Keystone XL builder optimistic on pipeline’s customer demand

The company hoping to build the Keystone XL oil pipeline is optimistic that it has enough demand from potential customers to make it economically viable.

TransCanada Corp. executives said Thursday the interest among oil companies in the Canada-to-Oklahoma line is similar to what it was in 2008, when it was first proposed.

“Overall, we expect support for the project to be substantially similar to that which existed when we first applied for the Keystone pipeline permit,” TransCanada CEO Russ Girling told investors in a Thursday call. “To be clear, production of Canadian heavy oil continues to grow, and the need for new pipeline transportation capacity remains high.”

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TransCanada had an “open season” for Keystone XL that ended in October. During that time, it encouraged potential customers to express interest in shipping through the 830,000-barrel-per-day line.

The company obtain at least the 500,000-barrel-per-day interest that it judged to be the point necessary to build.

“We do have various conditions attached to the interest,” Paul Miller, president of TransCanada’s liquid pipelines business, told investors, adding that the conditions from customers are manageable, related mostly to logistics. “But we’re quite encouraged with the results that we’ve seen.”

President Trump approved Keystone XL in March, after the Obama administration rejected it in 2015.

The pipeline has long been a flashpoint in national political debates over energy and environmental policy, framed as a choice between increased oil use from a friendly ally and a future with significantly reduced fossil fuel use.

But in TransCanada’s last investor call, in July, the company told investors that it has not made the final investment decision to build Keystone XL.

Miller told investors that it will likely make that decision as early as December, following a review of customer demand and an approval decision from Nebraska regulators for the route through that state.

“We still have a lot to do on both those events,” Miller said. “We let those two events play out, and that will give us greater visibility into our … final investment decision.”

Trump incorrectly told business leaders in Japan this week that Keystone’s construction had already started.

“The Keystone pipeline was dead. And the Dakota Access pipeline was in even in worse shape because they built it but they weren’t allowed to hook it up,” Trump said.

“And in my first week, I approved both. It’s 42,000 jobs. The Dakota is already open and Keystone is starting; it’s actually already started. And that was done in the first week — got it approved.”