TransCanada Corp. remains confident that the amended plans for the northern portion of its Keystone XL oil pipeline project will obtain the approvals it needs from both Nebraska and the White House, the company said Wednesday.
The public comment phase of Nebraska’s consideration of the pipeline re-routing that avoids an environmentally sensitive region will conclude soon and the Canadian pipeline company expects it will be able to complete its reapplication for a Presidential Permit later by the end of the year.
“The outcome of the U.S. election doesn’t change our opinion that Keystone XL will be approved” and built by the end of 2014 or early 2015, said Alex Pourbaix, president of Energy and Oil Pipelines at an Investor Day event in Toronto. It was just about a year ago that the U.S. State Department delayed a decision on the project and then, in January, President Obama rejected the permit application.
The project has encountered significant opposition from environmentalists, politicians and others concerned that the carbon emissions of oilsands crude production and consumption would worsen global warming and that the pipeline put a major aquifer at risk of contamination from an oil spill.
Pourbaix’s comments came before Obama, in his first press conference since winning reelection, spoke of the need to address climate change. “I am a firm believer that climate change is real and impacted by human behavior and carbon emissions,” he said. “I think we have an obligation to do something about it.”
Obama went on to say he wasn’t aware of what Democrats or Republicans were prepared to do, but that taking on climate change in a serious way “would involve some tough political choices.”
For TransCanada, the need for the full Keystone pipeline system (stretching from Hardisty, Alberta to Houston and Port Arthur, Texas) grows stronger the longer it is delayed. At 1.4 million b/d and capable of exporting one third of all projected Canadian oil production, the completed Keystone system will provide crude oil delivery volume that can’t be matched by rail or truck, Pourbaix said.
In the last year, shippers previously committed to long-term contracts on Keystone XL have remained so and enough volume has been added to make the line fully committed for 20 years, said Russ Girling, TransCanada’s president and CEO. Nervousness about long-term commitments has given way to worries that oil production will outstrip takeaway capacity which, even with Keystone XL in place could occur by 2017.
TransCanada executives also discussed the progress of the proposed Eastern Mainline. Studies of both economic and technical feasibility are well underway for the project that would involve the conversion of natural gas pipeline that runs east to Montreal and Toronto and the construction of new pipeline to connect the converted pipeline to the Hardisty hub. Capacity projections range between 500,000 to 1 million b/d, depending on where interest lies.
Executives reported that eastern Canada’s highest-in-the-country fuel prices, familiarity with crude oil movement (unlike British Columbia where pipeline construction is encountering significant opposition) and refiners’ desire to obtain crude cheaper than waterborne imports have stakeholders looking favorably on the project.
Allowing “a couple of years in permitting and a couple more in construction” makes 2017 a probable startup date if the Eastern Mainline Oil Pipeline were to go ahead, company executives said.