Keystone pipeline’s start date set back

TransCanada Corp., the Canadian pipeline company, said delays in getting a U.S. presidential permit for the Keystone XL oil pipeline will push back its start until the second half of 2015.

The company’s $5.3 billion cost estimate for the project “will increase depending on the timing of the permit,” Calgary-based TransCanada said in a statement Friday. The company, which had spent $1.8 billion on the project as of the end of last month, previously targeted startup for late 2014 or early 2015.

The U.S. is expected to issue a decision this year on the line, which would carry crude about 2,000 miles from Alberta’s expanding oil-sands projects to Gulf Coast refineries. Environmentalists opposed to the project say it would speed oil-sands development and lead to global warming. They are also concerned about the potential for spills along the pipeline route. Backers say it would create U.S. jobs and help North American energy security.

“Rejecting this project would represent a serious reversal in our long-standing energy relationship,” Canada’s Natural Resources Minister Joe Oliver said in a speech at the Center for Strategic and International Studies in Washington this week.

Alberta Premier Alison Redford appealed to Democrat and Republican lawmakers earlier this month, her fourth trip to Washington, following Saskatchewan Premier Brad Wall’s visit in March.

The Canadian Association of Petroleum Producers, a Calgary based industry group, plans another trip to Washington this summer following a visit by a delegation of Canadian oil executives in February. Executives from energy companies Imperial Oil, Royal Dutch Shell, BP and Canadian Oil Sands, met Republican and Democrat senators and representatives as well as Obama administration aides.

Keystone XL is among a number of proposed oil pipelines that are critical to Canada’s economy, Brian Ferguson, chief executive officer of oil-sands developer Cenovus Energy, said in a phone interview.

“What we as industry and what our government representatives in Ottawa, Alberta and Saskatchewan should be doing is making sure that the correct information is available to decision-makers and legislators,” Ferguson said. “Keystone XL will create a tremendous amount of jobs in the United States and increase energy security.”

President Barack Obama rejected a prior pipeline route last year, amid concerns about its path through Nebraska and the threat of a spill in the Ogallala aquifer. Keystone XL needs a presidential permit because it crosses an international border.

TransCanada requires two construction seasons to complete the pipeline. The company has previously stated it expected to receive U.S. approval by mid-2013.

The U.S. State Department, in a draft environmental assessment last month, said the pipeline wouldn’t worsen climate change because oil-sands projects would be developed even if it isn’t built.

The company released the Keystone XL delay information along with its first-quarter results.

Net income rose to $437 million, from $346 million, a year earlier, the company said in a statement.

TransCanada, which has one sell, seven buy and nine hold recommendations from analysts, fell 1.2 percent to $48.37 in Toronto. The shares have gained 4.7 percent this year.

Enbridge Inc. is Canada’s largest pipeline company by market value.

TransCanada aims to start the $2.3 billion southern portion of Keystone XL, which doesn’t require presidential approval, later this year. The company spun it into a separate project after Obama rejected the main pipeline in 2012.

Information for this article was contributed by Andrew Mayeda and Rebecca Penty of Bloomberg News.

Business, Pages 27 on 04/27/2013

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