These stocks could see tailwind from Pacific Link pipeline


Though the proposed oil pipeline from Alberta to the West Coast — now called Pacific Link — still faces hurdles despite its designation as a project of national interest, according to CIBC Capital Markets analysts, companies associated with it may benefit, they said in a note on Oct. 1. As a project of national interest, the pipeline is now on an accelerated regulatory track moving it closer to construction. Among the next set of hurdles are the requirement for Indigenous consultation and “we continue to view successful Indigenous participation and economic partnership as essential for project advancement and one of the largest sources of schedule uncertainty,” Robert Catelliler, a CIBC analyst, said. Other hurdles include the economics of the pipeline and costs associated with the Pathways carbon capture and storage requirements. Inflation and rising interest rates could also balloon the overall cost of the project, estimated at $35 billion to $45 billion, by another $5.5 billion to $6.5 billion on rates of 6.5 per cent, CIBC said. Pembina Pipeline Corp. (PPL:TSX) has the most direct exposure to the project with a 10 per cent interest, though that remains subject to a final investment decision. More broadly, CIBC said Keyera and AltaGas are best positioned to benefit from increased oilsands production, while Gibson Energy Inc. (GEI:TSX) could win on infrastructure growth. Other names that should experience an “indirect tailwind” include TC Energy and Rockpoint Gas Storage Inc. (RGSI:TSX), John Mould, a TD Cowen analyst, said in a note on Oct. 1. On the negative side, the project could compete with Enbridge Inc. (ENB:TSX) and South Bow Corp. (SOBO:TSX) projects, although Mould said he thinks that theme is “overblown.”



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