April 26 (Bloomberg) -- TransCanada Corp., Canada’s second-largest pipeline company, said delays in getting a U.S. presidential permit for the Keystone XL oil conduit will push back the start of operations 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 today. The company, which has spent $1.8 billion on the project as of the end of last month, previously targeted startup for late 2014 or early 2015.
“Maintaining a project with this type of delays is not inexpensive,” Chief Executive Officer Russ Girling told reporters at the company’s annual meeting today. TransCanada is evaluating additional startup costs, which would include storing pipe and pumps for the line, he said, declining to give an estimate.
The U.S. is expected to issue a decision this year on the line, which would carry crude about 2,000 miles (3,200 kilometers) 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. Backers say it would create U.S. jobs and help North American energy security.
TransCanada expects a final U.S. environmental review of Keystone XL will be complete in the “early summer” and a decision on the pipeline “in the coming months,” Girling said at the meeting.
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.
“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.
TransCanada requires two construction seasons to complete the pipeline. The company 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 first-quarter results today.
Net income rose to C$446 million ($437 million), or 52 cents a share, from C$352 million, or 52 cents, a year earlier, the company said in a statement. Excluding one-time items, per-share profit was below the 54-cent average of 13 analysts’ estimates compiled by Bloomberg.
TransCanada, which has one sell, seven buy and nine hold recommendations from analysts, fell 1.3 percent to C$49.14 at the close in Toronto. The shares have gained 4.5 percent this year.
Enbridge Inc. is Canada’s largest pipeline company by market value.
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