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@scott...apologies if this is off-topic. How does this proposed legislation impact the favorability of pipelines vs. road vs. rail for transporting oil. Are pipelines and rail competitors for crude or refined oil transportation? Thanks in advance.
@scott...apologies if this is off-topic. How does this proposed legislation impact the favorability of pipelines vs. road vs. rail for transporting oil. Are pipelines and rail competitors for crude or refined oil transportation? Thanks in advance.
First, in a somewhat related note, Canadian Pacific has its two-day investor day starting today. They ramped up their buyback from 5M shares to 12M shares yesterday and I think CP's discussion of the future - there will be announcements of new financial goals and discussion of the next stages for the company. I think that will be an interesting look into the company, but also will likely reflect on how the industry is doing/where it's going in general.
As for the legislation...
Not really a concern, in my opinion. In this country, it feels like the court of public opinion has already decided upon rail vs pipelines. Not that there won't be any pipelines built ever again, certainly,but I think it will be tougher (in terms of regulatory and otherwise) than it already was. I do own both pipelines and rail, although less in the way of pipelines after the whole Kinder Morgan buyout situation happened.
Canada keeps saying that the project's eventual approval is guaranteed. I question that and also question why Canada didn't just use the time, money and effort to build out to the coasts to amp up exports to Asia and elsewhere.
As for the railroads, I think they'll eventually upgrade cars and pass the costs on. The railcar companies (GBX, TRN, ARII) continue to work, but they are really at this point in time primarily a play on the demand of oil by rail and the continued demand for cars.
The thing that concerns me in the near-to-mid term is a considerable drop further in the price of oil. I think if oil drops much further, you will start to see whose production isn't sustainable at lower prices. That may also effect traffic in other, related things (for example, frack sand, whose deliveries by rail have ramped up enormously.)
Railroads remain a very long-term holding for me and if things continue to move South, I'll look to add a little more.
I don't own the railcar companies - not that they aren't doing really well and won't continue to - but what interests me are the railroad networks themselves and all of the assets (land, etc.) As I've noted before, one of my favorite investments is vital/strategic infrastructure.
It's run up a lot and I don't own it anymore, but in terms of truck transport, Gibson Energy (GBNXF.PK) is a diversified (truck transit, pipelines, services, etc) Canadian co (with Canadian/US exposure). "Gibson Energy is one of the largest crude oil truck haulers in Western Canada, and is the largest independent for-hire crude hauler in the U.S. We offer hauling services for crude oil, condensate, propane, butane, asphalt, methanol, molten sulphur, petroleum coke, gypsum, iron calcine, water and drilling fluids to many of North America’s leading oil and gas producers in Western Canada and the U.S."
I don't think truck transit really competes with rail/pipelines in the broader/long-distance sense, but I do certainly see it as big for "last mile" destination delivery.
What else would you expect "the head of an oil industry trade group" to say?
And you know what? They'll probably get what they ask for. Corporations are people too, just really important ones who get whatever they ask for, apparently. The TBTF banks are really, really important people. VIPs, no less.
Just a passing thought on why Canada didn't build the pipeline to the coast to supply Asia; a couple of things might hinder any pipeline construction. Two major mountain ranges including the Canadian Rockies, and the possibility of having to cross national or provincial park land.
Building a pipeline seems like a no brainer so why didn't they build instead of waiting for the Keystone? Maybe those two issues stood out?
Just a passing thought on why Canada didn't build the pipeline to the coast to supply Asia; a couple of things might hinder any pipeline construction. Two major mountain ranges including the Canadian Rockies, and the possibility of having to cross national or provincial park land.
I think there may be logistics issues, but cost becomes a concern (Keystone has nearly doubled in proposed cost and that wasn't proposed that long ago) and you have environmental concerns that have only grown.
All that said, the general idea is really that the Keystone situation has been going on for six years now (I couldn't believe it when I read that this morning.) At what point do you stop spending time and effort and opportunity cost? I dunno, but you do now have activist investors appearing to circle Transcanada.
Meanwhile, "Nexen Inc. has laid the groundwork for a concept to use trains to carry crude to the West Coast for export, as Canada’s energy industry rushes to find new ways to move oil out of North America.
