Keystone XL pipeline gets enough shipper pledges to proceed

The Calgary-based company now has “approximately 500,000 bpd of firm, 20-year commitments,” according to a statement on Thursday. The pipeline operator will continue to secure additional volumes.

The announcement marks yet another hurdle overcome for the project, first proposed in 2008. In November, TransCanada received state approval in Nebraska to construct the conduit there along an alternate route, a decision that may spur added legal action by foes who say the new path hasn’t received the same review as the original plan.

“We view the firm commitments as positive for the project,” David Galison, an analyst at Cannacord Genuity Corp., said in a note. “However, the project still has many hurdles to overcome in order for construction to begin.”

TransCanada hasn’t yet officially green-lighted the project and is still working toward a final investment decision, spokesman Terry Cunha said in an emailed statement. The company said in its statement it is working with landowners along the new path to obtain the necessary easements. Construction preparation has begun, with primary work potentially coming in 2019.

Keystone XL would be a victory for Canadian oil sands producers who are facing transportation bottlenecks getting their crude to market. The pipeline would ship 830,000 bopd from Hardisty, Alberta, through Montana and South Dakota to Nebraska, where it would connect to TransCanada’s existing Keystone system that carries crude to the U.S. Gulf Coast hub of refineries and export terminals.

“Over the last 12 months, the Keystone XL project has achieved several milestones that move us significantly closer to constructing this critical energy infrastructure for North America,” Russ Girling, TransCanada’s CEO, said in the statement.

Keystone XL drew fierce opposition from environmentalists concerned about climate change and landowners along the path in Nebraska. Former President Barack Obama rejected TransCanada’s application in 2015, saying that it wasn’t in the national interest. That decision was reversed by the Trump administration.

TransCanada shares were little changed on Thursday’s news, down 0.2% to C$59.71 at 11:28 a.m. in Toronto. The stock eked out a 1.1% gain in 2017.