TransCanada Keystone XL pipeline to cost $8 billion

TransCanada Keystone XL pipeline to cost $8 billion

The cost of TransCanada Corp’s (TSX, NYSE:TRP) controversial Keystone XL pipeline has risen by half to US$8 billion, the firm said Tuesday as the U.S. regulatory process drags into its seventh year.

Speaking during the firm’s morning’s third-quarter earnings call CEO Russ Girling said the longer the company is forced to wait for a U.S. authorization, the more expensive the pipeline would become. As of Sept. 30, TransCanada had sunk $2.4 billion into the project.

TransCanada applied to build its Keystone XL pipeline between Hardisty, Alberta and Cushing, Oklahoma six years ago, but the construction of the pipeline — set to carry 830,000 barrels per day of crude— has been delayed multiple times. The company continues to wait for the approval from U.S. President Barack Obama, who has the authority to back the pipeline or not because it crosses the Canada/U.S. border.

Supporters have said it would be a boon for job creation and domestic energy production, but opponents have warned that fuel extraction from the oil sands —among the most carbon-intensive methods of energy production— would likely increase should the project be approved.

Gas pipeline expansions

The Calgary-based company also said it's planning to expand its Nova natural gas pipeline system by 2017 at a cost of $2.38 billion (Cdn$2.7bn).

The pipeline carries about three-quarters of the gas produced in the Western Canada Sedimentary Basin, but TransCanada says demand for capacity has increased.

The NovaGas system currently transports more than three-quarters of total production in Western Canada’s Sedimentary Basin to markets within the basin and to downstream Canadian and U.S. export markets.

“The system plays a key role in meeting growing supply and demand requirements within the WCSB and North America,” the company said. Subject to approvals, including from Canada’s main energy regulator, it expects construction to start in 2016 and be completed by the second quarter of 2017.

Image via Flickr.