Suncor CEO Sees Increased Political Risk for Keystone XL
Canada’s second-largest oil producer, Suncor Energy, believes the political situation in the United States has increased the risks to companies counting on construction of TC Energy Corp’s proposed Keystone XL oil pipeline, its chief executive said on Wednesday.
A legal fight between TC, previously known as TransCanada, and environmental activists has delayed the Canada-to-Texas pipeline for a decade. A court in Nebraska last month affirmed an alternative route through the state, raising hopes the project might proceed and provide badly needed transport capacity for Alberta’s crude.
U.S. President Donald Trump, a supporter of Keystone XL, faces an election in 2020 and candidates for the Democratic nomination are critics of the fossil fuel industry who favor government support for renewable energy and other steps to fight climate change.
“Keystone XL is a massive investment and the political situation in the U.S. is I think increasing the risk associated with that,” Suncor CEO Mark Little said at a Barclays investor conference in New York. “That’s one that a lot of people are doing soul-searching about right now because it’s also a very substantial investment. Now we still believe it will go ahead. But time will tell.”
A Suncor spokeswoman could not be immediately reached to clarify Little’s comments.
“We are committed to Keystone XL and will continue to carefully obtain the regulatory and legal approvals necessary before we consider advancing this commercially secure project to construction,” TC Energy spokesman Matthew John said.
Little said he believes plans to expand the Canadian government-owned Trans Mountain pipeline are “in pretty good shape,” and noted there is still ongoing work by Enbridge Inc to replace its Line 3 in Minnesota.
Congestion on export pipelines prompted the government of Alberta, Canada’s main oil-producing province, to impose crude production curtailments this year to help drain a glut of oil in storage and support prices.
Last month the Alberta government said it would extend curtailments into 2020 because of delays getting new pipelines built.
Government-mandated production quotas have weighed on investor sentiment toward Canadian energy stocks, but Husky Energy’s chief executive, also speaking at the Barclays investor conference, said curtailments would likely ease.
“I think quotas will become less of an issue going forward as we see incremental pipeline and rail capacity coming on. I don’t think they’ll bite as hard,” Husky CEO Rob Peabody said.
Canadian crude-by-rail volumes have increased this year as companies look for alternatives to congested pipelines, even though it is a more expensive way of transporting crude.