TransCanada ‘confident’ Energy East pipeline will meet new rules
Higher price tag for project will be passed on to customers: analyst
Executives at TransCanada Corp. put a brave face on potential new regulatory requirements for the $12-billion Energy East pipeline on Tuesday, but said the total cost of the project is likely to increase.
TransCanada president and CEO Russ Girling said during the company’s third-quarter earnings call that it has not asked for a meeting with prime minister-designate Justin Trudeau’s recently elected Liberal government yet, but hopes to discuss potential changes to National Energy Board regulations and the Energy East pipeline “in the coming weeks and months.”
During the campaign, Trudeau’s campaign co-chair Dan Gagnier resigned over an email to TransCanada that advised the pipeline company on how to lobby a new federal government and suggested reaching out to new government officials as soon as possible.
Trudeau called the email, which TransCanada requested, “inappropriate” at the time.
Trudeau also said during the campaign that a Liberal government would make changes to the way the NEB processes and reviews pipeline applications in Canada, which could affect the regulatory process for TransCanada’s Energy East pipeline.
Girling and TransCanada chief operating officer Alex Pourbaix both said Tuesday the company would comply with new regulations.
“To the extent that the new government decides to modify the new rules or procedures, we’re confident that we’ll be able to manage within those new rules,” Pourbaix said.
“No question, these things cost more money going forward but at the end of the day, if the result is a safer, more reliable set of infrastructure then that makes sense for us,” Girling said.
He did not provide an updated cost estimate for Energy East.
AltaCorp Capital analyst Dirk Lever said a higher price tag for the Energy East pipeline will likely be passed onto TransCanada’s customers, Western Canadian oil producers, many of which are desperate for access to new markets.
“Given the pipeline options that are quickly disappearing for producers,” Lever said, a slightly higher price for the Energy East pipeline would be likely be accepted by the wider energy industry.
Before announcing its third quarter results, TransCanada asked the U.S. State Department to suspend its Keystone XL pipeline application as it seeks regulatory approvals in Nebraska for the route.
TransCanada posted higherthan-expected earnings in its oil pipeline division as a result of higher volumes on its existing Keystone XL pipeline system.
The company pulled in $402 million in net earnings in the third quarter, a 12 per cent drop from
If the result is a safer, more reliable set of infrastructure then that makes sense for us.
the $457 million it earned in the same period last year. At the same time, the pipeliner grew its third quarter revenues 20 per cent from $2.4 billion last year to $2.9 billion.
RBC Capital Markets analyst Robert Kwan said in a research note that TransCanada’s third quarter results were slightly ahead of market expectations as a result of its natural gas pipelines in the U.S., oil pipelines and U.S. power plants.
Girling said Tuesday the company is ready to begin construction on its $5-billion, 900-kilometre Prince Rupert Gas Transmission line, which would connect the Montney natural gas formation to Petronas’ Pacific Northwest LNG facility, as soon as Petronas sanctions the project.