TransCanada still sees producer support for Keystone XL pipeline

CALGARY TransCanada Corp. said it still expects commercial support for its controversial Keystone XL oil pipeline, tamping down speculation that it was having trouble finding customers for the longdelayed line.

Keystone XL, which was rejected by the Obama administration before being revived by U.S. President Donald Trump this year, would boost TransCanada’s dividend growth, the company said in a statement Friday. Media reports in recent weeks said that the company was having trouble signing up customers for the pipeline, conceived to help move crude from Alberta’s oilsands to refineries on the U.S. Gulf Coast.

TransCanada said earlier this year that it was working to sign new shippers following years of delays. Given the time it took to gain federal approval, TransCanada said it expected some shippers to reduce their volume commitments and that other new customers would be introduced. The company said on Thursday that it’s soliciting additional commitments to ship oil on Keystone XL.

“We’ve had good support from our legacy shippers, which gives us a good base to launch this open season,” Paul Miller, TransCanada’s president of liquids pipelines, said on a conference call.

The open season closes on Sept. 28, with the results of the process expected to be finalized in late November, Miller said. The company should also receive its regulatory decisions from Nebraska around that time and will weigh both of those factors in determining whether to proceed with the line, he said. If TransCanada decides to move ahead on Keystone XL, it would need six to nine months to prepare for construction and about two years to build it, he said.

Success in advancing Keystone XL or other growth initiatives such as the Bruce Power life extension may “augment or extend the company’s dividend growth outlook,” chief executive officer Russ Girling said in the statement.

The company plans to increase its annual dividend at the upper end of an eight per cent to 10 per cent range through 2020.

Keystone won votes of confidence from the chief executive officers of Canadian oil producers Cenovus Energy Inc. and Suncor Energy Inc. this week. The CEOs both said they support Keystone and that the Canadian energy industry needs more pipeline capacity. Suncor confirmed that it plans to ship its products on Keystone.

Alberta’s oil producers have long warned that a lack of pipeline space was hurting their prospects. That pipeline pinch may start to hit the industry later this year as Suncor’s massive Fort Hills oilsands project starts to produce oil and Canadian Natural Resources Ltd. completes another phase of expansion at its Horizon mine.

TransCanada is also spending $2 billion to expand its natural gas pipeline network in Western Canada. The upgrades to the Nova Gas system will include 275 kilometres of new pipeline.

The company said on Friday that it was applying to the National Energy Board to expand capacity on its Canadian Mainline.