CALGARY, Alberta (Reuters) - If allowed to proceed, TransCanada Corp's $7 billion Keystone XL pipeline could bring an end to the crude oil bottleneck in the U.S. Midwest that is now depressing North American oil prices, TransCanada Chief Executive Russ Girling said on Thursday.
Girling said the Cushing, Oklahoma-to-Texas portion of the proposed oil pipeline will have enough space to drain off much of the glut of crude at the Cushing storage hub that is keeping benchmark West Texas Intermediate crude prices well below Europe's Brent benchmark.
That spread was nearly $20 per barrel on Thursday.
Cushing has been swamped by crude, much of it coming from Canada, as pipeline capacity from the hub to the Gulf of Mexico coast, home to the largest cluster of refineries in the United States, is limited.
"My view is that we could alleviate 100 percent of the bottleneck today if we were allowed to commence construction, to get on with things," Girling told reporters following a speech to an investment conference.
The Keystone XL line would run from Hardisty, Alberta, to the Gulf Coast. The portion of the line running from Cushing to the Gulf could handle as much as 900,000 barrels per day of crude, with Canadian producers claiming 500,000 bpd of that capacity.
TransCanada's proposed Cushing Marketlink project, which would connect the hub and the Keystone XL line, would see 150,000 bpd flowing out of Cushing to the Gulf Coast should it open as scheduled in 2013. However Girling said TransCanada can boost the line's throughput just by adding additional pumps.
"We have the ability to add capacity fairly cheaply to the system," he said.
Girling said he's confident that the U.S. State Department will approve the Keystone XL project by year-end. However the Obama administration is under pressure from environmentalists as well as some legislators and land owners along the planned right of way to turn down the company's application.
The line's critics are concerned about greenhouse gas emissions from expanded oil sands production. There are also concerns about the threat of oil spills in sensitive areas along the route.
That criticism deepened after recent leaks on the company's existing Keystone system.
Still, Girling said he is confident of receiving the needed approvals, adding that polls the company has commissioned in the United States have showed support for the line.
"The average American understands the importance of a project like this and its impact on energy security, on jobs, on prices of gasoline," he said. "They want to know that those resources are being delivered safely and reliably."
TransCanada shares fell 84 Canadian cents to C$40.75 on Thursday on the Toronto Stock Exchange.
Reporting by Scott Haggett; editing by Peter Galloway