Post by
alwaysmoving on Dec 12, 2022 5:32pm
Keystone
MEG doesn't have allocation on Keystone and uses Enbridge's mainline to send barrels to refiners. Is MEG still able to maintain its volume with this shutdown? Or will the shutdown force Enbridge and others to take on new capacity thus hindering those with allocation on the pipeline? Would be fortunate if their production and capacity isnt hindered.
Was relieving to see a turn in the trend today, we'll see what happens tomorrow with the impending rate hike.
Comment by
cashtango00 on Dec 13, 2022 8:48am
it's my understanding that yes they use the Enbridge line but they are affected by the outage because its putting pressure on the WCS spread
Comment by
jleer42 on Dec 13, 2022 9:20am
The WCS spread is up because of transportation constraints. The outage is actually putting upward pressure on WTI, a good part of MEG's production is positively impacted by the Keystone outage. MEG does sell some of its oil in Edmonton and this oil is subject to the increased spread. End of the day it's a mixed bag, but MEG is not impacted a negatively as some Canadian producers.
Comment by
cashtango00 on Dec 13, 2022 10:53am
With all due respect, the Keystone issue is definitely a negative for MEG, not for transportation issues as others are, but because of the increased WCS spread. The minimal effect it may have on WTI is dwarfed by the negative WCS factor which is large. For every $ 1 increase in the spread, MEG loses 45m cash flow. That's substantial for a company this size
Comment by
alwaysmoving on Dec 13, 2022 12:23pm
It's certainly a negative for any Canadian producers that don't have their own refining capability. I'm just saying that I believe MEG is better positioned than most.
Comment by
jleer42 on Dec 13, 2022 12:28pm
Not sure who you are directing this at, but my point is MEG is not as negatively impacted by the shutdown as other Canadian producers. MEG uses the Enbridge mainline not TMX. From MEG's presentation "Currently ~60-65% of Christina Lake blend volumes have access to global pricing at the USGC"
Comment by
cashtango00 on Dec 13, 2022 12:57pm
I agree that MEG is less affected than some others due to their distribution network, my point is this is still a net negative due to what is happening to WCS. That's why I enclosed the sensitivity to cashflow numbers. When WCS gets hit, MEG feels it.