TransCanada Corporation (USA) (TRP) – Everything You Need to Know About Keystone XL: Why Pipeline Companies Care

The fate of Keystone XL will have great bearing on the outcome for the Alberta Clipper project as well as any other potential pipeline project that would cross the U.S.-Canada Border.

If Keystone XL gets built
The approval of this pipeline would certainly make it easier for other possible projects to get approved, especially the most current one from Enbridge. Based on projections for Canadian oil sands production, though, it’s pretty likely that we will cross this bridge again. By 2020, it’s very likely that production of Western Canadian Select and Bakken crude will exceed the additional takeaway capacity that is proposed today.

Then of course there is the actual owner of the pipeline, TransCanada Corporation (USA) (NYSE:TRP). Current market prices to bring barrel of oil from Hardisty, Alberta, to the Gulf Coast range from $7 to $11. If TransCanada Corporation (USA) (NYSE:TRP) could contract out the entire pipeline for the whole journey, then the pipeline would probably garner somewhere in the range of $2 billion-$3 billion in revenue annually.

If Keystone XL is rejected
Well, from the American standpoint, it’s hard to say at this point. Does one rejection mean that we are more likely to refuse any other pipeline projects? Or is it possible that the need for Canadian oil sands will grow over time and resistance to new pipelines will weaken over time? One thing is for sure, companies that have given thought to building new cross-border pipelines will certainly rethink those plans if this project is rejected.

In the case of TransCanada, it would be a lot of time and effort spent, but there is one small consideration. The Cushing Marketlink part of the project that brings oil from Cushing to the Gulf Coast will be built, so the company will still see some revenue growth from that half of the project. In all likelihood, with Canadian oil sands production increasing, TransCanada Corporation (USA) (NYSE:TRP) would try again to get some other project up and running.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool.The Motley Fool recommends Enterprise Products Partners L.P. and Spectra Energy.

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