CALGARY – The U.S. rejection of the Keystone XL pipeline pushed TransCanada Corp. to a $2.5-billion loss in the fourth quarter.
Meanwhile, the Calgary-based pipeline company said it’s weighing how federal changes to the environmental review process may affect timing of its controversial Energy East proposal.
TransCanada (TSX:TRP) took a $2.9-billion, non-cash charge in the fourth quarter related to Keystone XL, which U.S. President Barack Obama blocked in November on grounds it would undermine efforts to combat climate change.
Keystone XL would have connected to an existing cross-border system, offering a more direct route for oilsands and some U.S. crude to reach Texas refineries by cutting diagonally across Montana, South Dakota and Nebraska.
On a conference call with analysts and reporters, TransCanada CEO Russ Girling said he doesn’t consider Keystone XL dead.
“It’s very much still in demand. Our shippers remain very interested in seeing that project move forward and we’ll continue to look for an opportunity to advance that project in the future,” he said.
“But as a result of the denial, we are in a situation where we have to take the writedown as well as look to recover those amounts that arbitrary denial has cost us.”
Last month, TransCanada gave notice that it plans to seek US$15 billion in damages over Keystone XL through a North American Free Trade Agreement challenge. Separately, it has filed a federal lawsuit in Houston that seeks a declaration that Obama overstepped his constitutional power when he denied the permit.
With Keystone XL on ice for now, TransCanada is seeking to open up new markets for Canadian crude through its Energy East project.
That $15.7-billion proposal would connect 1.1 million barrels a day of western oil to eastern refineries, as well as to overseas customers via a marine export terminal in Saint John, N.B.
Paul Miller, president of liquids pipelines, said TransCanada is still aiming at a 2020 startup for Energy East, but cautioned that delays may result from Ottawa’s changes to the regulatory process, which include adding an assessment of a project’s broader climate change impact.
But Girling later reinforced that 2020 remains in sight.
“That’s currently our plan. The announced changes have not impacted that at the current time but we’ll continue to assess all of these factors as we move forward and we’ll update the marketplace if there are changes in our in-service date. But at the current time, our thinking remains for a late 2020 in service.”
Last week, the National Energy Board ordered TransCanada to rework its application for Energy East because a bevy of scope changes and amendments had made the already hefty document too difficult to navigate.
Chief operating officer Alex Pourbaix said the task is not daunting.
“This is kind of a housekeeping kind of activity,” he said. “I think it’s quite a reasonable request. It will take us a bit of time and a bit of effort to do it, but it’s just really just pretty simple stuff.”
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