TransCanada Corp. (TRP) said on Thursday that the southern portion of its massively unpopular Keystone XL pipeline would be completed by the end of the end of the month, and will begin transporting oil within 30 days.
The Gulf Coast portion of the pipeline will carry oil from Cushing, Oklahoma, the physical delivery location for West Texas Intermediate contracts traded on the NYMEX, to Nederland, Texas.
TransCanada has been working on the Gulf Coast pipeline, which has a projected capacity of over 800,000 barrels per day, for over a year now. The $2.3 billion project constitutes one third of the overall Keystone XL gambit, which has been in limbo since meeting stiff resistance from communities on both sides of the US-Canada border.
Despite TransCanada’s promises of the ostensible jobs that could be created as a result of the pipline’s construction, as well as guarantees about environmental safety, many residents of towns and cities along the northern portion of the Keystone route have concerns about the notoriously dirty tar sands oil that it would transport from Canada all the way down to the Gulf of Mexico for export.
Furthermore, while TransCanada and other supporters of the project have consistently tried to reassure its detractors by claiming that oil prices would drop across the Midwestern US as a result, it is not even clear if the company’s executives actually believe this themselves.
Indeed, it is no secret that one of the main goals of the pipeline is to increase demand for Canadian crude oil, and raise prices high enough to be competitive with Mexican and US crudes that also ship out of the Gulf Coast.
The US portion of Keystone XL has been under review for some six years now, with President Barack Obama having nixed the project last year amid enormous pressure from both supporters and opponents of the pipeline.
While the announcement could be considered somewhat of a victory for the Canadian gas utility, TransCanada admits that any construction in the absence of the full route would be relatively pointless. Company spokesman Les Cherwenuk told Bloomberg that “If something were to occur, then you build a smaller pipeline, but at this point in time, just building Keystone XL based on Bakken contract supplies is not attractive.”
Shares for TransCanada were down 1.35 percent to $43.13 heading in to Thursday’s close.