CALGARY, Alberta (Reuters) - Delays in approving TransCanada Corp's Energy East pipeline have cost Canada's struggling economy billions of dollars, the company's chief executive said on Friday, adding he was hopeful regulators would finish their review by 2018 as scheduled.
Speaking on Friday after TransCanada reported a drop in quarterly profits that still came in above expectations, the company's Chief Executive Officer Russ Girling said the No. 2 pipeline operator has had difficulty sticking to project schedules.
Last November U.S. President Barack Obama rejected TransCanada's controversial Keystone XL pipeline to the United States after a seven-year delay.
TransCanada is pressing ahead with its 1.1 million barrel per day Energy East project from Alberta's oil sands to Canada's Atlantic coast, which is also facing environmental opposition and regulatory headwinds.
Interim rules for environmental reviews from the new Liberal government introduced January imposed a delay on Energy East, and this week the National Energy Board released a preliminary timeline for its review of the project, which should be finished by March 2018.
Girling, who was speaking at a news conference after the company's annual meeting in Calgary, said improving market access by getting new pipelines built would narrow the discount at which heavy Canadian crude trades to benchmark U.S. crude.
"The delay is already costing our economy billions of dollars. Those are the kinds of numbers that have already come out of the economy because we haven't gotten these things done over the last few years," Girling said.
TransCanada reported a 35 percent drop in net income attributable to shareholders to C$252 million ($201 million), or 36 Canadian cents per share. Profit was hit by a C$176 million after-tax charge related to scrapping agreements to buy power from coal-fired plants in Alberta.
The company also had weaker earnings on liquids pipelines, because of lower uncontracted volumes on its Keystone and Marketlink crude pipelines.
Even so, the results were better than anticipated thanks to higher income from TransCanada's share in Ontario nuclear energy company Bruce Power and a lower-than-expected effective tax rate.
Excluding one-time items, the company earned C$494 million, or 70 Canadian cents per share, in the first quarter compared with the same period a year ago. Analysts on average had estimated a profit of 66 Canadian cents a share, according to Thomson Reuters I/B/E/S.
In March, TransCanada said it would buy Columbia Pipeline Group for $10.2 billion, creating one of North America's largest natural gas transmission businesses.
TransCanada shares were last up 0.2 percent on the Toronto Stock Exchange at C$52.10.
Additional reporting by Arathy S Nair in Bengaluru; editing by Shounak Dasgupta, Anil D'Silva and Diane Craft