TC Energy's (TRP) Keystone Pipeline Restarts at 50% Capacity
TC Energy's TRP Keystone crude oil pipeline is operating at about half of its capacity after being halted for maintenance work. The pipeline, which transports Canadian oil to markets in the United States and overseas, restarted on Tuesday night. However, it is currently transporting close to 300,000 barrels a day (bpd), nearly half of its capacity of 600,000 bpd.
Maintenance shutdown
On Oct 3, 2023, TC Energy shut down the Keystone pipeline for maintenance work, which was originally scheduled to take place in August 2023, but was postponed due to unforeseen circumstances. This delay contributed to the supply tightness in the Canadian oil market and the widening of discount for Canadian heavy crude.
Details of the Restart
On Oct 4, 2023, TRP announced that the Keystone pipeline restarted at half capacity, although it didn’t release any details regarding the same. The pipeline is expected to return to full capacity in the coming days.
Impact on the Oil Market
The shutdown of the Keystone pipeline had a significant impact on the oil market. The difference between Canadian heavy crude in Alberta and the American benchmark West Texas Intermediate (WTI) widened as a result. The discount widened to 90 cents, or $20.65 a barrel. The value has exceeded $20 for the first time since February.
The restart is expected to positively impact the oil market by increasing supply and easing supply tightness. This could lead to lower oil prices, which would be beneficial for consumers and businesses.
However, the impact is likely to be muted, as the pipeline is operating only at half capacity. Additionally, the global oil market is still facing several headwinds, including the ongoing war in Ukraine and the possibility of a global recession.
Implications for Canada and the United States
The restart of the Keystone pipeline is a positive development for both the Canadian oil industry and U.S. refiners. The pipeline is a vital medium for transporting Canadian oil to several markets, and its shutdown has contributed to higher oil prices. The restart should help ease supply tightness and bring down oil prices.
For Canada, the restart of the Keystone pipeline is a welcome relief. The Canadian oil industry has been struggling in recent years due to low oil prices and high production costs. The restart of the pipeline will help boost Canadian oil production and exports.
For the United States, the resumption is a positive move. The country is a major importer of Canadian oil, and the restart of the pipeline will help secure its energy supplies.
Zacks Rank and Key Picks
Currently, TRP carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy CVI and USA Compression Partners USAC, both sporting a Zacks Rank #1 (Strong Buy), and Harbour Energy HBRIY, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy is valued at $3.07 billion. In the past year, its shares have lost 9.5%.
CVI currently pays a dividend of $2 per share or 6.55% on an annual basis. Its payout ratio currently sits at 30% of earnings.
USA Compression Partners is valued at around $2.34 billion. USAC currently pays a dividend of $2.10 per unit, or 8.82% on an annual basis.
USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
Harbour Energy is worth approximately $2.26 billion. HBRIY currently pays a dividend of 21 cents per share, or 7.02% on an annual basis.
The company's activities include acquiring, exploring, developing, and producing oil and gas reserves. It has ownership stakes in a number of properties in the United Kingdom, Norway, Indonesia, Vietnam and Mexico.
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