TransCanada says Keystone XL interest strong enough to proceed

The company said it has commitments for 500,000 barrels of oil per day, which is about 60 percent of the total design capacity.
By Daniel J. Graeber  |  Jan. 18, 2018 at 9:32 AM
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Jan. 18 (UPI) -- Pipeline company TransCanada said Thursday that commercial commitments for about 60 percent of the capacity for its Keystone XL pipeline is enough to proceed.

The company said it concluded the open season for commercial commitments to fill the Keystone XL pipeline. With 500,000 barrels per day in firm commitments for the next 20 years, TransCanada said the proposed project was positioned to proceed.

"Interest in the project remains strong and TransCanada will look to continue to secure additional long-term contracted volumes," the company stated.

The announcement on commercial commitments is unchanged from a third quarter update. The 20-year commitments represent about 60 percent of the total design capacity.

Referencing long-standing concerns about the Sandhills region in Nebraska, some of which were the source of legal battles, regulators on the state Public Service Commission in November sided against the preferred route for Keystone XL and instead voted for an alternate route that allayed ecological concerns.

The Nebraska Department of Environmental Quality published a report more than three years ago on the need to avoid the Sandhills area. Rod Johnson, a former Republican state legislator and commissioner for the PSC, said parts of the pipeline as planned would be exposed and therefore vulnerable if TransCanada built the $8 billion pipeline.

"TransCanada is continuing outreach in the communities where the pipeline will be constructed and is working collaboratively with landowners in an open and transparent way to obtain the necessary easements for the approved route," the company stated.

Its third quarter estimate on shipper commitments was considered lackluster at the time. Crude oil production gains in the United States could strain existing infrastructure and Keystone XL would carry oil from oil sands in Alberta along with some shale oil from the Bakken formation in North Dakota.

While it does alleviate some concerns about the lack of infrastructure in North America, the pipeline could be seen primarily as a foreign pipeline sending Canadian oil to the southern U.S. coast for exports.

U.S. analysis from 2015 said most Canadian pipeline projects would break even with oil holding steady at between $65 and $75 per barrel. The State Department under President Donald Trump said in its permitting decision the break-evens for Canadian oil projects remained the same, but the sector in general has proven itself to be resilient in the low-price cycle.

The price for Brent crude oil, the global benchmark, was trading close to $69 per barrel early Thursday.

Preparation for construction is under way and the primary work is set to begin next year.

The original leg of its Keystone pipeline in the United States ruptured and released 5,000 barrels of oil in rural South Dakota in early November. The U.S. State Department under President Barack Obama denied a Keystone XL permit on environmental grounds.

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