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Enbridge Says Crude Price Discount May Affect Investment

Enbridge Inc. Chief Executive Officer Al Monaco said he is “concerned” about the impact of discounted Canadian crude on oil-sands investment.

“We need to attract world prices to promote investment in the oil sands,” Monaco said today in Edmonton, Alberta. “We don’t want price discounts to affect investment.”

Canadian companies are forgoing about C$2.5 billion ($2.5 billion) a month because of the lower prices, according to an estimate by Houston-based investment bank PPHB Securities LP. The discount has eroded Canadian oil profits and reduced tax revenues for Alberta, the bank said.

Investment in oil sands is made with long-term considerations, said Alberta Finance Minister Doug Horner, who attended the presentation, in an interview. The province expects the differential to diminish with the addition of new pipeline capacity, he said.

“Obviously, that is a concern that we have,” Horner said. “But there is a growing movement of market adjustments that will turn around the differential.”

Enbridge is investing C$15 billion over the next three years to add capacity for 1 million barrels of Alberta crude, Monaco said. Among projects the pipeline operator is developing are Northern Gateway, to ship oil to the Pacific, as well as a reversal of an existing line from Ontario to Quebec, home to several refineries.

Refiners could decide to ship processed crude to other markets if they find customers, Monaco said.

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