TransCanada says oil forecasts support Keystone XL

Wed Dec 12, 2012 6:30pm EST
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - New forecasts of booming oil output and falling demand in the United States have only strengthened the case for the Canada-to-United States Keystone XL pipeline, a top executive with proponent TransCanada Corp (TRP.TO: Quote) said on Wednesday.

President Barack Obama last January rejected it on concern about the line's route across a Nebraska aquifer, effectively removing it from much of the 2012 campaign debate.

With a new environmental assessment of the project expected soon, the U.S. State Department is moving closer to another decision on whether the $5.3 billion pipeline is in the national interest.

Environmental groups remain staunchly opposed, saying the pipeline will prevent a faster shift to renewable energy, and TransCanada is facing flare-ups of opposition to the southern leg of the project among a handful of landowners.

Alex Pourbaix, president of TransCanada's energy and oil pipelines division, pointed to a surprising November forecast by the International Energy Agency projecting that growth in U.S. unconventional oil production and a 30 percent drop in demand could allow the United States to become energy self-sufficient in the next two decades.

"Even if all of those come true, and I certainly have some concerns about that size of demand reduction, the U.S. is still, by 2035, importing 3.5 million barrels a day of oil," he said in an interview.

"The obvious place for that oil to come from is Canada, so I would expect that we're still going to see projects like Keystone XL, and more projects on top of that, go forward to bring Canadian oil to U.S. markets."

The United States currently imports about 9 million barrels a day, and Canada supplies more than 20 percent of that.   Continued...