President Barack Obama will announce tomorrow a fast tracking of the approval of the southern half of TransCanada's (TSX, NYSE: TRP) Keystone XL oil pipeline, CNN reports.
Permitting for the $7 billion-plus project can take over a year, so Obama’s promise to accelerate the process could save a few months of red tape.
Caving to pressure from environmental groups, the U.S. government rejected Keystone in January. With this, it prevented a potential 830,000 barrels of crude oil from being transported from the Alberta oil sands to refineries along the U.S. Gulf coast. The decision was highly criticized by the opposition.
In late February, TransCanada said on it would go ahead with the construction of the $2.3 billion southern leg of the polemic pipeline. The Calgary based company added the shortened pipeline, going from Cushing Oklahoma to the US Gulf Coast, could be operational by June-July next year.
Democrats applauded the news and some of them, such as former U.S. President Bill Clinton, called Americans to “embrace” the project, which was seen as a clear attempt to build popularity in an election year.
His comments came only a day after Republican presidential candidate Mitt Romney said Americans “deserve” the Canadian oil that Keystone XL would deliver.
Canada exports 2 million barrels of oil per day to the US and almost all of it ends up at Cushing – the pricing point for US crude – where inventories have been piling up and refining capacity is limited.
Alberta production is set to more than double to 3.7 million barrels by 2025 out of a total of 4.7 million. Production in the US particularly from the Bakken basin in North Dakota will see the country ramp up current output of 7.8 million barrels/day to 10.9 million barrels over the next few years.