Whatever happens the oil will get to where it is needed. The activist greens didn't want the pipeline because of the possibility of oil spills in the waters. The trains are doing the pipelines work.
Thanks @scott for that info on the KM pipeline. I didn't know that.
Whatever happens the oil will get to where it is needed. The activist greens didn't want the pipeline because of the possibility of oil spills in the waters. The trains are doing the pipelines work.
Thanks @scott for that info on the KM pipeline. I didn't know that.
I agree and thanks for your comments. As for KM, wish KMI was doing better lol. I diversified into other MLPs after Kinder bought KMP and KMR and I'm not regretting it. Will stick with some KMI for a long while as I think KM still as an extraordinary asset base, but a much smaller position than I had in the partnership.
"Once the November elections are behind us, it is almost certain that U.S. oil companies will turn up the heat on Congress to permit the export of U.S. crude. Enterprise Products Partners L.P. (NYSE: EPD) is taking a step to prepare for that eventuality by announcing on Wednesday a two-step merger process that would add Oiltanking Partners L.P. (NYSE: OILT) to its empire."
----
EPD and PXD were allowed to export condensates already.
The US Department of Commerce ruled June 25, 2014 to allow PXD and EPD to export condensates (an ultra light crude oil).
So much for "Energy Independence". Why don't we simplify things, get rid of Congress entirely, and just vote for our favorite oil companies and Wall Street barons?
So much for "Energy Independence". Why don't we simplify things, get rid of Congress entirely, and just vote for our favorite oil companies and Wall Street barons?
lol. As if congress has accomplished anything in recent years. As for exports, look at the chart of symbol LNG, up something like 85% this year.
Other names in the infrastructure space that are potential exporters also doing well.
The railcar manufacturing/refitting companies such as Greenbrier (GBX) and Trinity (TRN) certainly took a hit today. I would think such companies would pass on higher costs to their customers but the market doesn't seem to agree.
The railcar manufacturing/refitting companies such as Greenbrier (GBX) and Trinity (TRN) certainly took a hit today. I would think such companies would pass on higher costs to their customers but the market doesn't seem to agree.
Dang re: TRN. Canadian Pacific CEO Hunter Harrison giving his intro speech at investor day, talking briefly about how they are for newer, safer cars and were the first to come out and say they were for it. So far, fairly broad view of the company's next few years. I'm guessing tomorrow's full day will be more detailed.
"Financial expectations on CP's journey to 2018 include:
More than doubling diluted earnings per share (EPS) over the next four years compared to 2014 Growing annual revenue to $10 billion in 2018 Generating cumulative cash flow before dividends of $6 billion through 2018 Harrison said CP's new targets and growth strategy are built on the foundation of performance and discipline that will see the company achieve its objectives for 2016 a full two years early, including an operating ratio in the mid-60s and cash flow before dividends of $1 billion ."
Comments
Maybe "we're really sorry about all of the wrecks and dead people, and we support increased safety even though it will cost more"?
http://www.nytimes.com/2014/04/25/business/trailing-canada-us-starts-a-push-for-safer-oil-shipping.html?_r=0
Looks like BP wants to unsettle your stomach further:
4_things_to_know_about_the_bp
As for the legislation...
Not really a concern, in my opinion. In this country, it feels like the court of public opinion has already decided upon rail vs pipelines. Not that there won't be any pipelines built ever again, certainly,but I think it will be tougher (in terms of regulatory and otherwise) than it already was. I do own both pipelines and rail, although less in the way of pipelines after the whole Kinder Morgan buyout situation happened.
Also, Transcanada has said that costs for the Keystone pipeline have doubled. "Reasons for the projected higher costs include maintaining pipes, labor agreements and inflation, according to company executives." (http://online.wsj.com/articles/keystone-pipeline-cost-expected-to-double-transcanada-ceo-says-1411067631)
Wait, I thought there was no inflation. Hmmm...
Canada keeps saying that the project's eventual approval is guaranteed. I question that and also question why Canada didn't just use the time, money and effort to build out to the coasts to amp up exports to Asia and elsewhere.
As for the railroads, I think they'll eventually upgrade cars and pass the costs on. The railcar companies (GBX, TRN, ARII) continue to work, but they are really at this point in time primarily a play on the demand of oil by rail and the continued demand for cars.
