot again opposing these projects and capital will go south of the border now. The days of the canadian mega project are over.


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## sags

Judging by the appalling conditions on many reserves, what "benefits" from past capital investment would they be giving up ?


----------



## rford

tygrus said:


> Yes but here is the failure of imagination and leadership. Why didnt the govt make the settlement through a resource sharing partnership. ie, we greenlight x number of projects, you dont interfere, and we give you 10% royalty off the revenues dedicated to residential school survivors - win,win,win.
> 
> Now project is dead, we have more expenses and no more resources coming out of the ground to pay for it. You cant pay for this stuff off the goodwill of others - that wont last. Tack it on to the deficit which wont be clear for 40 more yrs.
> 
> And now, people are emboldended to kill off other projects like TransMountain. This would be so sad if it wasnt such a tragedy.


sweet, a quid pro quo should go over real well with first nations. do you even listen to yourself? you truly are an idiot.


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## tygrus

rford said:


> sweet, a quid pro quo should go over real well with first nations. do you even listen to yourself? you truly are an idiot.


Hey thanks for the useless commentary you basement dwelling pillow biter troll. GFY:stupid:


----------



## dubmac

never.....thought.....I'd live......to see.......the day.....
http://business.financialpost.com/c...s-final-permits-for-keystone-xl-in-close-vote


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## Numbersman61

dubmac said:


> never.....thought.....I'd live......to see.......the day.....
> http://business.financialpost.com/c...s-final-permits-for-keystone-xl-in-close-vote


Very good news


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## AltaRed

Many hurdles to come though. Obtaining permitting for the rest of the ROW, misguided attempts aka Standing Rock 2, etc. There will be continued delays short of authorities getting the lumber out and restraining illegal actions.


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## OnlyMyOpinion

And 9 years of regulatory hoops so far. Obscene. Let the trains roll I guess.


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## fatcat

OnlyMyOpinion said:


> And 9 years of regulatory hoops so far. Obscene. Let the trains roll I guess.


^ this

no pipelines for me thank you, this will never stop, the political inertia affects the whole business and big-hair is asleep at the wheel

can you spell C-N-R ?


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## doctrine

To me, this is constant reaffirmation that pipelines are virtually impossible to build, which makes the ones in the ground that much more valuable. It's kind of like a win-win. More than happy to let CNR be the load-levelling mechanism meanwhile


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## OnlyMyOpinion

An interesting and novel approach by South Dakota to get behind Keystone XL:

_South Dakota Gov. Kristi Noem said Monday that she's proposing legislation before construction begins on the Keystone XL oil pipeline that would create a way to go after out-of-state money that funds pipeline protests.

The legislation would let the state follow such money and "cut it off at the source," the Republican governor said in a statement. Noem would also set up a fund to cover extraordinary law enforcement costs that could come with intense pipeline opposition... here in South Dakota, we will have the rule of law, because rioters do not control economic development in our state,"_ Noem said. 

Gee, where have I heard the term "rule of law" used before? Oh that's right, Justin Trudeau. Too bad he is too full of talk & bullshit to actually accomplish anything. 

https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=a51822


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## agent99

doctrine said:


> To me, this is constant reaffirmation that pipelines are virtually impossible to build, which makes the ones in the ground that much more valuable. It's kind of like a win-win.


It is also perhaps an incentive to convert more of the oil and gas, at source, to useful products (or fuels?) that are safe to transport. IPL and Pembina are attempting this. How those large Polypropylene projects will work out, remains to be seen. There are many other products that can be produced. 

Maybe if we USE more of our resources close to source we will ease need for increased capacity of existing pipelines for export?


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## AltaRed

The petrochemical plants being built use NGLs, not oil, for their feedstock, in this case, mostly surplus propane. 

Building more upgraders for SCO would be a partial solution for the oil bottleneck but they are uneconomic on their own, requiring taxpayer support. No need to go there until/unless both Keystone XL and TMEP become dead in the water.


----------



## OnlyMyOpinion

This suggestion pops up from time to time Agent. Without going into details, it is a matter of Economics 101. If an accessable and proftable market for those products existed, that demand would have been filled. 

