CALGARY - TransCanada Corp. said Tuesday it aims to file a regulatory application for its eastbound pipeline proposal by year-end following "encouraging" feedback from potential customers.
The Calgary-based pipeline (TSX:TRP) giant also acknowledged that a long-awaited State Department decision on its controversial Keystone XL oil pipeline is unlikely to come during the first quarter of this year.
TransCanada is in the midst of gauging shipper interest in a project that would see part of its underused natural gas mainline converted to oil service, shipping as many as one million barrels a day of western crude to refineries in Quebec and potentially the East Coast.
"Discussions with potential shippers and other stakeholders are well underway to determine if it is a project that the market wants and I would say to date,those discussions have been very, very encouraging," CEO Russ Girling told analysts on a conference call.
Politicians are on board with the notion, with New Brunswick Premier David Alward and Alberta counterpart Alison Redford touting eastern pipelines in Calgary last week. Federal Natural Resources Minister Joe Oliver has also embraced the idea.
Refineries in eastern Canada and the U.S. Eastern Seaboard currently import some 1.5 million barrels a day of expensive crude from countries such as Saudi Arabia and Libya, said Alex Pourbaix, president of energy and oil pipelines at TransCanada.
Refineries in that part of the continent are geared to process light crude, so oil from areas like Saskatchewan is more likely to flow there than from the oilsands — at least initially.
Pourbaix says he sees an "open season" — a period of 30 to 60 days where potential customers can bid for space on the line — taking place toward the end of the second quarter.
TransCanada would like to have some comfort in the level of interest before reaching that stage, he added.
"We want to make sure we sop up all the potential barrels that are out there, but we wouldn't go to an open season unless we were very comfortable of getting a minimum level of commercial support for the project," he said.
The company also intends to spend a lot of time in coming months engaging with communities along the route.
On Keystone XL, Pourbaix said he's expecting the State Department to release a supplemental environmental impact assessment shortly, taking into account changes to the pipeline's route through Nebraska.
After that, it would take another two to three months to make a final decision, pushing a decision past the first quarter of 2013.
More than a year ago, the Obama administration rejected an earlier iteration of its controversial Keystone XL pipeline in its entirety, mainly as a result of an environmental backlash in Nebraska.
TransCanada then broke the project up into two parts. The southern portion between Oklahoma and the Gulf Coast, which does not need a permit because it doesn't cross the Canada-U.S. border, is 45 per cent complete and on track to start up by year-end.
The fate of the $5.3-billion northern portion is currently in the hands of new Secretary of State John Kerry. Last month, the Nebraska governor gave his blessing to a new route through the state that still crosses part of the Ogallala aquifer, but avoids much of the Sand Hills region.
TransCanada expects that 830,000-barrel-per-day line to start up in late 2014 or early 2015.
Earlier Tuesday, it said its fourth-quarter earnings were dragged lower by power plant outages and weaker contributions from its natural gas pipelines.
Comparable earnings were $318 million for the last three months of 2012, down from $365 million during the same period a year earlier.
On a per-share basis, that amounted to 45 cents, down from 52 cents a year earlier and missing the average analyst estimate of 49 cents, according to Thomson Reuters.
Revenues rose to $2.09 billion from $2.02 billion.
On the call, Girling called the results "solid" but "not reflective" of the company's "underlying earning power."
Lanny Pendill, an analyst at Edward Jones, said the quarter was a "slight miss," mainly on the power side of the business.
The main issue was a slow restart to two refurbished units at the Bruce Power nuclear generating station on the shores of Lake Huron in Ontario.
"For more of a higher-level perspective, our long-term outlook remains intact," said Pendill.
"If you look at the projects that the company has in place, commercially secured, we still see a company that's going to be able to provide above-average earnings growth and dividend growth over the longer term. From a lower-risk type of utility company, that bodes very well for shareholders in our view."
TransCanada also said its quarterly dividend will rise by two cents per share to 46 cents for the quarter ending March 31, an increase of five per cent.
Shares in TransCanada closed down 69 cents to $47.56 on the Toronto Stock Exchange.
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Syncrude Upgrader and Oil Sands
The refining or upgrading of the tarry bitumen which lies under the oil sands consumes far more oil and energy than conventional oil and produces almost twice as much carbon. Each barrel of oil requires 3-5 barrels of fresh water from the neighboring Athabasca River. About 90% of this is returned as toxic tailings into the vast unlined tailings ponds that dot the landscape. Syncrude alone dumps 500,000 tons of toxic tailings into just one of their tailings ponds everyday.