The thing that concerns me in the near-to-mid term is a considerable drop further in the price of oil. I think if oil drops much further, you will start to see whose production isn't sustainable at lower prices. That may also effect traffic in other, related things (for example, frack sand, whose deliveries by rail have ramped up enormously.)
Railroads remain a very long-term holding for me and if things continue to move South, I'll look to add a little more.
I don't own the railcar companies - not that they aren't doing really well and won't continue to - but what interests me are the railroad networks themselves and all of the assets (land, etc.) As I've noted before, one of my favorite investments is vital/strategic infrastructure.
It's run up a lot and I don't own it anymore, but in terms of truck transport, Gibson Energy (GBNXF.PK) is a diversified (truck transit, pipelines, services, etc) Canadian co (with Canadian/US exposure). "Gibson Energy is one of the largest crude oil truck haulers in Western Canada, and is the largest independent for-hire crude hauler in the U.S. We offer hauling services for crude oil, condensate, propane, butane, asphalt, methanol, molten sulphur, petroleum coke, gypsum, iron calcine, water and drilling fluids to many of North America’s leading oil and gas producers in Western Canada and the U.S."
http://seekingalpha.com/article/1639122-gibson-energy-an-enviable-position-in-the-heart-of-canadian-oil-hubs
I don't think truck transit really competes with rail/pipelines in the broader/long-distance sense, but I do certainly see it as big for "last mile" destination delivery. And you know what? They'll probably get what they ask for. Corporations are people too, just really important ones who get whatever they ask for, apparently. The TBTF banks are really, really important people. VIPs, no less.
Building a pipeline seems like a no brainer so why didn't they build instead of waiting for the Keystone? Maybe those two issues stood out?
I think there may be logistics issues, but cost becomes a concern (Keystone has nearly doubled in proposed cost and that wasn't proposed that long ago) and you have environmental concerns that have only grown.
All that said, the general idea is really that the Keystone situation has been going on for six years now (I couldn't believe it when I read that this morning.) At what point do you stop spending time and effort and opportunity cost? I dunno, but you do now have activist investors appearing to circle Transcanada.
Meanwhile, "Nexen Inc. has laid the groundwork for a concept to use trains to carry crude to the West Coast for export, as Canada’s energy industry rushes to find new ways to move oil out of North America.
The Calgary company, which has agreed to a takeover by China’s CNOOC Ltd., has spent more than a year on an idea that would see oil move by rail to Prince Rupert, B.C., where an export terminal on federal land could load it onto tankers bound for Asia." (http://www.theglobeandmail.com/globe-investor/nexen-closer-to-moving-crude-oil-to-west-coast-by-train/article7981477/)
Thanks @scott for that info on the KM pipeline. I didn't know that.
"Once the November elections are behind us, it is almost certain that U.S. oil companies will turn up the heat on Congress to permit the export of U.S. crude. Enterprise Products Partners L.P. (NYSE: EPD) is taking a step to prepare for that eventuality by announcing on Wednesday a two-step merger process that would add Oiltanking Partners L.P. (NYSE: OILT) to its empire."
----
EPD and PXD were allowed to export condensates already.
The US Department of Commerce ruled June 25, 2014 to allow PXD and EPD to export condensates (an ultra light crude oil).
http://seekingalpha.com/article/2287533-federal-approval-of-condensate-exports-by-pioneer-and-enterprise-products-should-give-eagle-ford-e-and-p-companies-a-lift
Other names in the infrastructure space that are potential exporters also doing well.
"Financial expectations on CP's journey to 2018 include:
More than doubling diluted earnings per share (EPS) over the next four years compared to 2014
Growing annual revenue to $10 billion in 2018
Generating cumulative cash flow before dividends of $6 billion through 2018
Harrison said CP's new targets and growth strategy are built on the foundation of performance and discipline that will see the company achieve its objectives for 2016 a full two years early, including an operating ratio in the mid-60s and cash flow before dividends of $1 billion ."
http://finance.yahoo.com/news/canadian-pacific-outlines-financial-targets-200600994.html
Meanwhile:
http://www.thestreet.com/story/12861535/1/jim-cramers-stop-trading-potential-disaster-for-railcarsoil-combo.html?puc=yahoo&cm_ven=YAHOO