TransCanada expects Keystone XL approval soon


HOUSTON -- TransCanada Corp. still fully expects to receive approval for its controversial cross-border Keystone XL pipeline expansion within the next several months, a company executive said Thursday.

TransCanada, which has been waiting for White House approval for the 830,000 barrel-a-day pipeline expansion for years, expects to receive the necessary permit "by the first half of 2013," Paul Miller, TransCanada's senior vice president in charge of oil pipelines, said on the sidelines of the Platts North American Marketing conference in Houston.

"We anticipate to have this in service by end of 2014 or beginning of 2015," Mr. Miller said.

The pipeline is meant to ship heavy crude oil from Alberta, where production is expected to grow to 4.5 million bpd by the end of the decade. But the project has gained criticism from environmental groups who say it will spur increased production from Canada's tar sands, an energy intensive process some groups say will cause an increase in green house gas emissions.

Mr. Miller spoke about the pipeline after his presentation at the conference was interrupted by an anti-Keystone protestor who chained himself to the projector Mr. Miller had been using.

TransCanada has no interest in building an oil pipeline to Canada's West Coast, because competitors Enbridge and Kinder Morgan Energy Partners have already announced projects there, Mr. Miller said. Instead, TransCanada might convert a natural gas pipeline to transport Alberta's growing supply of light oil to refiners in eastern Canada, he added.

"We're talking to refiners today, stakeholders today, producers today, to see what the market wants," Mr. Miller said.

The lack of a major pipeline connecting Alberta's growing oil sands production has pushed local crude prices down. Western Canadian oil at the end of January was selling at a nearly $40/bbl discount to its Gulf Coast counterpart Maya.

One thing Mr. Miller did not foresee was Canadian oil exports out of the Gulf Coast. At least one analyst has forecast up to 200,000 bpd of Canadian crude could head to Europe and Asia via the Gulf Coast by the end of 2014.

"I don't know why a producer would ship to the Gulf Coast just to bypass 5 million barrels a day of heavy oil refining capacity," Mr. Miller said.

Mr. Miller said that the company remained confident that the pipeline expansion would receive approval, even as some potential buyer's have grown more skeptical. Tom O'Malley, chief executive for east coast refiner PBF Energy, earlier this month expressed doubt that Keystone XL would receive the necessary cross border permits.

Dow Jones Newswires

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