Undaunted by the long battle over Keystone XL and current low oil prices, TransCanada Corp. is planning to build another border-crossing pipeline that would ferry North Dakota crude to refineries in Eastern Canada.
TransCanada executives confirmed Friday they have signed contracts with shippers for enough capacity on the proposed 285-mile Upland pipeline to go forward with the project. It would move as many as 70,000 barrels a day of oil away from North Dakota’s Williston Basin, giving producers another alternative to shipping that crude by rail.
“There is no question that production is up in North America, across the board,” said TransCanada CEO Russ Girling, in a conference call to discuss the company’s earnings. “All of that production is moving on rail today, and it wants to get off rail as quickly as possible, and so those producers are talking to TransCanada and other service operators to look for alternatives, to move it off the rails on to a less expensive, more efficient, safer system.”
The project would be subject to regulatory reviews in Canada and the United States — including the same kind of national interest analysis the U.S. State Department is now conducing on TransCanada’s proposed Keystone XL pipeline.
First proposed more than six years ago, Keystone XL has become ensnared in a larger fight over climate change, and it is not known when the State Department will rule on whether the pipeline is in the national interest. In response to a legal challenge by landowners in Nebraska, a judge has issued a temporary injunction blocking TransCanada from invoking eminent domain along Keystone XL’s path through the state.
Keystone XL is largely aimed at giving Alberta oil sands crude a new route to the U.S. Midwest and on to Gulf Coast refineries — though room is reserved on Keystone for some North Dakota supplies.
Related story: House sends Keystone XL bill to Obama
The proposed Upland pipeline, by contrast, would serve U.S. producers.
Girling said he hopes the Upland pipeline won’t encounter the same permitting challenges — an “extraordinarily difficult process” — as Keystone. Typically, it takes about 24 months to permit border-crossing pipelines, Girling said.
I hope (Keystone is) an anomaly in Canada-U.S. trade of energy,” Girling said, “but obviously, the market isn’t waiting for the regulators to catch up with their decisions; they’re moving the oil now. My view is eventually that oil has to move and eventually we will obtain the permits.”
“These are necessary pieces of infrastructure that are required to efficiently move volumes that are being produced today between production locations and markets,” Girling added. “These things have to get completed.”
It is not clear exactly where Upland would enter the United States, though it could be north of Minot, N.D. The pipeline is expected to connect to the proposed 1.1-million-barrel-per-day Energy East pipeline in Moosomin, Saskatchewan.
Even without winning approval to build the northern leg of Keystone XL, TransCanada reported its earnings climbed in the fourth quarter of 2014 to $387 million, thanks to the beginning of oil deliveries on Keystone XL’s southern leg, from Oklahoma to Texas.
TransCanada executives said they would look for ways to optimize Keystone and their other liquids pipelines, including use of drag-reducing agents to boost their flows.
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