TORONTO (Canadian Press) – A Canadian bank estimates that the cancellation or a continuing delay of the Keystone XL pipeline could endanger more than $9 billion of oilsands investment over the next seven years.
RBC Dominion Securities — part of the group that includes Royal Bank of Canada (TSX:RY) — says a negative decision on the pipeline would be felt by construction, engineering and project management companies, among others
It estimates the financial hit would be somewhere between $8 billion and $10 billion, but does not specify how it arrived at its final estimate of $9.4 billion.
Since most of the pipeline is being constructed in the United States, RBC Dominion says contractors in Canada will be affected less.
The proposed pipeline — which has faced stiff opposition by environmental groups and some land owners — would bring 700,000 barrels of oilsands crude a day from Alberta through six states and to Gulf Coast refineries.
Because it crosses an international border, Keystone XL requires U.S. presidential approval as well as approval from the U.S. State Department.
The Canadian and Alberta governments have staunchly supported Keystone XL as a way to reach an important market but President Barack Obama has yet to make a final decision.
The Obama administration rejected an earlier iteration of the Keystone XL project — which would have run from Hardisty, Alta., to the Texas coast — last year because of environmental concerns in Nebraska.
The company responded by breaking up the project into two parts and going ahead with the southern leg between Oklahoma and the U.S. Gulf Coast, which does not require presidential approval. That US$2.6-billion project is about 70 per cent complete and on track to start delivering crude late this year.