Energy Equipment And Infrastructure Alliance: Inadequate Pipeline Capacity Raises Prices
Late last month, The Wall Street Journal reported that Canada’s Oil Sands producers are suffering from higher prices.
The reason, according MSCI’s partners at the Energy Equipment and Infrastructure Alliance (EEIA): inadequate pipeline and rail takeaway capacities have required shippers to pay heavily for transport, which reduces the price realized. With no new pipelines available in the near-term and crude-by-rail operating at near capacity, shippers are hopeful that Keystone XL and other proposed projects within Canada will alleviate the bottleneck. (Click here for the latest from Connecting the Dots on Keystone.) While pipelines are delayed, railway companies are reluctant to invest in increased transport capacity because they expect when pipelines finally come online, they’ll replace crude-by-rail shipments.
According to Canadian Pacific's John Brooks, “We don't want to ramp up, spend a lot of money and utilize assets for a market we know is going to go away.”