UPDATE 3-TransCanada says to keep pushing Keystone; investors skeptical

Fri Nov 6, 2015 4:20pm EST
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(Adds comments from Canadian government on pipeline support, analyst, environmental group)

By Nia Williams

CALGARY, Alberta Nov 6 (Reuters) - TransCanada Corp said on Friday it will keep pressing to build the Keystone XL oil pipeline from Canada to the United States despite the Obama administration's rejection, but skeptical investors suggested it focus on a controversial all-Canadian alternative.

TransCanada is also developing the Energy East pipeline, designed to move 1.1 million barrels per day of western crude to Canada's East Coast, although it too faces opposition from environmentalists trying to halt industry expansion.

"Although (TransCanada has) been trying to keep the Keystone pipeline alive, really their attention is diverted onto other projects; there is more emphasis on Energy East and other elements," said Julie Brough, vice president at investment managers Morgan Meighen & Associates, which owns TransCanada stock.

President Barack Obama said he rejected Keystone XL because it would not make a meaningful long-term contribution to the U.S. economy.

The rejection caps a rocky week for TransCanada, which on Monday requested that Washington suspend consideration of its Keystone bid and on Thursday scrapped plans for a second Energy East marine terminal.

U.S. rejection of Keystone gives TransCanada a "more focused argument" for needing Energy East, said FirstEnergy Capital analyst Steven Paget, as the company seeks to win over Canada's two most populous provinces, Ontario and Quebec.

Keystone's rejection boosts the case for Energy East "volumetrically," said Wood Mackenzie analyst Skip York.   Continued...