Tired of waiting for a resolution of the Keystone XL delays, TransCanada plans to take early steps to enter the rail-shipping business, Chief Executive Officer Russ Girling told reporters in Toronto in early February.
He said shippers have given up waiting for XL, whose capacity of 830,000 barrels per day would include 100,000 bpd from the Bakken, and industry has increased rail capacity to 1.2 million barrels per day, forcing the pipeline giant to look at the rail market.
Girling said that depending on the outcome of discussions with its customers, TransCanada is likely to enter the crude-by-rail business “in the coming months,” although if XL does get built he is counting on those shippers transferring their business to the pipeline.
He said TransCanada is already positioned to use rail from its four storage terminals - two in Alberta, one in Oklahoma and one in Texas.
Using those facilities to meet shippers’ requirements would need the construction of loading and offloading terminals, which are now part of the discussions with customers, Girling said.
However, he doubts that TransCanada would become a “big player” in the rail business, even if rail reaches capacity of 2 million bpd pending approval of new pipelines.
The company is being prodded into action now that its major Canadian competitors, Enbridge and Kinder Morgan (both facing their own versions of the XL stalemate), have started building rail capacity.
US politics
TransCanada’s frustrations over XL were compounded earlier in February when the U.S. Environmental Protection Agency urged the U.S. State Department to “revisit” some of its earlier conclusions about XL.
EPA challenges the State Department’s calculations on greenhouse gas emissions from the Alberta oil sands, assumptions about the long-term trend for oil prices, and its reluctance to “look harder” for other alternatives to the pipeline.
Dismissing the EPA letter as a stalling tactic, Girling said TransCanada has “studied and studied and studied” many other routes. He said oil prices of US$50 a barrel will not discourage development of the oil sands.
And Girling doubts that any use of the veto by President Barack Obama to block efforts by the Republican-controlled Senate to win approval for XL will be the “final nail in Keystone’s coffin.”
He said political backing of XL “will not go away, by any means.”
In the meantime, the State Department is refusing to indicate when it will make a final recommendation to Obama, or even if it will complete the process before the next president is elected.
A department spokeswoman refused to set a new deadline on the State Department review and would not say how many of eight federal agencies - other than the EPA - had submitted their final views on the project.
White House Press Secretary Josh Earnest said Obama has his “own clear criteria” on how the pipeline should be evaluated, referring to Obama’s insistence that a crucial test will be XL’s impact on climate change.
He would not say whether the EPA letter shows the pipeline does not pass that test.
Look at the bigger picture
On a broader front, Girling told the editorial board of Toronto’s Globe and Mail that Canada’s chances of becoming a global resource power are endangered unless governments act to resolve the conflicts holding up projects to extract resources and move them to market.
He said Canada is now faced with fundamental choices about the future development of its economy.
“We’ve got to quit the bickering that goes on between us and get to the bigger picture and let the institutions that we charge with managing the public good get on with doing their jobs,” he said.
Girling argued that governments at some point have to stop responding to public sentiment and show some leadership.
“As Canadians, I think that we should be screaming right now, saying, just a second, are we a resource-based nation or not,” he said.
Girling said he has no idea how much XL’s costs have climbed above the latest estimate of US$8 billion, which includes the US$3 billion TransCanada has already invested.
“I’d like to say I know where it’s going to end, but I really don’t,” he said.
