* Big delays could force XL shippers to find alternatives
* Company still expects U.S. approvals by year-end
* Still sees Keystone XL operational in 2013
* Nebraska legislation could delay line by three years
* TransCanada Q3 net profit C$0.55 vs C$0.54
* Comparable income C$0.59 vs analysts’ view C$0.57
* Shares drop 0.6 pct (Recasts to add details, comment; in U.S. dollars unless noted)
By Scott Haggett
CALGARY, Alberta, Nov 1 (Reuters) - An extended delay in approving TransCanada Corp’s (TRP.TO) $7 billion Keystone XL pipeline or a forced rerouting of the controversial project would lead oil shippers and refiners to abandon their support for the line, the company’s chief executive said on Tuesday.
TransCanada, which reported a 12 percent rise in third-quarter operating earnings on Tuesday, expects the Obama administration to make a final decision on whether to approve the 700,000 barrel per day line, which would carry crude from Alberta’s oil sands to Texas refineries, by year-end.
However environmental groups concerned about the risk of spills or greenhouse gas emissions from oil sands projects are threatening lawsuits. As well, the Nebraska legislature began a special sitting on Tuesday in order to come up with legislation compelling TransCanada to alter the line’s route away from the state’s environmentally sensitive Sand Hills and the Ogallala aquifer. [ID:nN1E79N1M1]
Though TransCanada believes Nebraska will be hard-pressed to come up with a constitutionally sound law, rerouting the line could delay construction by another three years for new environmental studies.
The shippers who have signed up for space on the line, can only have so much patience, TransCanada’s chief executive said. Should Nebraska be successful, or should the U.S. administration drag out approval, the shippers and refiners will be looking for alternative supplies.
“They’ll be looking for things like offshore crude oil (or) tankers moving down the Mississippi River. They’ll look at other avenues to source their crude because they do need crude oil for their refineries,” CEO Russ Girling said on a conference call.
“They are committed to our project as long as they can see that there is a logical way of getting to a decision ... but if they don’t see that’s possible they will put in place other alternatives.”
FACTBOX-Keystone XL dominates U.S. energy, environment
Girling was more sanguine about the risk that environmental groups could challenging a State Department approval of the project in U.S. courts, noting that similar suits leveled against the 2009 approval of Enbridge Inc’s (ENB.TO) Alberta Clipper, which carries Alberta crude to Superior, Wisconsin, or objections to the original Keystone project failed to halt work.
“We fully expect there will be appeals, but our intent is to start construction immediately, unless we are barred from doing that legally,” Girling said.
Should TransCanada get its approval on schedule, the company expects to complete work on the line in the second half of 2013.
TransCanada, said third-quarter net income rose to C$384 million ($378 million), or 55 Canadian cents a share, from C$377 million, or 54 Canadian cents a share, in the year-before quarter.
Excluding unusual items, quarterly earnings were C$417 million, or 59 Canadian cents a share, up 12 percent from C$374 million, or 54 Canadian cents a share. That beat the average estimate among analysts of 57 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 12 percent to C$2.39 billion from C$2.13 billion.
TransCanada said its results were bolstered by new pipelines, including the first phase of its Keystone system, and higher power prices in the Alberta market.
“We noted strong performance from the Western and Eastern Power (Canadian) segments,” Chad Friess, an analyst at UBS Securities Canada, said in a note to clients. “This strength was partly offset by lower results in U.S. Power”
TransCanada shares were down 0.6 percent at C$42.10 by midafternoon on Tuesday on the Toronto Stock Exchange. The exchange’s benchmark index was also about 0.6 percent lower due to European debt worries.
$1=$1.02 Canadian Additional reporting by Abhiram Nandakumar in Bangalore; editing by Rob Wilson