Canadian Pacific sees growth opportunities in energy sector

CALGARY — North America’s energy sector will provide Canadian Pacific Railway Ltd. with plenty of growth opportunities in the years ahead, company executives told investors Wednesday.

CALGARY — North America’s energy sector will provide Canadian Pacific Railway Ltd. with plenty of growth opportunities in the years ahead, company executives told investors Wednesday.

One key growth area will be Alberta’s industrial heartland near Edmonton, where much of the province’s oilsands processing takes place, said chief marketing officer Jane O’Hagan.

“I’m exited by our long-term prospects to earn our share in the development and expansion of this region,” she said at a Canadian Pacific (TSX:CP) investor conference.

“The slowdown and constraints posed by the economy over the last two years have delayed some of the upgrader plans, but we’re seeing interest pick up.”

One proposal, an upgrader planned by North West Upgrading Inc. and Canadian Natural Resources Ltd. (TSX:CNQ), recently won the support of the Alberta government.

A lot of the near-term growth for Canadian Pacific will come from bringing construction materials into the region as companies take their projects off the shelf.

“Our current footprint and investments in the region enables us to take advantage of these opportunities. We will be ready to serve this market,” said O’Hagan.

In addition to Alberta’s industrial heartland, Canadian Pacific is also the only major railway positioned to serve to other big emerging energy plays.

One is the Bakken oil formation that straddles parts of Saskatchewan, North Dakota and Montana.

Another is the Marcellus shale formation, where companies are only just beginning to drill for natural gas in Pennsylvania and New York.

Canadian Pacific is also well-positioned to carry freight for alternative energy producers.

The railway has a logistical team set up to help bring supplies to the wind energy industry, said Ray Foot, vice-president of sales.

“We’re seeing good year-over-year revenue growth as this environmentally friendly energy source continues to grow,” he said.

Ethanol has also become a “big success story” for the railway, he added.

When Canadian Pacific acquired the Dakota, Minnesota & Eastern railway in 2008, it knew it would be able to tap into the U.S. ethanol market, but underestimated how successful that business would be, Foot said.

“We knew that ethanol would be a win for us, but we substantially discounted the number of plants expected to move to production. We were wrong. Those plants came to fruition and they’re all now producing at full levels,” he said.

“The energy business in North America is robust and CP will be a big player in its expected growth.”

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