Trans Mountain: Reason #43,583 Why I Love To Blog

For background, start here: activist environmentalists.

Here is the home page for TransMountain. The project overview:

Trans Mountain is proposing an expansion of its current 1,150-kilometre pipeline between Strathcona County (near Edmonton), Alberta, and Burnaby, BC. The proposed expansion, if approved, would create a twinned-pipeline that would increase the nominal capacity of the system from 300,000 bopd to 890,000 bopd. 

• Projected capital cost: approximately $5.4 billion
• Approximately 994 km of new pipeline
• Reactivation of 193 km of reactivated pipeline
• 12 new pump stations to be built
• 20 new tanks to be added to existing storage terminals in Burnaby (14), Sumas (1) and Edmonton (5)
• Westridge Marine Terminal in Burnaby to be expanded with three new berths
• Existing line to carry refined products, synthetic crude oils, light crude oils with capability for heavy crude oils
• Proposed new line to carry heavier oils with capability for transporting light crude oils

This is not the first time the Trans Mountain line has been expanded. In fact, since operation began in 1953, the capacity of the pipeline system has been increased numerous times, with the initial expansion in 1957.

The most recent expansion project took place between 2006 and 2008 with the construction of 13 new pump stations and modifications to existing stations. Also during this time, the Anchor Loop project added 160 kilometres of new pipe through Jasper National Park and Mount Robson Provincial Park between Hinton, Alberta and Hargreaves, BC.

At present, the Westridge Marine Terminal handles approximately five tankers per month. Should the proposed expansion be approved, the number of tankers loaded at the Westridge Marine Terminal could increase to approximately 34 per month.

Kinder Morgan has a huge page on the Trans Mountain pipeline.

So, what's the status of Trans Mountain? (Note: Canada's National Energy Board -- NEB -- appears to be equivalent to the US FERC). GlobalPost is reporting:

Texas-based Kinder Morgan's $5.4-billion pipeline expansion would have the capacity to transport up to 890,000 barrels per day from Alberta to the company's Westridge terminal in Burnaby.

The National Energy Board hearings into Kinder Morgan's proposed pipeline expansion through Alberta and British Columbia will begin in August and hear from more than a thousand people, groups and communities.

But only 400 of the more than 2,118 applicants who applied to be interveners in the hearings will be allowed to participate.

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Why I Love To Blog

And that leads me to reason #43,583, why I love to blog.  In the emotional / political arena, I have always been bothered by President Obama killing the Keystone.

However, in my investing arena, my reaction is completely different. Note: in one of the current polls I ask whether "killing the Keystone" has actually benefitted you as an investor. The answer will differ from investor to investor, but nimble investors very likely profited from Obama's decision: three winners come to mind immediately: a) Warren Buffett (owns the regional railroad monopoly serving the Bakken); b) rail industry in general (for multiple reasons); and, c) Kinder Morgan.

The discussion, for the investor, now shifts from TransCanada -- which by the way, will do very, very well with/without the Keystone -- and Kinder Morgan. Kinder Morgan is an international company but most of us probably still think of it as an American company. TransCanada sounds like a Canadian company. So, all things being equal, what's not to love if one is an American? Irony?

There are two or three big stories here, of course.

The biggest story: walk softly and carry a big stick. Ever since the Keystone was killed, we have heard nothing about the pipeline from two players that walked very, very softly but wielded huge sticks: Kinder Morgan and Warren Buffett.

Which, of course, raises another question but one which I will not ask.

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Moving Canadian Crude Oil To The West Coast Or To The Gulf Coast?

That's an interesting question. Canada definitely has close ties to China. One might argue that Canada is "closer" to China diplomatically and culturally than the United States. The US has a glut of oil arriving at the Gulf and it will only "get worse" -- depending on one's definition of "worse." China is going to need a lot of Canadian oil. Some of that Canadian oil will find its way to California, which also needs its own source of oil.

From a pro-growth, free-market, capitalist point of view, one can argue it would have been the best of all worlds for both pipelines to have been built and then let the market play out. At the other end of the continuum, from an activist environmentalist's point of view, it would be best to kill both pipelines.

Regardless of how it works out, it looks like western Canadian oil is reaching all three coasts: the west coast, the east coast, and the Gulf Coast.