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Canada's Suncor cautious about Keystone XL, Trans Mountain, Enbridge pipelines

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Canada's Suncor cautious about Keystone XL, Trans Mountain, Enbridge pipelines

Canadian oil producer Suncor Energy Inc. expects that the three major pipeline projects to move more Alberta oil to market could experience more delays, especially given rising U.S. political risk for TC Energy Corp.'s 830,000 barrel-per-day Keystone XL pipeline.

CEO Mark Little said Sept. 4 at the Barclays 2019 CEO Energy Power Conference that he sees all three pipelines — Keystone XL, Canadian government's 590,000-bbl/d Trans Mountain expansion to British Columbia, and Enbridge Inc.'s 370,000-bbl/d Line 3 expansion eventually getting built but not on their current schedules.

"Everybody is giving you an optimistic schedule, if they get all their approvals and move forward," he said. "It's one of the reasons that we don't want to sanction a bunch of growth hoping the pipeline shows up, which is one of the reasons we're in the situation now. [If] then you find ... it gets pushed out a year or two ... then we have this huge glut of oil in Canada that can't get market access."

Little expressed the most caution about Keystone XL.

"The political situation in the U.S., I think, is increasing the risk associated with that," he said. "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."

Little said the Trans Mountain expansion appears to be in "pretty good shape," as "they're plowing ahead and starting construction," while on the Line 3 expansion, "there's still a lot of work going on."

"There's been some favorable decisions there recently," he said. "So we're looking to push ahead, but could it get pushed out in time? Yes, I think it could, and there's some more challenges."

Lack of sufficient pipeline capacity to take away mounting volumes of Canadian crude oil had caused price discounts for Western Canadian Select to widen to as much as $51/bbl to Cushing West Texas Intermediate in late 2018, causing the Alberta government to impose production curtailments for producers. The curtailments have been adjusted each month as market conditions warrant.

S&P Global Platts assessed Western Canadian Select crude at Hardisty at an $11.85/bbl discount to WTI crude Sept. 3.

S&P Global Platts Analytics expects Enbridge's Line 3 expansion to begin moving crude from Hardisty, Alberta, to Superior, Wis., in mid-2021 and Keystone XL and/or the Trans Mountain expansion to be completed by late 2022.

Meghan Gordon is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.