CALGARY, Alberta (Reuters) - TransCanada Corp (TRP.TO), the backer of the Keystone XL pipeline, said on Tuesday it plans to soon reapply for U.S. approvals for the project, adding that the line would be further delayed and raising its cost estimate to $7.8 billion.
The company, which reported a 39 percent rise in net income on Tuesday and boosted its dividend by 4.8 percent, said it expects to have the 830,000 barrel Alberta-to-Texas oil pipeline up and running by early 2015 after last estimating it could be operating by late 2014.
Alex Pourbaix, the head of TransCanada’s pipeline division, said the schedule was revised because the company now expects it will not receive the required presidential permit clearing construction until the first quarter of 2013.
“We’ve always said that the time period for construction of Keystone XL would be two full years and we’re just taking a look at the timeframe,” he said on a conference call. “We believe that a reasonable date to get a new Presidential Permit is in Q1 of 2013, and it was really just simple math.”
The Obama administration has twice withheld approval for the Keystone XL line, once in November when it delayed a decision until after the 2012 presidential election and again last month, when Republican legislators tried to force the president to make a final decision on the line. Barack Obama rejected that bid because environmental studies were incomplete.
But TransCanada maintains that Obama’s denial was not based on the merits of the project and it plans to re-apply for the crucial Presidential Permit in the near future.
“I don’t have any reservations that this pipeline is going to get completed,” said Russ Girling, the company’s chief executive. “The U.S. needs to import some 10 million barrels a day of oil, every day, and currently get it from places like Venezuela, Saudi Arabia, Nigeria. We’re just going to replace that oil with Canadian oil.”
At the request of shippers who have contracted for capacity on Keystone XL, TransCanada is still mulling first completing the leg of the pipeline that would run from the bloated oil storage hub at Cushing, Oklahoma, to Texas refineries on the Gulf of Mexico.
“We think there’s a pretty compelling need for the project,” Pourbaix said. “So we’ve got to do our homework with shippers. But I would expect that this is the kind of thing we’ll be considering over the next couple of months.”
The Keystone XL line has been bitterly opposed by environmental groups concerned about spills along the route and the expansion of the Alberta oil sands. The oil sands are the world’s third largest crude storehouse, but producing its tar-like bitumen is more energy intensive and emits more greenhouse gases than conventional oil production.
TransCanada said it now has firm contracts to ship as much as 1.1 million barrels of crude per day on Keystone XL and its existing Keystone system, which takes oil sands crude to Cushing and southern Illinois.
The company also raised its cost estimate for the line to $7.8 billion from $7 billion to account for the costs of building an 80 km (50 mile) extension to Houston, as well as additional linkages to Cushing and the Bakken oil field in North Dakota.
The company said fourth-quarter net income rose 39 percent to C$375 million ($375 million), or 53 Canadian cents a share, compared with C$269 million, or 39 Canadian cents a share.
Comparable earnings, which exclude most unusual items, fell about 5 percent to C$366 million, or 52 Canadian cents a share, from C$384 million, or 55 Canadian cents, a year ago. That was just under the average analyst forecast of 53 Canadian cents a share, according to Thomson Reuters I/B/E/S.
The company said its lower comparable earnings were due to weaker results from its natural gas pipelines and reduced profit from its stake in Ontario’s Bruce Power nuclear generating station, and its U.S. power plants.
TransCanada also said it will raise its quarterly dividend by 2 Canadian cents to 44 Canadian cents a share.
Fourth-quarter revenue rose about 15 percent to C$2.36 billion.
TransCanada shares rose 67 Canadian cents to C$42.15 on the Toronto Stock Exchange on Tuesday.
Additional reporting by Shounak Dasgupta in Bangalore; editing by Rob Wilson