The new 715-mile-long Trans Mountain Pipeline in Canada will add 590,000 barrels a day of capacity to Canadian oil producers for export. Fidelity portfolio manager Peter Belisle calls the pipeline a “game changer for Canadian oil producers.” Fidelity reports:
“This new pipeline gives Canada significantly greater access to world markets,” says Belisle. “And I believe the broader market is underestimating the impact here.”
He adds that the Canadian energy sector has the potential to “meaningfully improve its environmental profile” via Pathways, a carbon capture and sequestration program, or CCS, that is being developed by an industry group.
Oil sands, the type of crude deposits found in many of Canada’s oilfields, are well-suited to CCS applications, given their large, concentrated sources of carbon dioxide. The CCS program recently appointed Derek Evans, the former CEO of oil-sands producer MEG Energy, as executive chair. Belisle says he has high confidence in Evans’s ability to direct this program.
Action Line: Owning hard-to-replicate infrastructure can be an advantage for companies. The Trans Mountain Pipeline was so difficult to build that Canada’s government had to do it. It’s not easy to license rights of way. If you want to talk about owning infrastructure businesses and companies with hard-to-replicate models, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
