What Makes TransCanada Attractive in the Long Term

1 2 3 4 5
Part 3
What Makes TransCanada Attractive in the Long Term PART 3 OF 5

In Focus: TransCanada’s Keystone XL Pipeline Project

The project

TransCanada’s (TRP) Keystone XL pipeline project is a crude oil pipeline beginning in Hardisty, Alberta, and extending to Steele City, Nebraska. After years of protests and roadblocks, the U.S. State Department issued a presidential permit authorizing the Keystone XL pipeline in March 2017.

In Focus: TransCanada’s Keystone XL Pipeline Project

Interested in ENB? Don't miss the next report.

Receive e-mail alerts for new research on ENB

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

The Keystone XL pipeline will transport oil from Alberta’s oil sands reserves to Nebraska. In addition to Keystone XL, there are various other projects planned to transport oil from Alberta’s reserves. Kinder Morgan’s (KMI) Trans Mountain pipeline expansion and Enbridge’s (ENB) Northern Gateway project are the key initiatives. ENB’s Line 3 pipeline from Alberta to Wisconsin is also undergoing a replacement.

Why is Keystone XL opposed?

Extracting oil from oil sands (or bitumen) results in much more greenhouse gas emissions than conventional oil sources. Moreover, the extraction process affects boreal forests and requires much more fresh water than conventional oil extraction. As the project is expected to harm the environment, environmentalists have strongly opposed it.

Uncertain future?

Although the pipeline got a presidential permit, its troubles are far from over. In addition to opposition from environmentalists, the project faces extreme oil price headwinds. In light of Canada’s commitment under climate agreements to reduce carbon emissions, combined with oil price dynamics, industry experts now expect the reduced development of Canadian oil sands reserves as a source of oil.

The next step for TransCanada is to gather commercial support in the form of long-term agreements from oil producers and refiners to move forward with the project’s construction.

In May 2017, the company expected to get the required commitments in a couple of months. Paul Miller, executive vice-president and president of Liquids Pipelines at TransCanada, said on the company’s 1Q17 earnings call, “A lot has changed since we were first denied the permits here in 2015 in regard to crude oil pricing and supply and various competitive alternatives, so they continue to work through that and I anticipate it will take a couple of months yet before we sum up our commercial support.”


Please select a profession that best describes you: