CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:Could KMP pipeline expansion to Vancouver

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Hope this helps>

Energy Infrastructure: Does Crude by Rail Make Sense? Is it Sustainable? Over 2014-2015, GEI/CUS/KEY Benefit....Longer Term Pipes Win (ENB/TRP/PPL/IPL)
Short Summary: Alberta is in the process of adding ~700,000 bbl/d of crude-by-rail infrastructure over the next three years. This trend is being driven by pipeline bottlenecks. The pipeline bottlenecks largely reflect regulatory delays/blockages (see KXL), and Akman questions whether crude by rail is any less likely to be targeted for similar objections/regulations/delays. In fact, if mass crude by rail is allowed, pipeline companies could build tracks cross border and then construct pipelines that do not cross national boundaries (...complying with the letter of the law, if not the spirit of the law).
Investment Thesis: Akman's conclusion is that crude by rail does not make sense in either economic terms or on risk-adjusted (e.g. safety) terms. Akman recognizes there will be a short term boom in crude by rail spending and revenues...however, he sees this as a short term trend (2-4 years) with rail infrastructure being overbuilt in the 2013-2016 timeframe for a short term capacity constraint, with pipelines ultimately capturing the long term revenue stream as regulatory approvals or 'pseudo-solutions to cross the border' are implemented. Put simply, the long term winners remain ENB, TRP, PPL and IPL in Akman's view. The order of investment trends is as follows:
1. GEI, CUS and to a Lesser Extent KEY win on Rail Volume Shipments 2014-2015. The following chart shows who has the greatest short term (2013-2016) exposure to greater crude-by-rail infrastructure to meet the short term gap in transport needs. GEI, KEY, CUS are the biggest winners.