Donald Trump may be doing whatever he can to resurrect the Keystone XL pipeline, but former TransCanada CEO Hal Kvisle says the oilpatch executives who would pay for space on the new line may be a harder sell.
“These are tough things for shippers to do in the best of times. The balance sheet commitment it takes to sign a long-term contract to move oil through an expensive pipeline, that’s a big financial commitment for any company to make,” Kvisle told CBC.
“It’s easier to make when you’re at the top of the cycle, oil is $100 a barrel. It’s tougher to make today, when oil is $50 a barrel.”
Then again, he said support from the Oval Office could be a boon for the project. “If you have a president who overtly supports these kinds of projects, it changes the mindset of all the regulators, of all the other politicians, of all the state governors.” Kvisle, who came up with the Keystone plan during his time as CEO, described the intensely controversial project as “the lowest-cost way to get Alberta oil to the highest-value market. That’s why Keystone XL was conceived in the first place.”
After the new U.S. president invited TransCanada to re-apply for a presidential permit to build the pipeline, the company complied, but has been understated about the response it’s getting from potential customers. On Tuesday, the company told CBC only that those discussions “are ongoing”.
But shortly after Trump’s inauguration, the Canadian Press reported on the significant barriers facing a Keystone v.2, beginning with the former reality TV star’s ideas about negotiating for “big, big chunk of the profits, or even ownership rights” in the project, while setting American content rules for the steel in the pipe.
Keystone isn’t the only pipeline whose business prospects may be on the shaky side. Last week, Medium recapped the financial risks facing the Dakota Access pipeline, now that shippers are in a position to renegotiate prices that were set when oil prices were much higher. This week, Seeking Alpha suggested the wheels may soon fall off Kinder Morgan’s Trans Mountain pipeline expansion, as the company enters a detailed route approval process that will involve Burnaby, B.C. landowners who are affected by—and fiercely opposed to—the project.