Could the Otterburne Explosion Hurt TransCanada’s Long-Term Goals?

Another setback for the pipeline industry.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Over the weekend a pipeline owned and operated by TransCanada Corp (TSX:TRP)(NYSE:TRP) exploded outside in the southern Manitoba community of Otterburne, sending flames hundreds of feet into the air and causing road closures and a loss of gas service to over 4,000 homes. The explosion also affected Xcel Energy (NYSE:XEL) customers in the U.S. who are serviced by the pipeline.

The section of pipe that exploded was part of the Canadian Mainline natural gas pipeline system and was built between 1960 and 1969. The cause of the rupture remains unknown. This could not have come at a worse time, with overnight temperatures falling to -45C (with the wind chill). Residents were left without gas for the weekend, and some communities still have many more days until services along the three affected lines will be restored.

Past explosions in Manitoba

This is not the first time that TransCanada has had one of its natural gas pipelines erupt into flames in the province of Manitoba.

In 1995, the community of Rapid City located north of Brandon experienced one of these explosions. In 1996, the gas pipeline running on the southern edge of my hometown St. Norbert exploded. I still remember hearing the explosion and I’ll never forget the sight of the 400-500 foot pillar of fire.

This was follow by a quiet period that ended in 2002 when the line running outside Brookdale that is located north east of Brandon also erupted into flames.

Potential fallout

TransCanada and other pipeline companies should expect to see some negative press in the coming days as they push for expanding their current infrastructure. For TransCanada it could be used as fodder to further push back the Northern Keystone XL pipeline out of safety concerns.

Those involved in BC’s natural gas boom such as Fortis (TSX:FTS) and Shell (NYSE:RDS.B) could face increased scrutiny from the public. Even as the province pushes to capitalize on its fully realized gas reserves, these types of accidents are hard to shake from the minds of the people living near the pipelines.

Foolish bottom line

On the first day of trading since the explosion TransCanada’s stock held firm, up $0.11 to close at $48.55. While the impact to TransCanada’s financials will take months to realize, the immediate effects on those in southern Manitoba and those in the natural gas industry are already unfolding.

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.

Fool contributor Cameron Conway does not own any shares in the companies mentioned.

More on Investing

Profit dial turned up to maximum
Tech Stocks

$1,000 Invested in Constellation Software Stock Would Be Worth This Much Today

Constellation Software (TSX:CSU) is trading above $2,000 today. Why this stock is so expensive, and is it worth buying?

Read more »

Dividend Stocks

Passive Income: 3 Top Canadian Stocks to Buy for Monthly Dividends

Companies such as Pembina Pipeline and Killam Apartment REIT pay investors monthly dividends, making them top bets for income-seeking investors.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Stocks for Beginners

TFSA Investors: Top TSX Stocks to Buy With $6,000

Here are two safe, dividend-paying TSX stocks for your long-term portfolio.

Read more »

Gold medal

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Are you looking for growth stocks that could be huge winners in the next decade? Here are three top picks!

Read more »

Retirees sip their morning coffee outside.

Retirees: How to Make Over $95/Week in Passive Income TAX FREE!

Canadian retirees who are hungry for passive income should look to snag stocks like Sienna Senior Living Inc. (TSX:SIA) in…

Read more »

Man holding magnifying glass over a document

Where to Invest $500 in the TSX Right Now

Given the massive correction, long-term investors can start buying stocks like Shopify and goeasy to outpace the broader markets by…

Read more »

Aircraft wing plane

Air Canada Stock Is a Fantastic Deal Right Now

Air Canada (TSX:AC) is a great stock to own, as market fear turns into hope amid falling recession fears.

Read more »

Pixelated acronym REIT made from cubes, mosaic pattern

Beginner Investors: Get Passive Income by Investing in REITs!

You can get passive income by investing in REITs like Northwest Healthcare Properties REIT (TSX:NWH.UN).

Read more »