Keystone XL shippers wary of Trump ‘tweaks’
Canada’s oil firms reaffirm support for pipeline despite concerns over U.S. policy
Canadian oil companies are recommitting to TransCanada Corp.’s Keystone XL pipeline, though some producers are concerned about threats of “tweaks” to the North American Free Trade Agreement and a border adjustment tax by the U.S. government.
TransCanada has been canvassing support for its long-delayed but recently revived pipeline between Alberta and the U.S. Gulf Coast at a time when many domestic oil producers are concerned U.S. President Donald Trump could impose new trade taxes on exports to the States. Trump did soothe Canadian nerves by stating he is only looking for “tweaks” to the Canadian portion of the NAFTA agreement, but it’s unclear whether the minor changes could turn into major implications for Canadian businesses.
In the meantime, other pipeline proposals, such as the Alberta-toNew-Brunswick Energy East pipeline and Kinder Morgan Canada’s Trans Mountain expansion project, are looking increasingly attractive as they connect Alberta to new overseas markets and also serve as a hedge against the oilpatch’s utter dependence on the U.S. and its political risk.
Trent Stangl, Crescent Point Energy Corp. senior vice-president of investor relations and communications, said forecasts show Asian and Indian markets to be key growth drivers for oil products over the next 20 years.
Some producers have reaffirmed their support for the Keystone XL project, which now needs shippers to re-sign transportation agreements. “We are, and we remain, a committed shipper on both pipelines,” Suncor Energy Inc. spokesperson Sneh Seetal said of Keystone XL and Energy East pipeline.
Privately, however, other energy executives have expressed concerns to the Financial Post about a border adjustment tax and about committing to more U.S.-bound oil shipments on Keystone XL given the uncertainty. “The last several years, starting with the inability to get Keystone XL across the finish line, and now with border taxes and things like that, it really highlights the need to have a diverse market,” one Alberta executive said, asking not to be named.
Neither producer, nor transporter, nor consumer likes uncertainty, ARC Energy Research Institute executive director Peter Tertzakian said. Trump’s invitation to TransCanada to re-apply for a presidential permit for the pipeline comes at a difficult time for the company, given the president has sought “tweaks” to NAFTA without offering much details.
When asked whether a possible border adjustment tax has made it difficult to secure commitments on the U.S .- bound pipeline, TransCanada spokesperson Terry Cun ha would only say, “discussions with our customers on Keystone XL continue.”