Boreal Forest and Coast Mountains / Atlin Lake, British Columbia | 2001
This area, located in the extreme northwest of British Columbia, marks the western boundary of the Boreal region. On the border of the Yukon and Southeast Alaska, the western flank of these mountains descends into Alaska's Tongass Rainforest and British Columbia's Great Bear Rainforest. Far from the oil sands, the greatest remaining coastal temperate and marine ecosystem is imminently threatened by the proposal to build a 750-mile pipeline to pump 550,000 barrels per day of oil sands crude to the coast. Once there, it would be shipped through some of the most treacherous waters, virtually assuring an ecological disaster at some point in the future.
Tailings Pond in Winter, Abstract #2 / Alberta Tar Sands | 2010
Even in the extreme cold of the winter, the toxic tailings ponds do not freeze. On one particularly cold morning, the partially frozen tailings, sand, liquid tailings and oil residue, combined to produce abstractions that reminded me of a Jackson Pollock canvas.
Aspen and Spruce | Northern Alberta | 2001
Photographed in late autumn in softly falling snow, a solitary spruce is set against a sea of aspen. The Boreal Forest of northern Canada is perhaps the best and largest example of a largely intact forest ecosystem. Canada's Boreal Forest alone stores an amount of carbon equal to ten times the total annual global emissions from all fossil fuel consumption.
Tar Sands at Night #1 | Alberta Oil Sands | 2010
Twenty four hours a day the oil sands eats into the most carbon rich forest ecosystem on the planet. Storing almost twice as much carbon per hectare as tropical rainforests, the boreal forest is the planet's greatest terrestrial carbon storehouse. To the industry, these diverse and ecologically significant forests and wetlands are referred to as overburden, the forest to be stripped and the wetlands dredged and replaced by mines and tailings ponds so vast they can be seen from outer space.
Dry Tailings #2 | Alberta Tar Sands | 2010
In an effort to deal with the problem of tailings ponds, Suncor is experimenting with dry tailings technology. This has the potential to limit, or eliminate, the need for vast tailings ponds in the future and lessen this aspect of the oil sands' impact.
Tailings Pond Abstract #2 | Alberta Tar Sands / 2010
So large are the Alberta Tar Sands tailings ponds that they can be seen from space. It has been estimated by Natural Resources Canada that the industry to date has produced enough toxic waste to fill a canal 32 feet deep by 65 feet wide from Fort McMurray to Edmonton, and on to Ottawa, a distance of over 2,000 miles. In this image, the sky is reflected in the toxic and oily waste of a tailings pond.
Confluence of Carcajou River and Mackenzie River | Mackenzie Valley, NWT | 2005
The Caracajou River winds back and forth creating this oxbow of wetlands as it joins the Mackenzie flowing north to the Beaufort Sea. This region, almost entirely pristine, and the third largest watershed basin in the world, will be directly impacted by the proposed Mackenzie Valley National Gas Pipeline to fuel the energy needs of the Alberta Oil Sands mega-project.
Black Cliff | Alberta Oil Sands | 2005
Oil sands pit mining is done in benches or steps. These benches are each approximately 12-15 meters high. Giant shovels dig the oil sand and place it into heavy hauler trucks that range in size from 240 tons to the largest trucks, which have a 400-ton capacity.
Oil Sands Upgrader in Winter| Alberta Oil Sands | 2010
The Alberta oil sands are Canada's single largest source of carbon. They produce about as much annually as the nation of Denmark. The refining of the tar-like bitumen requires more water and uses almost twice as much energy as the production of conventional oil. Particularly visible in winter, vast plumes of toxic pollution fill the skies. The oil sands are so large they create their own weather systems.
Boreal Forest and Wetland | Athabasca Delta Northern Alberta | 2010
Located just 70 miles downstream from the Alberta oil sands, the Athabasca Delta is the world's largest freshwater delta. It lies at the convergence of North America's four major flyways and is a critical stopover for migrating waterfowl and considered one of the most globally significant wetlands. It is threatened both by the massive water consumption of the tar sands and its toxic tailings ponds.
Tar Pit #3
This network of roads reminded me of a claw or tentacles. It represents for me the way in which the tentacles of the tar sands reach out and wreak havoc and destruction. Proposed pipelines to American Midwest, Mackenzie Valley, and through the Great Bear Rainforest will bring new threats to these regions while the pipelines fuel new markets and ensure the proposed five fold expansion of the oil sands.