CALGARY – The CEO of one the biggest crude oil producers in Canada says he’s confident that the Keystone XL pipeline will be built despite doubts related to lower oil prices and regulatory obstacles.
Steve Laut, CEO of Canadian Natural Resources (TSX:CNQ), said in an interview on Thursday his company is committed to use almost a fifth of the capacity on the 830,000-barrel-per-day conduit from Alberta to markets in Oklahoma and the U.S. Gulf Coast.
“It makes economic sense to support Keystone and we support Keystone. We’re in for 150,000 barrels per day,” he said.
The contentious pipeline was approved by U.S. President Donald Trump in March but questions have been raised about the business case for it after proponent TransCanada Corp. (TSX:TRP) launched an open season call last week, giving shippers until next month to commit to use 225,000 barrels per day of available room.
The pipeline also faces a key regulatory hurdle in Nebraska where a state commission is expected to rule by late November on whether Keystone XL serves the public interest.
TransCanada has indicated it won’t make a final decision on whether to proceed with the US$8-billion project until late November or December, based on commercial support and regulatory approvals.
“I think it’s up to us as industry and the governments, municipalities, everyone, to work together to make sure all the issues are addressed and it gets put through,” said Laut in an interview following the release of second-quarter results.
He confirmed that Canadian Natural is also a committed shipper on the TransMountain expansion and Energy East oil pipelines but wouldn’t say how much it is set to ship on those lines.
Analyst Dirk Lever of AltaCorp Capital said he believes Keystone XL will win sufficient support to proceed but it’s prudent for TransCanada to demand take-or-pay contracts.
“The markets have changed, they’ve deteriorated, so people are concerned about it,” he said. “Do I think (TransCanada) will get the support? Probably.”
In a forecast in June, the Canadian Association of Petroleum Producers said production in Canada has almost grown to equal pipeline capacity of four million barrels per day of oil. It said crude-by-rail shipments are expected to grow as production from new oilsands projects come on line.
Laut said it’s unclear if his company will need to use rail to ship its oil but, if it does, there is plenty of third-party rail capacity it can hire as it owns no rail cars or loading facilities.
Canadian Natural’s need for oil shipping is growing thanks to a $12.7-billion deal to buy a 70 per cent interest in the Athabasca Oil Sands Project mining complex in northern Alberta.
It announced on Thursday it produced more than one million barrels of oil equivalent per day in June, its first month since the close of the sale. Its output included 202,000 bpd of upgraded oilsands crude from its stake in AOSP.
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