We do now see the Alberta NDP government trying to favourably tilt the economics of refined products by adding government incentives. Time will tell how well that works. Historically it has not worked out well when governments try to incent the market using taxpayer money for very large capital projects that companies would normally build (whereas infrastructure, transportation, etc. usually involve government). They have the potential to become uneconomic, funding black holes. 

Government is better suited to providing regulatory certainty that companies can assess and make investment decisions on the basis of. That includes pipeline approval.

We are seeing the impact of arbitrary Federal government decisions on some files, and wishy-washy federal government inaction on others right now = uncertainty. Companies are leaving Canada massively and moving to the US where the regulatory environment is not subject to tinkering and uncertainty.


----------



## Eder

Mini upgraders are becoming a thing...my kid has received a lot of inquiries for cost proposals from the majors...one project is breaking ground this Spring. 2 billion for a plant capacity of 77,000b/day...30% more crude gets shipped than dilbit...so 22,000b/day shipped free...$12/b saved shipping costs....$250k/day in saved shipping costs...90% uptime so saving of 80 million/year to service 2 billion investment & running costs...30-35 year payback...my napkin is full so that's it. I didn't figure in bitumen to light crude price variations...long term light crude may be more valuable per barrel. Also pipe tolls are as high as $15/b. Could be 25 year payback...

Anyone can figure this more accurately?

Rumor also has it China is looking at our moth balled upgraders to see if somehow they can pay.


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## AltaRed

We don't have any mothballed upgraders that I am aware of. Decommissioned ancient light oil refineries don't count. You need to include operating costsin the above calculations and the WCS/SCO differential in the calculations too. That said, the shrinkage and reverse out of diluent that comes with upgrading dilbit to SCO does allow 10% or more bitumen production at the wellhead for the same pipeline takeaway capacity.

The problem with mini-upgraders is the lack of economies of scale that comes with large throughputs, i.e. the services needed to support the actual processing units. Upgraders <100 kpd will never compete with 200+ kpd upgraders or heavy oil refineries. Projects have to have full cycle payout (of sunk capital plus accrued interest) in about 10-12 years and a 10% return thereafter to spend the capital there rather than in some other more business friendly environment. That said, the way to approach it is for industry in general to build one 'train' of, for example, 77,000 bpd, and if that turns out to be economic, build train 2 right next door, and so on over time. It would take determined industry cooperation by multiple companies.

The economics are complicated with a 'chicken and egg' dilemma because by upgrading dilbit, that provides some relief on constrained pipeline capacity and reduces the differential. Upgrade too much bitumen and the differential disappears and no money can be made. You have to forgive private industry for not committing to long term payouts on upgraders when they could become white elephants shortly after commencing production. We did many upgrading 'what ifs' in my corporate planning days and never could we get beyond a high risk of a 'white elephant'.


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## Eder

The one I have in mind is Nexen's upgrader at Long Lake.


----------



## AltaRed

Eder said:


> The one I have in mind is Nexen's upgrader at Long Lake.


Ahhhh! The one that experienced a major fire. Thought that had been under repair and returned to operation a year or so. I am aware Nexen is increasing its SAGD output there as well.


----------



## agent99

AltaRed said:


> The petrochemical plants being built use NGLs, not oil, for their feedstock, in this case, mostly surplus propane.
> 
> Building more upgraders for SCO would be a partial solution for the oil bottleneck but they are uneconomic on their own, requiring taxpayer support. No need to go there until/unless both Keystone XL and TMEP become dead in the water.


I did say oil AND gas, but OK, oil, gas and NGL  (Apparently a lot of the NGL used in Alberta comes to Alberta from BC by pipeline?)

A lot of conventional thinking going on here. Time to think out of box?


----------



## AltaRed

Certainly NGL comes out of northeastern BC to Alberta directly from mid-streamers, or via the gas system to be extracted in straddle plants. Petro-chemical choices depend on the surplus feedstock that exists, market for that petro-chemical and cost to ship it, etc. liquid in rail tank cars, or pellets in closed hopper cars. Not a business I know much about BUT it has to compete with the same feedstocks coming out of US refineries.

There is not much novel to think about that has not been thought about already. The petro-chemical industry is notoriously cyclical on the supply (and thus price) side. The multi-national I worked for had upstream, downstream and chemical divisions, the latter two which had the most difficulty making a reliable return on investment, and one of the reasons for selling off most of those assets to specialty companies. It really is a tough business.


