TransCanada Keystone XL Delay Costs Consumers, Girling Says
TransCanada expects a ruling from President Barack Obama by the end of March on its proposed pipeline that would link expanding Alberta oil-sands production with U.S. Gulf Coast refineries, Girling said in an interview today at his Calgary office. The project is scheduled to begin operating in 2016, four years after its original targeted start date, after delays because of environmental opposition.
“Some way or another the consumer is going to pay for all of this,” said Girling, who declined to specify a cost associated with project delays. Environmental groups may “want to drive the prices of fossil fuel and energy up.”
Canadian producers are counting on Keystone XL to help relieve a glut of crude resulting from a lack of transportation options for Alberta production that has led to Canadian heavy oil selling for as much as $42.50 a barrel less than the U.S. benchmark. Environmentalists oppose the project because they say the 830,000-barrel-a-day line poses a risk of oil spills and would encourage oil-sands output, which releases more greenhouse-gas emissions than some conventional oil production.
The Natural Resources Defense Council, an environmental group that opposes Keystone XL, has said the project would add $20 to $40 a barrel to the cost of Canadian crude, with gasoline prices rising as oil is diverted from Midwestern refineries to Gulf Coast facilities that export fuel.
The pipeline must get presidential approval because it stretches across the U.S.-Canadian border. A final environmental report from the State Department is expected “relatively soon,” Girling said, after which there will be a 90-day period to assess whether the line is in the U.S. national interest.
If approved, TransCanada needs 24 months to build the pipeline, which it first proposed to regulators in September 2008. In the meantime, shipments of oil by rail are increasing costs for producers and consumers as well as greenhouse-gas emissions, Girling said.
Obama initially rejected the project in January 2012, citing concerns with its path through ecologically sensitive lands in Nebraska. The company reapplied with a new Nebraska route last year and split the project in two, building the southern portion that doesn’t require a presidential permit. The southern leg is scheduled to start delivering crude Jan. 22, Girling said.
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