In The Media

After 'bruises' of past, TransCanada vows to carefully move ahead with Keystone XL

by Chris Varcoe (feat. Dennis McConaghy & Kevin Birn)

Calgary Herald
Jan 26, 2018

TransCanada Corp. walked away from the mammoth Energy East pipeline project due to its “complexity and difficulty.”

But the pipeline giant will keep moving ahead with its Keystone XL project due to the strong economics underpinning the project.

Company CEO Russ Girling didn’t drop any bombshells Thursday speaking at a CIBC investor conference in Whistler, but gave some clarity to two of the most critical pipeline decisions facing the country’s energy sector in recent years.

In doing so, he provided insight into the daunting obstacle course that now stands in front of future energy developments in Canada. Even in a world of “no brainers” — as Stephen Harper once called Keystone XL approval — nothing should be taken for granted, and caution will loom over future decisions.

“We are committed to moving this project forward but … we’ve got a lot of bruises of not being really careful,” Girling said about Keystone XL.

“So we will just be really careful about how we spend our money through the next 12 months.” 

If built, the US$8-billion project will help get Alberta crude south to U.S. Gulf Coast refiners. It’s desperately needed by Western Canadian producers who are facing steep discounts today for their oil.

A decade in the making, the proposed pipeline from the Hardisty area to Steele City, Neb., was resurrected last year after the Trump White House granted it a presidential permit, something that had been denied by the previous Obama administration.

After Nebraska regulators approved the pipeline route in November — although they didn’t choose the company’s preferred path — the last big obstacle was locking up shippers to use the line, something it accomplished last week.

Yet, the company didn’t proclaim a final investment decision for the project.

On Thursday, Girling stopped short of giving Keystone XL the official green light, but left little doubt work is proceeding, money is being spent and the economics make sense.

“By the end of the year, we will be in a position to start construction in 2019,” he said. “We’ve been at this for close to 10 years and the market demand is still there for the project.”

But it’s not a done deal just yet.

Unhappy landowners have filed an appeal of the approval by the Nebraska Public Service Commission. Environmental opponents vow to keep fighting the cross-border development.

The Calgary-based company is taking a cautious approach moving forward, something we’ve also heard from Kinder Morgan recently in building the Trans Mountain pipeline expansion to the B.C. coast.

In the case of Keystone, Girling said the company will prudently spend money in the coming months to acquire land along the right of way, obtain permits and complete engineering work.

The alternate route in Nebraska will add another $100 million to $200 million to the price-tag, although that doesn’t appear to be a show-stopper.

And the CEO said TransCanada will be “far more methodical today” about how it would define and make a final investment decision around the large-scale development.

Former TransCanada executive Dennis McConaghy said the company could still face some unforeseen legal issues in the United States, but it seems committed to keeping the project on track.

“It’s like he virtually said TransCanada has made a final investment decision, other than actually calling it a final investment decision,” McConaghy said of Girling.

Kevin Birn, an analyst with IHS Markit, said the Canadian energy sector clearly needs additional pipeline capacity, but the caution shown by developers reflects the level of uncertainty around getting such projects finished.

“You don’t want to hit snags in the middle of the way that cost you more money,” he said.

For Canadian petroleum producers, a positive decision to build Keystone XL is essential, as oilsands output continues to increase, pipelines are full and more oil is moving by trains.

The differential between the Western Canadian Select heavy oil benchmark and West Texas Intermediate crude has widened in the past two months, closing at over US$28 a barrel on Thursday after averaging $11 in November.

Building new pipelines, including Keystone, Trans Mountain and Enbridge’s Line 3 project, will be imperative to improving the economics for the Canadian oilpatch.  

Yet, completing new oil and gas pipelines won’t be easy, as the demise of the $15.7-billion Energy East project demonstrates.

Last October, TransCanada pulled the plug on the pipeline, which would have shipped oil from Alberta and Saskatchewan to the Atlantic coast.

Federal officials and some analysts blamed commercial factors for undermining its economics, but a decision by the National Energy Board to consider the project’s upstream and downstream greenhouse gas emissions added another layer of complication.

Girling didn’t cite economics Thursday as the reason the project was terminated. Asked why Energy East was shelved, he talked about the “complexity and the difficulty.

“We have many opportunities in our portfolio that are far less complex, far more real and far more doable. And we had to make a hard decision,” he said.

“I still believe that Energy East is a great idea for this nation, but it didn’t appear that we could get all of the pieces put together that were necessary.”

In order words, there were so many hurdles in its path, it wasn’t worthwhile to spend more money, time and effort on a project it wasn’t certain could survive all of the potential pitfalls.

And that’s the dicey dilemma facing Canadian energy development.

Does the country really want to expand fossil fuel production in the years ahead, and can it do so successfully in an era of decarbonization?

These are hard questions and the debate is complex.

Until there’s some clarity to this conundrum, however, caution will remain a guiding principle for companies like TransCanada trying to build important energy projects like Keystone XL.

Be the first to comment

Please check your e-mail for a link to activate your account.

No events are scheduled at this time.


Global Times: BRICS summit displays the potential of a new future

by Editorial Staff (feat. Swaran Singh), WSFA 12, June 24, 2022

Oil's Dive Won't Bring Any Immediate Relief on Inflation

by Alex Longley, Elizabeth low, and Barbara Powell (feat. Amrita Sen), BNNBloomberg, June 24, 2022

China To Tout Its Governance Model At BRICS Summit

by Liam Gibson (feat. Stephen Nagy), The Asean Post, June 23, 2022

Soutien aux victimes d’inconduites sexuelles dans l’armée

by Rude Dejardins (feat. Charlotte Duval-Lantoine), ICI Radio Canada, June 23, 2022

Defence: $4.9 billion for radars against Russian bombs

by Editorial Staff (feat. Rob Huebert), Archynews, June 23, 2022

The Hans Island “Peace” Agreement between Canada, Denmark, and Greenland

by Elin Hofverberg (feat. Natalie Loukavecha), Library of Congress, June 22, 2022

What the future holds for western Canadian oil producers

by Gabriel Friedman (feat. Kevin Birn), Beaumont News, June 22, 2022

At BRICS summit, China sets stage to tout its governance model

by Liam Gibson (feat. Stephen Nagy), Aljazeera, June 22, 2022

Crude oil price: there are no changes to the fundamentals

by Faith Maina (feat. Amrita Sen), Invezz, June 22, 2022

Few details as Liberals promise billions to upgrade North American defences

by Lee Berthiaume (feat. Andrea Charron), National Newswatch, June 20, 2022

Defence Minister Anita Anand to make announcement on continental defence

by Steven Chase (feat. Rob Huebert), The Globe and Mail, June 19, 2022

Table pancanadienne des politiques

by Alain Gravel (feat. Jean-Christophe Boucher), ICI Radio Canada, June 18, 2022

Russia Ukraine conflict

by Gloria Macarenko (feat. Colin Robertson), CBC Radio One, June 17, 2022

New privacy Bill to introduce rules for personal data, AI use

by Shaye Ganam (feat. Tom Keenan), 680 CHED, June 17, 2022


Canadian Global Affairs Institute
Suite 1800, 150–9th Avenue SW
Calgary, Alberta, Canada T2P 3H9


Canadian Global Affairs Institute
8 York Street, 2nd Floor
Ottawa, Ontario, Canada K1N 5S6


Phone: (613) 288-2529
Email: [email protected]


Making sense of our complex world.
Déchiffrer la complexité de notre monde.


© 2002-2022 Canadian Global Affairs Institute
Charitable Registration No. 87982 7913 RR0001


Sign in with Facebook | Sign in with Twitter | Sign in with Email