----------



## OnlyMyOpinion

agent99 said:


> ... Apparently a lot of the NGL used in Alberta comes to Alberta from BC by pipeline?..


Alberta produces 86% of Canada's NGL's and BC produces 12%.
I suspect what you meant was that most of BC's NGL production is destined for Alberta?


----------



## AltaRed

That is what I took Agent's post to mean.


----------



## agent99

AltaRed said:


> There is not much novel to think about that has not been thought about already.


I guess we should stop funding research


----------



## AltaRed

agent99 said:


> I guess we should stop funding research


Not suggesting that, but in terms of commercial scale operations, there is not much that has not been thought of in the AB Patch with respect to products that could be made locally that are profitably competitive in end user markets. The key problem is our products have to compete in key population centers like the US Atlantic Coast, the Mississippi corridor, or the Gulf Coast, where they already have access to lower cost feedstock.

As an example, how can AB crude (or any feedstock or hydrocarbon end product) be profitably competitive with Texas crude that travels a few hundred miles to Baytown, TX to be refined in XOM's 584.000 bpd refinery built originally in 1919, that makes products that can be shipped by tanker right next door, or sent to petro-chemical plants across the street? This scene plays out throughout the USA that has access to tidewater or inland waterway barges, right up to Illinois and Indiana, St. Louis, New Orleans and all points in between. 

That is the reason why huge amounts of capital that would need to be spent between production (wellhead extraction) and end user products is highly risky and seldom economic in the industrial heartland around Edmonton.

Added: I've taken a risk investing in IPL, which is making a big bet on a petro-chemical plant. The only reason that makes sense is due to the huge surplus of propane that has limited places to go and is thus priced dirt cheap. PPL is also building a plant to use propane and ALA is bringing a Ripley propane export terminal into service to make money on the current propane situation. What happens if all those projects soak up all the surplus propane and result in much higher propane prices? Will those projects sill be economic? Time will tell but I consider my IPL investment to be somewhat speculative.


----------



## agent99

Good response! Sounds logical, but that sounds like there is no hope for Alberta oil industry?

But why build the TRP or other proposed pipelines if the product can't be delivered economically? Presumably there must be a market for the Alberta crude? Is it the heavier oil that they need for some refineries? Or is it just that we are prepared to take lower than market prices for our oil?

If it doesn't make sense to manufacture and ship petrochemicals or plastics then we will have to continue to ship the crude. How should we ship it when pipelines don't get approved. Rail can be used to some extent, but after a few more serious spills, some provinces and states may restrict those too? 

So what do we do? Leave the oil in the ground? Or maybe come up with ways to make the crude or a modified version safe to transport? Probably rules out pipelines. Coal being a solid can be transported safely by rail. Could oil be solidified, emulsified or adsorbed on solids for rail shipment and then reconstituted at destination? Economics no doubt not good and not a practical idea? Hopefully smarter people are trying to solve this dilemma for the longer term. We need an Elon Musk or at least people who don't just see the barriers!

By the way, we own TRP, IPL and PPL. Will ride the dividend wave from the latter two for a while, but am concerned that IPL at least, are stretching themselves on what could be a risky venture.


----------



## OnlyMyOpinion

A safe way to transport oil has already been invented. Its called a pipeline. Environmental concerns can be addressed.
Those who absolutely refuse to consider pipelines are religious zealots. 
My argument that roads should be closed down because people are killed on them every day carries a comparable weight.


----------



## AltaRed

Sure there is hope. What we have is a crisis in timing.

1. Pipelines that were timed to handle increasing volumes of production got held up, so now we have a 3+ year glut of over-production relative to pipeline capacity available. That will alleviate when/if 1-2 of the pipelines go into service.

2. Projects that are built to make products to alleviate the pipeline bottleneck are all expensive and take 2+ years to build... just in time for 1-2 new pipelines to go into service and squeeze differentials to the degree that price increases for Alberta crude and make it too expensive to make these new products non-economic. Catch 22 for upgraders especially.

3. A number of US refineries are configured to process on Canadian dilbit and thus rely on Canadian dilbit as their feedstock. There will always be a market for X barrels per day of dilbit.

