Keystone XL gets enough commercial commitments to continue

By Patrick C. Miller | January 23, 2018

As a result of a successful open season, TransCanada said it has enough commitments from oil producers to move ahead with the Keystone XL project.

The open season—which began last September—enabled the Calgary-based Canadian company to secure 20-year commitments to transport 500,000 barrels per day of crude from Alberta tar sands to refineries on the U.S. Gulf Coast.

“The 500,000-barrel announcement indicates that we do have sufficient commercial underpinnings for the project and that it’s viable given the amount of long-term support,” said Matt Johns, TransCanada spokesman

He said the company solicited North American producers during the open season, but confidentiality agreements prohibited TransCanada from revealing whether any are from the U.S. He said the company is continuing to secure additional long-term contracted volumes for the 800,000-barrel-per-day pipeline.

“It really does speak to the importance of the project,” Johns said. “The commercial underpinning has withstood nearly a decade of regulatory review. The United States Gulf Coast remains the most important market for heavy crude oil and Canada’s the No. 1 supplier of that product. It’s a very efficient way and a much safer way to get it to the Gulf Coast than to import it from Venezuela and Mexico where it’s declining.”

As originally proposed, the Keystone XL Pipeline was to transport up to 100,000 barrels per day of Bakken crude from Montana and North Dakota. The Bakken Marketlink Project would provide a link at Baker, Montana, to the Keystone XL Pipeline. In 2010, TransCanada said it had secured 65,000 barrels per day of shipments from Williston Basin producers, but that changed after the project was delayed by the Obama administration for more than seven years.

John’s said the Bakken Markitlink remains in the Keystone XL project application. “Pending commercial support of that part of the project, it would be included in the project,” he added.

Last week’s announcement builds on the November 2017 decision by the Nebraska Public Service Commission to approve the Keystone XL route through the state. The approved route was based on a comprehensive review of the evidence submitted during the hearing process, as well as state agencies.

"Over the past 12 months, the Keystone XL project has achieved several milestones that move us significantly closer to constructing this critical energy infrastructure for North America," said Russ Girling, TransCanada's president and CEO. He thanked President Donald Trump—who approved a presidential permit for the project in March 2017—for his administrations’ continued support.

TransCanada said it’s continuing outreach efforts in the communities where the pipeline will be constructed and is working collaboratively with landowners to obtain the necessary easements for the approved route. Construction preparation has begun and will increase as the permitting process advances throughout 2018, with primary construction expected to begin in 2019.