Pipelines’ promises under scrutiny

REALITY CHECK

of Nebraska concluded that TransCanada also significantly underestimated the likelihood of major pipeline spills.

TAXES The State Department estimated Keystone XL would generate US$70 million in additional state and local taxes during construction and US$55.6 million in property taxes once the pipeline begins operating.

The Dakota Access companies estimate that the project will result in US$156 million in sales and income taxes during construction and US$55 million in annual property taxes.

OIL Keystone XL would carry about 830,000 barrels a day from Alberta to Nebraska. TransCanada, which is seeking US$15 billion in damages from the United States over the 2015 rejection of its previous application, said it reapplied on Thursday. The State Department has 60 days to make a decision.

At an investor conference earlier this week, TransCanada CEO Russ Girling was optimistic but not convinced Keystone XL can get built because of uncertainty about demand from oil producers.

“I believe the economics for this project are still there, but we’ll see,” Girling said. “This wasn’t in our planning horizon in the middle of last year. We only have just re-engaged with our shippers on that topic.”

Afolabi Ogunnaike at Wood Mackenzie said rising costs, continuing opposition and competition from two other planned pipelines will complicate XL’s future.

“This could be a race to get shipper commitments and a race to build,” he said. “Maybe only two of the three pipelines get built.”

Some of the biggest producers of oilsands oil or bitumen are Canadian firms including Suncor Energy Inc. and Canadian Natural Resources Ltd. Other big producers include Texas-based Exxon Mobil Corp.

The US$3.8-billion Dakota Access project would carry about 500,000 barrels of oil per day of from North Dakota to Illinois.

MADE IN USA Trump signed a separate memorandum last week that could lead to a requirement that new and retrofitted pipelines within the United States be built with U.S.-produced materials “to the maximum extent possible and to the extent permitted by law.” But much of the Dakota Access pipe is already laid, and TransCanada has stockpiled much of the pipe it would use for Keystone XL — much of it foreign.

Vicki Granado, a spokeswoman for Energy Transfer Partners, said 57 per cent of the pipeline used in the Dakota Access project was bought from manufacturers in Louisiana and Arkansas. That was the total U.S. capacity available when it was ordered, she said.

TransCanada spokesman Terry Cunha said “a majority” of XL’s pipe has come from the U.S. and Canada — he declined to break out the U.S. share. The firm said in 2012 that three-fourths of the pipe laid in the project’s U.S. section would come from the U.S. or Canada, with the rest from Italy and India.