4. There is research going on for alternatives, e.g. https://www.cninnovation.ca/ to transport bitumen as a solid. It will likely never be economic but is worth doing the research on.

The basic problem is that both the upstream and pipeline industry did not see the 'delay' issues coming. Is it the industry's fault? Is it the government's fault for not being ahead of the curve? Or is it that the pipelines and oil sands have become a flash point uphappy with a lot of isues? There is a good book called The Patch by Chris Turner that tells the story of the oilsands industry, its challenges, shortcomings and 'fall boy' for social ills in general. I have read a little over half of the book and find it a pretty balanced point of view. Not sure where the book will end up, but the last chapter is called "complicity". Your guess is as good as mine. It combines storytelling with facts, is not overly technical, and would be a good read for everyone, including Joe Q Public, who wants a better understanding of the oilsands, how we got to where we are now, and ?


----------



## agent99

AltaRed said:


> 4. There is research going on for alternatives, e.g. https://www.cninnovation.ca/ to transport bitumen as a solid. It will likely never be economic but is worth doing the research on.


Thanks, so at least someone thought of looking into shipping as a solid. There are likely some other options that could be looked at too. Interesting that it is a rail company that is doing the research. 

Still hard to see oil transported that way competing with oil from conventional sources/locations any time soon. Likely not until oil supplies start to run out.


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## Eclectic12

agent99 said:


> It is also perhaps an incentive to convert more of the oil and gas, at source, to useful products (or fuels?) that are safe to transport ...
> Maybe if we USE more of our resources close to source we will ease need for increased capacity of existing pipelines for export?


It might have changed lately as I haven't looked in a while but the numbers I recall had Canada as a net exporter of refined products. This raises the question of who is going to buy them. Certainly if there's more going to be exported - the question scales of economy that places like US have will make it more difficult for the Canadian product.

Gasoline, in particular, has been reported to be refined at over Canada's use for many years.


Take Enbridge's reversal of line 9 as an example to consider. The good news is that reports are the the Quebec refineries now use a lot more Canadian feedstock. The bad news is that if it is not competitive with US sources, can provide US feedstock as well. 




agent99 said:


> ... A lot of conventional thinking going on here. Time to think out of box?


What out of the box thinking has crossed your mind would deal with these issues?


Cheers


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## Eclectic12

agent99 said:


> ... But why build the TRP or other proposed pipelines if the product can't be delivered economically?


Refining then shipping has more costs to keep on par with US sources than straight shipping through a pipeline, n'est pas?




agent99 said:


> ... Presumably there must be a market for the Alberta crude?


Sure ... in the states where bitumen can be refined. There's reported to be fifty nine of one hundred thirty four refineries that can handle it. About forty four percent.
Canada has about seventeen refineries in total.




agent99 said:


> ... Is it the heavier oil that they need for some refineries?


If you are talking "ship it to Eastern Canada to be refined" then Ontario is 59% light/medium, 23% synthetic, 13% heavy and 5% bitumen. Quebec is 56% light/medium, 35% synthetic, 7% heavy and 2% bitumen.

Alberta is 56% light/medium, 35% synthetic, 12% bitumen and 2% heavy.


Despite the low numbers for bitumen refining, as I say the last numbers I saw said Canada is a net exporter of refined products so being competitive to sell outside of Canada is important.




agent99 said:


> ... Or is it just that we are prepared to take lower than market prices for our oil?


It seems to mainly be an scale of economy problem mixed in with distribution.




agent99 said:


> ... Coal being a solid can be transported safely by rail ...


Some aren't so sure coal is being transported safely.
https://www.sightline.org/2016/05/04/coal-trains-mean-coal-dust-period/
https://globalnews.ca/news/1076392/officials-investigate-train-derailment-in-burnaby/
https://blog.nwf.org/2012/07/going-off-the-rails-on-a-crazy-coal-train/


Cheers


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## agent99

Eclectic12 said:


> What out of the box thinking has crossed your mind would deal with these issues?
> Cheers


I mentioned a few earlier. I was hoping others might also try and think about possible solutions.

There are other possibilities. Exporting the energy via wires may be one!


