Keystone risk worries U.S. oilsands investors

U.S. investors cut stakes in oilsands stocks, including Suncor Energy Inc. and Cenovus Energy Inc., as delays to the Keystone XL project and the lack of pipeline capacity depressed Canadian crude prices.

U.S. ownership of Calgary-based Suncor, Canada’s largest energy company, fell 8.2 percentage points in the past three years while Cenovus saw its U.S. shareholder base fall 5.9 percentage points.

“You’ve got a theoretically valued resource that can’t come to market,” Ted Harper, who helps oversee more than $9 billion at Frost Financial Management Group in Houston, said Thursday. He pointed to Keystone XL’s delays and challenges facing other proposed Canadian export pipelines. “U.S. investors tend to be more shorter term in terms of their returns focus than their Canadian and European counterparts.”

TransCanada Corp.’s $5.3 billion Keystone XL is one of several projects designed to ease congestion from booming oilsands projects and move the fuel from Alberta to refineries. Stymied by the lack of market access, energy companies have underperformed U.S. peers by 55 percentage points on Standard & Poor’s indexes during the past three years as Western Canada Select oil prices averaged $19.53 a barrel less than the U.S. benchmark, according to data compiled by Bloomberg.

The timeline for U.S. approval of Keystone XL will make the planned start of operations in the second half of 2015 “difficult,” TransCanada Chief Executive Russ Girling said Friday. “I hope a decision can be made this year.”

Investor wariness, which caused some energy shares to fall, can be blamed on a shortage of pipelines to the coasts and the resulting price gap between Canada’s heavy crude and global grades, TorontoDominion Bank analysts led by Menno Hulshof said.

“There are always ebbs and flows in share ownership, but based on the regular interaction we have with our investors and the feedback we receive we’re not overly concerned with the modest four per cent drop we’re seeing from 2011 to today,” Sneh Seetal, a spokeswoman for Suncor, said Thursday.