Quote:
Originally Posted by para transit fellow
Don't know if this has been covered. There may be an additional TransCanada business factor to decision to suspend pursuit of the energy east proposal
Energy east depended on transforming an existing - under-utilized -- gas pipeline across the prairies. In late September, TransCananda. got a ruling that they can now charge considerably less for natural gas transmission on that pipeline.
The new low rate could change the eastern Canadian demand for western Canada natural gas producers.
https://apps.neb-one.gc.ca/REGDOCS/Item/Filing/A86215 |
In my opinion, this was clearly plan F. Shipping gas is far worse than oil in terms of profitability (especially at half of what they were charging before), but a full pipe is more profitable than an empty pipe.
Obviously TransCanada has been trying to figure out ways to get the utilization back up. Converting to oil was one way, and dropping the price by half and ship gas was another way. If I was running TRP, I know which one I would want for the company.
Getting the rate discount approved does change the economic analysis slightly - is spending the massive amount of money, time, tarnishing the entire brand fighting with first nations and protesters worth the increased profitability 5 years down the line? Or with the rate approval, we can spend no money, keep the asset slightly profitable, and focus our money elsewhere?