TransCanada working furiously to resubmit Keystone application

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TransCanada Corp. chief executive Russ Girling said the Calgary-based firm is working furiously to resubmit the Keystone XL pipeline application after U.S. President Donald's Trump directive to revive the project.

"We're obviously very, very pleased with that announcement, and I can tell you we're working very hard and diligently to complete that application as quick as we possibly can," Mr. Girling said Wednesday, making his first remarks on the project since Mr. Trump signed the Keystone XL memorandum at the White House.

Speaking at the CIBC Whistler Institutional Investor Conference, Mr. Girling told the audience to "stay tuned" in the weeks ahead as TransCanada proceeds through the U.S. regulatory process. He brushed away a question regarding a U.S. border-tax proposal and Mr. Trump's discussion of wanting an economic share of the pipeline, saying it's "premature to speculate on those things."

Former U.S. president Barack Obama rejected the controversial Keystone XL project in 2015 after years of delays. Parts of the pipeline route angered U.S. landowners, and environmentalists raised concerns about increasing greenhouse-gas emissions from Alberta oil-sands production.

But Mr. Trump's administration has abruptly changed course and moved to give the project a second life.

On Tuesday, Mr. Trump issued a memorandum inviting TransCanada to promptly resubmit its application for the Keystone XL project to the State Department. His directive asked that the agency make a decision on a new TransCanada application within 60 days of receiving it.

On the surface, the expeditious process directive is good news for TransCanada. But Mr. Trump's countenance comes with conditions. He said he is seeking an unspecified "better deal" from the company on the project to make sure it's in the U.S. national interest. During the presidential campaign, Mr. Trump said he would seek a slice of the pipeline profits.

The pipeline also faces additional hurdles, including potential legal actions and state regulatory delays in Nebraska and South Dakota, environmental opposition and protests, and another new Trump administration memorandum that asks that new pipelines use American steel and materials.

Keystone XL would stretch 1,897 kilometres from Hardisty, Alta. and south to Steele City, Neb., and would add massive new transport capacity for moving Western North American oil – primarily heavy crude from the oil sands. The pipeline would link up with TransCanada's existing system that transports oil on to key heavy oil refineries in the U.S. Gulf Coast.

On Wednesday, Mr. Girling said the $8-billion (U.S.) pipeline, if built, will be a significant job creator – which is at the core of what both Canada and U.S. governments want right now. He said Keystone XL will be safer than transporting oil by rail, and will contribute to U.S. energy security.

"We have procured a lot of the materials already. Most of that was in North America. We still have other things to buy," he said. "We will continue to focus on where we buy those materials."

Mr. Girling added that since TransCanada wasn't expecting the project to be revived until recently, they have only just re-engaged with potential shippers to see if they're still interested in the project.

"This wasn't in our planning horizon in the middle of last year."

Oil prices remain half what they were just three years ago, and Canadian oil-sands producers face increasing competition from U.S. shale firms for market share. Still, Mr. Girling said the market fundamentals of the proposed pipeline project to link to the company's existing Keystone system remain sound. He said Canadian shippers will likely still want access to the massive refining capacity of the U.S. Gulf Coast.

"I think that remains pretty darn attractive for almost any producer."

However, it's still unclear what Mr. Trump will ask in return for approving the Keystone XL project.

Citigroup Inc. analyst Faisel Khan wrote on Tuesday: "We can only postulate that it could require some sort of additional tariff or transportation charge on Canadian producers, or the pipeline itself."

Canada is largely dependent on the United States for its oil export market – less than 1 per cent of Canadian exports of crude go to non-U.S. destinations.

The country's heavy oil sells at a significant discount – or differential – to lighter varieties of North American crude. The discount has grown at times as a result of limited pipeline capacity to key refining markets.

The Canadian industry, with headquarters centred in Calgary, wants the option of selling to markets around the globe. Pipeline projects such as Kinder Morgan Inc.'s Trans Mountain expansion in British Columbia – approved by the federal government late last year – could potentially give Canadian oil producers access to overseas markets in China and India.

But with Enbridge Inc.'s replacement of its Line 3 to the U.S. also green-lit by Ottawa, there are questions about whether there is sufficient demand to see a number of major pipeline projects go ahead.

On Wednesday, Mr. Girling didn't speak to his company's push to build the $15.7-billion (Canadian) Energy East pipeline from Alberta to the East Coast, which has met with significant opposition, especially in Quebec.