By REBECCA PENTY
CALGARY (Bloomberg) -- TransCanada has
about $31 billion of projects on its books, even without
the $5.4 billion pipeline the company had targeted for
completion in 2012.
For producers, Keystone is the earliest export line
scheduled to ease bottlenecks which have helped push Canadian
heavy crude $27/bbl above the United States benchmark and are
costing the industry about $16 billion/year, according to
Canadian oil-sands output is set to more than double to 4.5
MMbpd by 2025 from last year and producers are forecast by RBC
Capital Markets to spend as much as $27 billion annually
through 2018 to develop the words third-largest crude
reserves. Canadian Natural, which has 120,000 bpd booked on
Keystone XL, plans to increase oil-sands output by about 14 %
in 2014 from this year.
For large shippers like Canadian Natural or Suncor, Keystone
XL is far more important, than for TransCanada,
John Stephenson, who helps oversee $2.47 billion at First Asset
Investment Management, including stakes in TransCanada,
Canadian Natural and Suncor, said by e-mail December 4.
TransCanada expects the results of the United States State
Departments environmental review of Keystone XL
by the end of the year, CEO Russ Girling said November 19 in an
interview. The report on the pipeline, which would link the oil
sands to the worlds largest refining center on the Gulf Coast,
will help Obama decide whether the conduit would contribute
significantly to climate change, the test he set in a June
speech for the projects approval.
Canadian Natural has 120,000 bpd of capacity booked on
Keystone XL, Steve Laut, president of the company, said on a
May conference call, according to the transcript. Suncor
Energy, which expects to boost its production of crude by 10 %
in 2014 from this year, and Cenovus Energy also are among
companies that committed to use the line.
As TransCanada pursued other projects and split Keystone XL
in half by building the southern leg that doesnt require
a presidential permit first, the pipelines contribution
to the companys growth diminished. The line now
represents 14 % of TransCanadas roughly $34 billion in
projects backed by contracts, compared with 32 % four years
ago, according to figures compiled from company presentations.
The projects include solar power and other oil and gas
The northern portion will contribute $776 million a year in
earnings before interest, taxes, depreciation and amortization,
compared with $1.55 billion for the Energy East pipeline
TransCanada is proposing from Alberta to the Atlantic Coast,
according to Steven Paget, an analyst at FirstEnergy Capital
The southern leg of Keystone XL, from Cushing, Oklahoma, to
the Gulf Coast, is forecast by Calgary-based FirstEnergy to
contribute $228 million a year. Oil began flowing through the
pipe last week and its scheduled to start delivering
crude in mid-to-late January, according to TransCanada.
Even as TransCanada plans to build other oil pipeline
capacity, Keystone XL remains very important for
the company, Girling told reporters last month. Its
still a very important project for the industry.
The pipelines delay is one reason why Cenovus is
making commitments to other projects, Brian Ferguson, Cenovus
CEO, said at an investor conference in September, pointing to
rail and barge shipments that have allowed producers to
work around bottlenecks, he said.
For producers boosting North American oil output, the
pipeline is a lot more meaningful, than for TransCanada
as multiple new crude conduits are needed to shrink discounts
of grades on the continent to global benchmarks, said Pendill,
of Edward Jones.
The only way were going to do that is to provide
a greater outlet coming out of the supply centers, that being
the Bakken and the oil sands and getting that to the shore
lines, he said. XL could certainly help get that