The $10 Billion Mistake That Will Revive Canadian Oil
After years of pain, Canada’s expensive new TMX pipeline is set to put the industry back on track.
A worker stands on a concrete berm at the Trans Mountain Pipeline expansion project.
Source: Bloomberg
For the last decade, the Canadian oil industry has experienced firsthand the meaning of “with friends like these, who needs enemies.” To its south is an obvious export route and a huge client: the US. But American courts and politicians blocked new oil pipelines, strangling the industry to the north.
The bottleneck has cost Canadian oil companies billions of dollars in forgone revenue, delaying the industry’s growth. With existing pipelines full, any extra barrels have had to move via costly railway, depressing their value. At the worst point in late 2018, Canadian crude sold at a discount of $50 a barrel less than American petroleum.