Keystone XL: Pipe Dreams

TransCanada’s third-quarter earnings call with analysts on Nov. 1 ought to have been a victory lap for Chief Executive Officer Russell Girling: profit at the Calgary-based energy infrastructure company was up 20 percent over the same period in 2010; total revenue had risen 11 percent to C$2.14 billion ($2.07 billion); and he had a fat dividend to announce. Instead of enjoying the good news, however, Girling’s presentation was dominated by the same thing that has dominated pretty much all news about the company over the last five months: the tortured approval process for TransCanada’s next big thing, the Keystone XL pipeline.

First proposed in 2007 as an extension to another TransCanada oil pipeline, the XL will be three feet in diameter, run 1,750-plus miles, mostly below ground, cost roughly $7 billion to complete, and transport up to 700,000 barrels of oil a day. Crucially, it will carry crude oil from Alberta’s tar sands region across Montana, South Dakota, Nebraska, Kansas, and Oklahoma and through to refineries on the coast in Port Arthur, Tex., that can handle the heavy crude that comes from oil sands. The pipeline, says Doug Cogan, a research analyst at New York-based financial services giant MSCI, “would be a huge win not only for TransCanada, but the Canadian oil sands industry generally, because it would mean building a new backbone through the center of the U.S. that would allow access to markets within the U.S.”