Downsizing alone is not the answer to Canada pipeline sector woes

4 September 2020 (Last Updated September 4th, 2020 15:53)

Downsizing alone is not the answer to Canada pipeline sector woes

The Covid-19 pandemic has impacted the pipeline sector in Canada, forcing pipeline companies in the country to opt for measures that can allow them to weather out  unfavourable market conditions.

Pipeline operators in Canada have  resorted to downsizing their capital expenditure (capex) for 2020 to withstand looming economic uncertainty.

Several pipeline operators in Canada halted their expansion plans of ongoing projects due to the pandemic-induced economic slowdown.

Keyera Corp has delayed the construction schedule of its Key Access Pipeline System, likely pushing the start of the project by a year to 2023.

Similarly, Pembina Pipeline Corp, has decided to defer the expansion plans of Pembina Peace Expansion VII, VIII, and IX projects.

 

Participants of  Canadian pipeline projects have been reducing their overall capex for 2020. Suncor Energy, Pembina Pipeline Corp,  Keyera Corp, and Inter Pipeline have all taken off a third of their  initially planned expenditure for this year.

Husky Energy Inc has downsized its overall capex in excess of US$1.2 billion due to unfavourable market conditions.

Canada pipeline sector needs investment

The oil and gas pipeline sector in Canada has been at the receiving end of pandemic outbreak undergoing heavy losses in a very short span.

Although, reducing the expenditure or delaying upcoming projects to plug losses might provide a short-term solution, it  may not be enough to sustain business in the long run.

Canada’s pipeline operators are expected to invest in disruptive technologies to augment operational efficiency that can protect pipeline companies from sudden market  challenges in future.