November 22, 2017 Read More →

Hurdles Remain for Keystone XL


TransCanada Corp. finally secured the last major permit for its Keystone XL pipeline after a battle that lasted most of a decade, but it is an open question whether the company will build it after weighing legal, commercial and even new regulatory risks.

While the C$8 billion Keystone XL project could yield at least 500,000 barrels per day in committed 20-year transportation contracts, it could also increase financial risks for TransCanada, which already has C$24 billion in secured near-term projects on its planning horizon.

“While today’s Keystone XL pipeline approval is an important milestone, it does not provide certainty that the project will ultimately be built and begin operating,” Gavin MacFarlane, a vice president in Moody’s Toronto office, said in a note Nov. 20. “Pipeline construction would negatively affect TransCanada’s business risk profile through increased project execution risk, and would likely put pressure on financial metrics.”

TransCanada already wrote off US$2.4 billion in Keystone XL expenses after being denied a presidential permit to cross the border into the U.S. in 2015 and has since seen almost C$1 billion sunk into the shelved Energy East oil sands line across Canada.

In what could be a reprise of the raucous protests against Energy Transfer Partners LP’s Dakota Access pipeline, environmental groups are already threatening to stall Keystone XL.

More ($): Permits in hand, Keystone XL oil pipe still faces financial hurdle

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