June 29, 2018

Enbridge Line 3

  • Minnesota Public Utilities Commission (MPUC) approved Enbridge’s Line 3 Replacement project, including their preferred route.
    • Enbridge reaffirmed expected in-service date of H2 2019 for the 1,600km project.
    • Line 3 will restore capacity back to 760,000 bpd vs 390,000 bpd currently.
    • Enbridge expects no material change to the project cost estimate of $5.3 billion in Canada + US$2.9 billion in the US.
    • MPUC will require Enbridge to remove the existing 50-year old Line 3, representing an incremental undetermined cost beyond 2019.

Oil (Tom Lee: Consultant to Angus Watt Advisory Group)

  • WTI crude has risen to over $73 a barrel, the highest level since November 2014.
  • Three factors that are driving oil prices up:
    • The U.S. has warned buyers of Iranian oil to cease and desist by November.
    • Fighting in Libya over control of oil export terminals.
    • Temporary outage at Syncrude in Alberta.
  • Two reasons why oil prices won’t stay up here:
    • Saudi Arabia and Russia have agreed to boost output. The targeted boost is modest, but other producers will overproduce to protect their market shares and to take advantage of the sanctions against Iran.
    • U.S. oil production and oil exports have reached record new highs, at 10.9 million barrels per day and 3.0 million bpd, respectively, and will continue to rise because there are no curbs to the trends.

Alberta

  • Provincial deficit for fiscal 2017-18 is $8 billion, $2.5 billion less than previously estimated.
  • Provincial government spending was $55.3 billion, $400 million more than estimated.
  • Oil price rise increased revenues to nearly $5 billion, up $1.2 billion vs estimated.
  • Improved global markets in early 2017 brought $933 million more in investment income than expected.
  • Bolstered energy sector helped Alberta’s GDP increase by a country-leading 4.9% last year.
  • Alberta took in $402 million less than expected from personal taxes, $470 million less in corporate taxes.

Tidbits

  • Federal ministers announced up to $2-billion in loans and new funding for the steel and aluminum sectors, which will be spread out over a number of years.
  • Former PM Steven Harper is said to meet with US National Security Advisor in Washington on July 2, the day after a wide range of retaliatory measures come in effect; a surprise to the Canadian government.
  • Russia says Canada’s legalization of cannabis contravenes its international law obligations and breaches UN drug control conventions.
  • Although Swedes are paying some of the world’s highest income taxes, the government is not delivering its part of the contract in important areas such as health care, education, and policing.
  • President Trump’s peace deal to Palestine offers Muslim control of the holy places in Jerusalem, limited communal autonomy in the West Bank, and prosperity through massive public and private-sector investment.