Projects get the go
In November 2016, Kinder Morgan’s Trans Mountain pipeline got the green light from the Canadian government while Enbridge’s Northern Gateway was rejected. This did not come as a surprise to me. On January 24, 2017 U.S. President Donald Trump by executive order cleared the way for TransCanada’s Keystone XL pipeline that would be capable of shifting 800,000 barrels of oil a day to Nebraska when it is completed; Trump also approved the Dakota Access pipeline.
Both Keystone and Dakota have been controversial and will no doubt continue to be so. Getting beyond the opposition that is unlikely to go away anytime soon there is the business case. I believe that these pipelines, if they were going to be built, should have been constructed 20 years ago. With the oil market oversupplied and low priced I’m not sure the viability of putting extra production into the market is going to stack up.
Trump said that he would renegotiate the Keystone project. Keystone would be built with American steel and no doubt American workers. I wonder if that includes the Canadian side of the project? I also wonder why, at the time of writing, I haven’t seen anything from TransCanada yet. I rather wonder as to the enthusiasm of TransCanada for the project at all. I may be wrong and the next thing I see is a release saying how clearly delighted and pleased they are.
Since OPEC and Russia (agreed), note the inverted commas, to cut production oil has been trading in the low to mid fifty dollars a barrel. According to Baker Hughes, the U.S. rig count was up 35 at 694 for the week of January 20 while the count for Canadian rigs for the same period was up 27 to 342. This is welcome news for some workers and companies in hard times. Excluding North America, the rig international rig count was down three and is 18 per cent lower than the same period in 2016.
The undeclared oil and gas war goes on for market share and I think under President Trump the U.S. will aggressively produce and cut imports. As for the effect on the oil price I think we could see another dip.