TransCanada asks US to suspend Keystone XL pipeline review
In an unexpected move, TransCanada Corp (TSX, NYSE:TRP), the company behind the controversial Keystone XL pipeline, has asked the U.S. government to suspend its permit application, which would leave the project in limbo likely beyond the 2016 U.S. elections.
In a letter made public late Monday, the Calgary-based firm asked Secretary of State John to halt the assessment of the $8 billion project, arguing it would allow the department to await the final results of a separate review in Nebraska.
The request, analysts believe, can be seen as an effort to save the project from Obama’s anticipated rejection.
“If you think you’re going to get a ‘no,’ it may be better to wait,” said Kevin Book, managing director at energy policy advisory Clearview Energy Partners in Washington, according to Bloomberg. “The surprise is that it’s the sponsor itself that seems to be pushing for the delay, rather than the administration seeking to avoid a politically difficult decision.”
TransCanada has been waiting more than seven years for a decision on its permit application to build the 1,897km (1,179-mile) pipeline, which would carry 800,000 barrels of crude a day from Alberta to Steele City, Nebraska, where it could join an existing pipeline.
The company has spent at least $2.5 billion on the project, whose total cost if built was estimated to be at least $10 billion due to delays and increased permitting costs.
The approval of Keystone is key for the company and Canada’s economy. Oil sands production has been increasing steadily and is set to rise further as new projects come on stream, in spite of the fall in oil prices. At the same time, existing pipelines to take oil out of Alberta are already close to full capacity.
The country’s newly elected Prime Minister, Justin Trudeau, has been supportive of the project, but it is thought he might not pursue it as aggressively as his predecessor Stephen Harper, who said he wouldn’t “take no for an answer” from President Obama.