KXL alternative route could cost TransCanada additional $200M

CALGARY TransCanada Corp. will need to add as much as $200 million to the cost of its US$8 billion Keystone XL pipeline project after regulators in Nebraska approved an alternative to the company’s preferred route through the state, according to the company’s chief executive officer.

The Nebraska Public Service Commission’s approval in November of the alternative route would add to the project’s cost but “technically, it’s not a challenge,” TransCanada president and CEO Russ Girling said at an investors’ conference Thursday in Whistler, B.C.

Girling was addressing concerns that Keystone XL, a long-delayed project that would carry 830,000 barrels of oil per day from Alberta to the U.S. Gulf Coast, faces yet more uncertainty following a legal challenge in Nebraska.

Opposed landowners in Nebraska filed a challenge in late December to the Public Service Commission’s approval of the alternative route, arguing that the alternative was provided for comparative purposes only and had not been studied by environmental bodies.

The challenge hinges on the commission’s purview — whether it has the legal ability to approve an alternative, rather than just issuing a “yes” or “no” to a proposed route.

“We’ve very comfortable that the commission came to a decision that was within the law,” Girling said of the public service commission’s decision and its legal challenges. “We’re very comfortable that the decision is solid.”

He said the company is pressing forward with the project, spending money to acquire land easements for the alternative route in Nebraska. He expects to have agreements for the entire right-of-way for the pipeline, as well as all construction permits, as early as the third quarter of this year.

Pressed by an analyst about when TransCanada would announce a final investment decision on the controversial project, Girling was non-committal but said the company is advancing the project and spending money now.

“We will prudently spend money to acquire right of way, to acquire the balance of our permits but we don’t have to ramp into large dollars until we get into 2019,” Girling said. He said the company is preparing to begin construction early next year.

TransCanada has previously said that construction would take two years, meaning the project would not begin shipping oil from Alberta to heavy-oil-calibrated refineries in Texas and Louisiana until 2021.