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Enbridge Line 3 delays a set back Alberta's energy industry doesn't need: analyst

Last Updated Mar 4, 2019 at 7:43 am MDT

Pipes are shown at the Kinder Morgan Trans Mountain facility in Edmonton, Thursday, April 6, 2017. Canada's energy regulator will tell the federal government on Friday whether it still thinks the Trans Mountain pipeline should be expanded, but cabinet's final say on the project's future is not likely to come before the summer.THE CANADIAN PRESS/Jonathan Hayward
Summary

When Premier Notley announced the cuts she said they would last until Dec. 31, 2019 — when Line 3 was expected to run.

Two other pipelines, the Trans Mountain expansion and the Keystone XL project, are both in limbo after being stalled.

Enbridge says Minnesota indicates the permits should be available by November.

An energy analyst says the delays to Enbridge’s Line 3 replacement is something the industry doesn’t need. Now the pipeline won’t be operational until the second half of 2020, about six months later than Calgary-based Enbridge had hoped.

Tim Pickering, CIO of Auspice Capital said the delays came as a surprise.

“Meetings had indicated that Line 3 would be live by the end of the year and that’s how the market has priced the differential,” he said.

Those figures will now change.

“What I think, this will put additional pressure on that differential to widen out, closer to the average which is about $18, $18.50,” said Pickering. “It’s like a bridge being washed out again; it’s something we’ve been anticipating being complete to give access, and it’s not going to be there for us.”

READ MORE: Enbridge: Line 3 replacement likely won’t be in service until second half of 2020

Pickering said they’re trying to look on the bright side.

“When you see it [the differential] widening, what it does is allow investors to have an entry point. It’s a negative, there is no doubt about it, but it gives investors an opportunity to say what’s the long term prognosis? Are we going in the right direction?” he said. “I am still optimistic that down the road, we are going in the right direction and there is a great investment here.”

Line 3 will transport crude from Alberta to Wisconsin, where it will connect with pipelines to the U.S. Gulf Coast. It’s designed to replace an aging pipeline and restore its original capacity of 760,000 barrels per day, an increase of about 370,000 bpd.