Pipeline firm ponders options

Keystone project may be built in segments

CALGARY — Transcanada Corp. is mulling whether to separate its proposed Keystone XL oil pipeline into segments and build one leg from Oklahoma to the Gulf Coast first, following a U. S. rejection of the $ 7- billion project.

Chief executive Russ Girling said Thursday that laying pipe from an oversupplied oil storage hub in Cushing, Okla., to refining centres in Texas would cost Transcanada $ 2 billion.

“I think that clearly, with yesterday’s decision, we are now open to amending or changing our plans to building this in segments,” Girling told an investor conference in Whistler.

A Transcanada pipeline from Cushing to the Gulf Coast would compete directly with the Seaway pipeline reversal proposed by rival Enbridge Inc. and its partner Enterprise Products Partners LP, scheduled to start on June 1, Enbridge chief executive Pat Daniel said at the same conference.

The Seaway line would transport up to 450,000 barrels per day by the end of the year, Daniel said, noting the companies are in the midst of gauging shipper support to expand capacity on the line.

Gulf Coast refiners are keen to replace declining supplies of international oil with Canadian and U. S. oil and a glut in supply at Cushing has had North American crudes trading at a discount to the international benchmark Brent for more than a year.

U. S. President Barack Obama breathed life into the southern route after rejecting Keystone XL Wednesday, when he said his administration would work with the oil and gas industry “including the potential development of an oil pipeline from Cushing, Okla., to the Gulf of Mexico.”

Transcanada had floated the idea of building a leg from Cushing to Texas last November.