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TransCanada delays Keystone XL start to 2016

11.20.2013  | 

TransCanada pushed the start date for its $5.4 billion Keystone XL oil pipeline into 2016, the second delay this year as the company awaits United States approval for the project.

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By REBECCA PENTY

CALGARY (Bloomberg) -- TransCanada pushed the start date for its $5.4 billion Keystone XL oil pipeline into 2016, the second delay this year as the company awaits United States approval for the project.

The pipeline, which would stretch from Alberta’s oil sands to the United States Gulf Coast, can begin operating no sooner than two years after it gets a United States presidential permit, CEO Russ Girling said in an interview. With the permit expected early next year, “there’s no way we can get it done faster than two years,” Girling said.

The company has previously suggested it may be able to build the northern leg of the project within two years. TransCanada split its original Keystone XL project after President Barack Obama rejected a prior route last year because of fears its path through Nebraska would threaten ecologically sensitive lands. TransCanada is currently building the southern leg, which doesn’t require a permit because it doesn’t cross the United States border, and has revised the route for the other portion.

The project has galvanized environmental groups that argue it will increase greenhouse-gas emissions by encouraging development of Alberta’s oil sands, which require more energy than most conventional crude production. Supporters say the oil sands will be developed with or without Keystone XL and the line’s construction will create jobs.

Department Review

The United States State Department is overseeing an environmental review to estimate the extent Keystone XL would contribute to global warming. A draft analysis released in March found the project wouldn’t have a big impact on greenhouse-gas emissions because companies can find other ways to transport the bitumen to market, such as by train.

Costs for the line will continue to rise as delays push the start date back, TransCanada CFO Don Marchand said in Toronto. The pipeline’s $5.4 billion cost includes extensions to reach the United States oil storage hub in Cushing, Oklahoma, and to gather supplies from the Bakken formation in Montana and North Dakota, James Millar, a company spokesman, said in an e-mail.



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