July 27, 2012 / 12:52 PM / 6 years ago

TransCanada profit falls as Gulf Coast project approved

CALGARY, Alberta (Reuters) - TransCanada Corp said on Friday construction on the southern leg of its Keystone XL pipeline could begin within weeks as the company received a crucial final permit allowing it to at last break ground on the controversial project.

Canada’s largest pipeline company, which reported a 23 percent drop in second-quarter profit on Friday, said the U.S. Army Corps of Engineers had given the $2.3 billion line its third and final permit, the last obstacle to the start of work on the long-delayed project.

“This will allow us to maintain our previously stated schedule of beginning construction on the pipeline this summer and an in-service date of mid to late 2013,” Russ Girling, TransCanada’s chief executive, said on a conference call.

TransCanada moved to split the Alberta-to-Houston Keystone XL project in two after President Barack Obama refused to approve the project last year because of environmental concerns.

The southern portion, which the company calls the Gulf Coast Project, will carry 700,000 barrels of crude per day from the Cushing, Oklahoma, storage hub to Houston.

The company expects a U.S. decision on whether the remaining portion of the line can be built to come early next year.

Girling said the company is moving ahead with early plans to build another big pipeline project, a line that would carry between 400,000 and 900,000 barrels per day of oil sands crude to Canada’s East Coast.

TransCanada could convert an under-used natural gas pipeline to carry the oil from Alberta as far as Montreal and then install new pipe to the Atlantic.

While planning is in the early stages, Girling said there is market interest in the scheme.

“I would say at this point we’re getting a lot of inbound interest from potential shippers on the project but we have a fair bit of work to do to lock all of that down,” he said.


TransCanada’s net income fell to C$272 million ($269.4 million), or 39 Canadian cents a share, in the second quarter from C$353 million, or 50 Canadian cents a share, a year earlier.

Comparable earnings, which exclude most one-time items, fell 15 percent to C$300 million, or 43 Canadian cents per share.

The company said that the drop came on lower earnings from its U.S. power business and some of its natural gas pipelines.

Revenue rose slightly to C$1.81 billion.

Shares of TransCanada were up 11 Canadian cents at C$44.91 early on Friday afternoon on the Toronto Stock Exchange

Reporting by Scott Haggett in Calgary and Bhaswati Mukhopadhyay in Bangalore; Editing by Peter Galloway

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