TransCanada CEO: Keystone XL still most competitive Gulf coast pipeline
By EDWARD WELSCH
TransCanada Corp. chief executive Russ Girling said Wednesday the Keystone XL pipeline is still the best alternative to bring Canadian crude to the US Gulf coast despite a delay and a re-route imposed by the US government last week.
However, the delay will increase the competition Keystone XL faces from other pipeline companies proposing other routes to move crude oil from the key US storage hub in Cushing, Okla. to Texas refineries, Girling said.
Earlier Wednesday, Enbridge, another Canadian pipeline company, appeared to take the upper hand in the race to provide new capacity out of Cushing. The company said it had agreed to buy into the Seaway pipeline system, and reverse the direction, so oil could go from Cushing to the Gulf coast.
US benchmark crude jumped on the news, suggesting the Enbridge move - which could come as early as next year - could ease a bottleneck in the Midwest that has depressed US prices.
Reacting to the Seaway news, TransCanada said it may also try to get State Department approval to construct the Cushing-to-Gulf Coast leg of Keystone XL early next year.
Alex Pourbaix, president of the company's oil pipelines business, said the company had gotten 150,000 bpd in binding contracts for that leg of the pipeline, and shippers had expressed interest in having that section move ahead even as the rest of the pipeline faced delays due to the re-route.
Girling also said Keystone's shippers remain supportive of the project, due to its progress through planning and regulation.
Many of the materials and contracts to build the $7 billion pipeline are in place and ready to be put to use as soon as TransCanada gets final approval from the US State Department, he said.
On Monday, TransCanada reached an agreement with Nebraska officials to move the route of the Keystone XL pipeline away from an environmentally sensitive aquifer in the Sand Hills region, which may speed the pipeline's eventual approval.
The State Department, charged with reviewing cross-border pipelines, has said the review of the new route would take another 12 to 18 months, pushing Keystone's completion into 2014.
Other projects competing with Keystone XL include a joint venture between Enterprise Products Partners and Enbridge to build the 500-mile Wrangler pipeline, connecting Cushing to Houston.
On Wednesday, Enbridge said it would pay $1.15 billion to buy a 50% stake in the Seaway pipeline from ConocoPhillips (COP) and reverse its flow. Enterprise Products owns the other 50% and is the line's operator.
Girling said he remained confident Keystone XL would be approved.
"The Keystone XL project in our view means way too much to the US economy, the Canadian economy, US energy security, and US national security not to be approved," he said.
TransCanada estimates the $7 billion, 1,700-mile pipeline will create 20,000 jobs and $20 billion in economic stimulus to the US economy. After an expansion, it would ship up to 830,000 bpd or a third of all imports from Canada, the largest US crude oil supplier.
Dow Jones Newswires
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