Agreements with shippers ‘encouraging’
Still, the alternate route “would involve a number of new landowners for us and we are striving to understand their perspectives on the project and we will continue to strive to reach agreement on mutually beneficial terms,” he said.
Nebraska’s approval was the project’s last regulatory hurdle, but the route change created new uncertainties for the company and was seized by opponents as an opportunity for further litigation.
TransCanada is continuing discussions to lock up binding agreements with shippers, and they “have been very encouraging,” Patry said.
Subject to a final investment decision, construction of the long- delayed pipeline would start in 2018, move forward in segments to optimize the schedule, and be completed in two years, said CEO Russ Girling. With much of the pipe already in hand, the cost estimate remains unchanged at US$8 billion.
If it moves forward, KXL would yield other expansion options for TransCanada, including new pipelines, storage and terminal facilities.
The company expects demand for heavy oil to keep increasing in the Gulf even if global oil demand plateaus in the late 2030s.
Also Tuesday, TransCanada restarted the base Keystone pipeline system, which carries 20 per cent of Western Canada’s crude oil exports, after repairing a leak that spilled 795,000 litres of crude oil in South Dakota.
Western Canadian natural gas production is also struggling with transportation bottlenecks and excess supplies that are depressing prices.
Karl Johansson, executive vice- president for Canada and Mexico natural gas, said the big growth opportunities are outside the local market in liquefied natural gas exports. TransCanada estimates that LNG, gas- fired power generation and industrial demand in North America would contribute to 27 billion cubic feet a day of demand growth in the next decade, raising total demand to 130 bcfd.
TransCanada is making proposals to Montney producers to transport their gas from North East B.C. all the way to the U.S. Gulf of Mexico using predominantly its own system. In a year, TransCanada will be able to transport Canadian gas all the way to Mexico, he said.
Increasing supplies from shale plays in Western Canada, not enough local demand, and failure to construct a single LNG terminal off the British Columbia coast have contributed to low local natural gas prices.
TransCanada also cont i nues to work on t he $4.8-billion Coastal GasLink, a proposed pipeline to carry Western Canadian natural gas to the LNG Canada project in Kitimat. A final investment decision by the Royal Dutch Shell PLC- led project is expected in 2018.
Access to the Gulf would bring relief to long-suffering Canadian oil and gas producers and more integration with the U. S. energy market. To the rest of Canada, it would be just another reminder of missed opportunities.