Keystone XL’s Ship May Have Sailed

The world is becoming a different place than it was when TRP’s mega-project was first announced.

| More on:
The Motley Fool

An article appeared in this morning’s Wall Street Journal that spins TransCanada’s (TSX:TRP,NYSE:TRP) much maligned Keystone XL pipeline in a rather negative light, for something other than its potential environmental impact.

It turns out that as we all await the final thumbs-up or thumbs-down from the U.S. State Department, the world is moving on.  The WSJ points to three pieces of evidence that indicate the business case for the Keystone XL pipeline may not be as sound as it once was.

These points were:

  1. Railways are carrying way more crude oil than they have in the past.  The Journal indicates that nearly 200,000 rail cars in Canada carried crude oil in the first 7 months of 2013 – a 20% increase from the year before.
  2. The collection of refineries on the U.S. Gulf Coast that at one time were ready to welcome the heavy crude oil from Alberta’s oil sands that the Keystone XL pipeline would bring, are now finding other ways to satiate their appetite for unrefined oil.  Valero Energy (NYSE:VLO) is cited in the article as a one-time potential client that’s now relying more heavily on rail shipments into 3 of its North American refineries.
  3. TransCanada’s primary Canadian rival, Enbridge (TSX:ENB,NYSE:ENB) is investing $2.4 billion to expand several of its western Canadian pipelines.  These pipelines are already in place and therefore not subject to the same regulatory scrutiny as the Keystone XL project.  When complete, Enbridge’s expansion will allow 1.2 million more barrels/day to flow out of Canada’s west, and North Dakota, and into the U.S. Midwest.  From there, it can be transported via the Seaway pipeline to the Gulf of Mexico refinery complex.  This is a significant bump in capacity as the Keystone XL pipeline is only expected to move 830,000 bbls/day out of western Canada.

Foolish Takeaway

As a Valero spokesman is quoted as saying in the article, “If we just sat around and waited for Washington, we’d never get anything done.”  Clearly, as Washington stalls on this project, the world is shifting, to the detriment of TransCanada.  One has to think that if a decision out of Washington doesn’t come soon, this may become a project that TransCanada will just let die on the vine.

Should the Keystone XL pipeline ever be approved, it’s not a stretch to think that oil from Canada could one day make its way to China. But what many don’t realize is that Canada is already helping to power China by way of uranium – the key ingredient for nuclear power. That’s why The Motley Fool has prepared a Special FREE Report that will clue you into the two best uranium companies in Canada. It’s called “Fuel Your Portfolio With This Energetic Commodity,” and you can receive a copy at no charge, by simply clicking here!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler does not own shares in any of the companies mentioned.  The Motley Fool does not own shares in any of the companies mentioned. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

funds, money, nest egg

Retirees: 3 Canadian Stocks You Can Confidently Own for the Next 20 Years

Here's why retirees need to plan beyond 20 years in retirement. Fortis Inc. (TSX:FTS), Royal Bank of Canada (TSX:RY) stock…

Read more »

Question marks in a pile
Tech Stocks

Should You Invest in Absolute Software Stock Right Now?

Absolute Software (TSX:ABST) is a tech stock that is worth your attention, as it offers exposure to exciting security markets.

Read more »

Dividend Stocks

1 Oversold Dividend Stock I’d Buy in December 2022

Here’s one of the best Canadian dividend stocks to buy in December that I find undervalued.

Read more »


FOR TUESDAY – 3 TSX Stocks to Buy Today and Hold for the Next 3 Years

Given their growth prospects, these three TSX stocks could outperform over the next three years.

Read more »

Supermarket aisle with empty green shopping cart
Stocks for Beginners

Is Dollarama Stock a Buy at All-Time Highs?

Dollarama stock (TSX:DOL) remains at all-time highs while the rest of the market drops. Does this mean it's due to…

Read more »

Online shopping
Tech Stocks

Should You Buy Shopify Stock If the Rate Hike Cycle Slows?

Is SHOP stock a buy after its 72% drop this year?

Read more »

A bull outlined against a field

2 Canadian Stocks Set to Soar in a New Bull Market

Consider Sleep Country Canada Holdings (TSX:ZZZ) stock and another mid-cap bargain, as the bear market moves on.

Read more »

Gold bars
Metals and Mining Stocks

Better Buy: Newmont or Barrick Gold Stock?

If you think better days are ahead for gold miners, consider exploring gold stocks Newmont and Barrick Gold.

Read more »