TransCanada Delays Controversial Keystone XL Pipeline

TransCanada (NYSE: TRP  ) , the operator of the proposed Keystone XL pipeline, said it will be postponing the line's in-service date from late 2014 or early 2015 to the second half of 2015, as the regulatory process drags on longer than anticipated.  

The ongoing delay in getting a U.S. presidential permit for the project could raise the pipeline's staggering $5.3 billion price tag even further. As of the end of March, TransCanada had already spent about $1.8 billion on the project.  

If constructed, Keystone would transport up to 830,000 barrels per day of crude oil from Alberta's oil sands to Steele City, Neb. From Nebraska, the crude would make its way to Cushing, Okla., from where it would be moved south via Seaway, a major pipeline that runs from Cushing to refineries along the Gulf Coast and is operated jointly by Enbridge (NYSE: ENB  ) and Enterprise Products Partners (NYSE: EPD  ) .

TransCanada's decision comes amid growing pressure from environmentalists, climate change campaigners, landowners, and others, who are urging lawmakers to reject the pipeline. They argue that allowing the pipeline to be built would lead to further development in Alberta's oil sands – a region that spews materially greater quantities of greenhouse gasses than conventional methods of oil production.

However, in its Draft Supplemental Environmental Impact Statement for the Keystone XL Pipeline, the U.S. Department of State concluded that Keystone XL would pose minimal risks to the environment, while conferring major economic benefits to the US. During its two-year construction period, the pipeline would generate tens of thousands of jobs for U.S. workers, according to the report.

Though the study acknowledged that Alberta's oil sands emit greater amounts of greenhouse gasses into the atmosphere, it argued that rejecting Keystone would have little impact on the pace of development in Alberta's oil sands, stating: "Approval or denial of any one crude oil transport project, including the proposed project [Keystone XL], remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the US."

The U.S. Department of State is currently reviewing comments on the study that were received during a 45-day public comment period, which ended April 22. Once the department concludes its review, it will likely conduct a final supplemental study before consulting with other federal agencies to help determine whether or not the pipeline is in the national interest – a process that could take up to three months.

Whether or not Keystone XL is approved by the U.S. State Department, improvements in pipeline infrastructure will be a defining trend in North America's energy landscape over the next several years – one that astute investors would be wise to follow. Enterprise Products Partners, the nation's largest publicly traded energy partnership, is at the forefront of this trend and is investing heavily in pipeline infrastructure that will serve the nation's energy companies for decades into the future. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool's brand-new premium research report on the company.

 


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 29, 2013, at 2:40 PM, mdk0611 wrote:

    "growing pressure from evironmentalists, climate change campaigners, landowners"

    You forgot the 800 lb. gorilla, Warren Buffett.

  • Report this Comment On April 29, 2013, at 4:11 PM, cyberclark wrote:

    One major item is being missed from the press releases. Timing!

    We have sufficient; underutilized pipeline space available for all and any production that we can put out over the next 5 years.

    Then, depending on expansion and more importantly who's doing the expanding (India? China?) the need for more pipelines would not arrive for perhaps 10 years.

    The word "imperative" is very over used.

  • Report this Comment On April 30, 2013, at 2:11 PM, cdkeli wrote:

    The author's miserable comments that ",,,astute investors would be wise to follow,,," CLEARLY indicates that any moral or eithical qualms regarding the health of the citizens of this country and the future of the world have little to do with short-sighted avarice.

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