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## Eclectic12

I can recall ones that have been suggested or done before such as refine more within Canada to supply Canada, ship as a safer solid and leave the oil in ground.

A risk of being picky ... export via wires seems to be the out of the box suggestion. :biggrin:



Cheers


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## AltaRed

agent99 said:


> Exporting the energy via wires may be one!


There has to be a lower 48 market for the electricity, and Canada would be beat up for increasing its CO2 emissions, while US states would get a free pass on reducing CO2 emissions.

As Eclectic said, Canada has a surplus of refined products already (on a national basis, though not on a regional basis). For example, the lower mainland of BC has to import a good portion of its refined products from refineries in Puget Sound in WA state, from oil that comes in via tanker through Juan de Fuca strait...within eyeball view of Victoria. How perverse! Now if BC really had its f'ing act together, it would build a refinery in Burnaby and take more oil from Alberta to supply its own refined product needs. Oh, but wait! That means those tree hugging neanderthals in that part of the world would have to acknowledge their thirst for hydrocarbon fuels.

Anyways, if there was money to be made, the ideas would have already been translated into solutions. Oh wait! The pipeline companies have been trying to do so for some time, the most effective and efficient way to move hydrocarbons to market. Even marginally economic rail capacity has been added to move hydrocarbons, most of which will gather dust once the pipelines get built. In the meantime, the port of Portland, OR is expanding its crude by rail capacity to allow AB oil to be loaded on tankers there.


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## agent99

AltaRed said:


> There has to be a lower 48 market for the electricity, and Canada would be beat up for increasing its CO2 emissions, while US states would get a free pass on reducing CO2 emissions.


To be honest, I don't think burning oil is a good idea. Just a starting point for discussion.

Demand for transportation fuels is predicted to drop. Cars, buses, mass transport, etc are switching to electricity. Same for home heating, new homes will have geothermal heat pumps. If so, we will have less demand for oil and more demand for electricity. It's not one thing or the other. We will have pipelines for a long time and also use railcars. But as demand drops or pipelines have to be closed down, then we need to think about how we could use our resources in other ways. 

CO2 can be a problem However, there is existing technology to make other products, like methanol from CO2. 
CO2 can also be converted to CO using membrane technology (pilot scale only so far) Lots of other research going on in this field! 
Also possible to convert hydrocarbons to hydrogen and carbon with no CO2 being produced. 
Transporting hydrogen in large quantities is not that easy, but at least it goes up when it spills! 

I would like to hear some out of the box ideas from others.


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## OnlyMyOpinion

agent99 said:


> ... I would like to hear some out of the box ideas from others.


If it is alternative energy/transportation methods you want to discuss, probably best to start a new thread. This thread title, Transcanada Pipelines (TRP.TO) doesn't really do it justice.


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## Eder

The thing is what harm is there if a company wants to create jobs & pay taxes by building a pipeline whether or not we need them. There is no downside. Once they're not needed and we power our planet on batteries lets remove and recycle them.
Or is it actually a money grab agenda to make pipelines impossible to build. I know what my opinion is and how I will vote to try change this rot.


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## Eder

stupid lag


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## kcowan

agent99 said:


> To be honest, I don't think burning oil is a good idea. Just a starting point for discussion.


What Transmountain is trying to achieve is to get China to switch from coal. So is the LNG pipeline. Not outside the box but reducing carbon emissions worldwide. The main opposition is funded by US interests trying to keep the prices down. This is the principle argument for pipelines.


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## agent99

kcowan said:


> What Transmountain is trying to achieve is to get China to switch from coal. So is the LNG pipeline.


That certainly could be a result. But maybe not the driving force? 

I imagine Canadian producers would very much like to have an alternative/competitive market for their products and that could be the main driving force?


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## kcowan

agent99 said:


> That certainly could be a result. But maybe not the driving force?
> 
> I imagine Canadian producers would very much like to have an alternative/competitive market for their products and that could be the main driving force?


I think this is where the proponents have failed. They let the US-funded opposition set the agenda while ignoring the Big Picture. I think the worm is turning gradually. We need a government to get behind the initiative and position pipelines as the current version of the National Infrastructure (like railways and highways). Instead the feds have downloaded that responsibility. No long-term vision!


