CALGARY – TransCanada Corp. (TSX:TRP) hopes it won’t have to resort to a challenge under the North American Free Trade Agreement to get its long-delayed Keystone XL pipeline built, CEO Russ Girling said Friday.
“Those are issues that are sort of well beyond what we’re contemplating at the current time and not something we’ve spent a whole bunch of time analyzing,” he told reporters following the company’s annual general meeting.
“Down the road that’s something that hopefully we don’t have to take a look at, but obviously something that we would have to look at if we end up in a situation where the pipeline’s delayed indefinitely or denied.”
The U.S. regulatory review of Keystone XL is in its sixth year.
A week ago, the U.S. State Department dealt a major setback to the project, saying it would hold off on making a decision while a court case over the pipeline’s route is being worked out in Nebraska.
“Our view is this pipeline looks no different than other pipelines that have been approved, that continue to be approved in the United States,” said Girling.
“We can’t think of a legitimate reason why we can’t move forward with this pipeline at the current time… Our focus is on getting a pipeline built and doing what’s necessary to provide the authorities with the information they need to make a positive decision.”
Natural Resources Minister Greg Rickford said a NAFTA challenge is not in the works on Ottawa’s end.
“We’ve not to this point heard from the Obama administration that this project should, would or could be stopped. We’ve heard delays,” he said in an interview before heading to Rome for a meeting of G7 energy ministers.
Rickford said the Keystone XL issue will be raised with his U.S. counterpart, Energy Secretary Ernest Moniz, at the meeting.
“I’m not going to miss an opportunity to remind him this project is important not just to us, but obviously to a critical mass of Americans,” he said, noting that companies in a number of U.S. states would provide goods and services to the pipeline.
“Environmentally and economically, this project is a responsible way to proceed, so we’d like to see this depoliticized and moved forward sooner rather than later.”
Meanwhile, Girling said he’s resigned to the fact that the coming summer construction season for Keystone XL has likely been lost and that hundreds of workers will need to be taken off the project.
“We are looking at which costs and which contracts we can ramp down and have people stand down into next year.”
TransCanada needs two summers to build the pipeline, making a late 2016 or early 2017 start up possible.
The project’s costs will be “materially” higher than its most recent price tag of US$5.4 billion, but TransCanada is not disclosing by how much.
Legal action to recoup some of those costs is an option that could be contemplated in the future, he said.
“This has been very costly for our company and obviously that would be something we think about down the road,” said Girling.
Keystone XL would enable 830,000 barrels per day of mostly oilsands crude to flow to U.S. Gulf Coast refineries. A stretch of pipe from the Cushing, Okla., storage hub to the Gulf, which did not need a federal permit to be built, opened in January.
The proposed pipeline has been met with widespread criticism from environmental opponents — from farmers and ranchers concerned about the impacts of a spill on their land to major green groups concerned about the line’s impact on climate change.
Earlier Friday, TransCanada reported a first-quarter profit of $412 million or 58 cents per share, compared with a profit of $446 million or 63 cents per share a year ago.
Revenue increased to $2.88 billion, up from $2.25 billion a year ago.
Excluding certain one-time items, TransCanada said its comparable earnings for the quarter came in a $422 million or 60 cents per share, up from $370 million or 52 cents per share a year ago. Analysts polled by Thomson Reuters had on average been calling for comparable earnings of 59 cents per share.
The company attributed the increase to higher earnings from its NGTL System, Keystone, Bruce Power, U.S. power, and natural gas storage operations.
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