What a Trump Presidency Means for Canadian Oil and Gas....

As President-elect Donald Trump assembles his team and gets ready to assume the role of 45th President of the United States, many Canadian energy investors are pondering on what a Trump Presidency means for Canadian oil and gas. Most Significantly, a Trump presidency likely bodes well for efforts to improve access of Alberta crude to American markets, potentially reducing the discount local producers accept for their oil. Specifically, Trump noted during his campaign that he would approve the Keystone XL pipeline, which would deliver 830,000 barrels of oil per day from Western Canadian producers to refineries on the U.S. Gulf Coast. However, this approval would also come with conditions that would likely see the U.S. take a larger chunk of the profits or even ownership rights to the pipeline. Recall that the Obama administration rejected Keystone in 2015, which led to TransCanada Corp eventually filing for NAFTA arbitration seeking $15 billion in damages, claiming the decision was arbitrary and politically driven. Post the Trump election win, TransCanada Corp has stated that it plans to engage with the Trump administration on Keystone's benefits and remains fully committed to the 1,900-kilometer pipeline. Further, Senate Republican leader Mitch McConnell recently asked president-elect Donald Trump to move swiftly in approving construction of the Keystone XL pipeline.

More broadly, Canada could take its cue from the Trump agenda and support the construction of all the proposed big pipelines to move its oil to tidewater - TransCanada Corp.’s Keystone XL, Kinder Morgan’s expansion of Trans Mountain, and TransCanada’s Energy East. Combined, Keystone XL, the TransMountain expansion and Energy East would have the capacity to move more than 2.4 million barrels of oil a day. It would seem that sooner or later, the Trudeau government will have no other choice than to accept the pipelines to ensure their economic agenda (growth) has a chance of success. Overall, a pro fossil fuel Trump presidency will likely be positive for Canadian oil and gas, particularly with respect to getting one of Canada's most valuable and abundant commodities to tidewater.