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## gardner

kcowan said:


> US-funded opposition


I have heard the allegation that part of the social opposition is organized and/or funded by foreign interests before. While I tend to believe it may well be true, I have not seen any direct evidence, documentation or specific instances spelled out. Where do I look to see specifics on this?


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## Eder

Heres a few links from this lefty site...

https://www.huffingtonpost.ca/kathryn-marshall/anti-oil-sands-funding_b_1121071.html

https://fairquestions.typepad.com/rethink_campaigns/

https://www.cbc.ca/news/canada/calg...n-funding-protest-conspiracy-theory-1.4987202

Its no secret they write checks to our indigenous to get them protest.


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## AltaRed

gardner said:


> I have heard the allegation that part of the social opposition is organized and/or funded by foreign interests before. While I tend to believe it may well be true, I have not seen any direct evidence, documentation or specific instances spelled out. Where do I look to see specifics on this?


I would have to dig around, but I've seen a number of sources that say it is so. 

Anecdote: South Dakota https://globalnews.ca/news/5029630/south-dakota-panel-pipeline-protest-bill-keystone/


> In urging committee members to pass the legislation targeting “riot boosting,” Republican Rep. Chris Karr said many rioters are funded by out-of-state money with the goal of shutting down oil pipelines, echoing similar statements from Noem at a Monday press conference.
> 
> “Typically they align themselves and term themselves as environmentalists, but not necessarily how I would define an environmentalist,” Noem said. “I’d say the most typical national offender that we see funding these types of activities would be George Soros.”
> 
> But Laura Silber, a spokeswoman for the liberal billionaire philanthropist’s Open Society Foundations, told South Dakota Public Broadcasting that Soros opposes violence. It’s odd the governor is trying to tarnish a surge in public activism, Silber said.


More information of various 'credibilities' can be googled re TMEP

https://www.cbc.ca/player/play/1429179459779

https://stockhouse.com/opinion/inde...ig-us-money-behind-canadian-pipeline-protests


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## Eder

Heres a list including which of our First Nation's have their hand in the cookie jar.

https://fairquestions.typepad.com/rethink_campaigns/tar-sands-campaign-400-payments.html


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## fatcat

here are two major players

tides.org
350.org

both are active against energy and resource extraction in canada


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## gardner

Trump issues new permit for stalled Keystone XL pipeline

https://www.cbc.ca/news/business/trump-permit-keystone-xl-pipeline-1.5077957



> the permit issued Friday replaces one granted in March 2017. The order is intended speed up development of the controversial pipeline


Any opinions if this will actually help?


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## AltaRed

I have my doubts... The courts sometimes seem to operate in the ozone layer.


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## humble_pie

kcowan said:


> We need a government to get behind the initiative and position pipelines as the current version of the National Infrastructure (like railways and highways)



^^ excellent idea

part of the reason i like it is that it offers a way to offset all the ambient hostility
stop the squabbling, give up the gimme-gimme

branding a pipeline as a new Last Spike achievement - a contemporary version of the National Dream - belongs to canada as much as the CPR & the transcanada - might just work to re-start some healthy positive energy


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## kcowan

humble_pie said:


> branding a pipeline as a new Last Spike achievement - a contemporary version of the National Dream - belongs to canada as much as the CPR & the transcanada - might just work to re-start some healthy positive energy


Yes back in the day I was a Liberal supporter. Now I am without national representation. A proverbial voice in the wilderness. Too much pandering.


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## doctrine

TRP trading nicely above $60, with plenty of growth even without Keystone XL due to their acquisition a couple years ago of Columbia Pipelines. 

Ironically, Transcanada, who has proven to be more than willing to build pipelines to benefit Canada, cannot due to the Trudeau government policies. In the US, however, they are already pumping increasing amounts of US drilled natural gas to massive LNG terminals on the Gulf Coast. Expansion is nearly limitless for the next several decades for LNG exports. Too bad that isn't Canadian natural gas. End markets will get it - we choose not to provide it and get any benefits. An untold story is the exodus of Canadian assets to the US to drill these natural gas wells and build these pipelines. Both physical assets, such as rigs, but also people and capital.


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## Eder

It is the Venezualization of our country...JT has done damage that will take decades to repair.


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