TransCanada Plans to Build Portion of Keystone XL Pipeline

Move will alleviate oil glut at crucial point of pipeline

   

investorpoliticsletters2 TransCanada Plans to Build Portion of Keystone XL PipelineTransCanada (NYSE:TRP), the Canadian energy company whose proposed Keystone XL Pipeline led to a clash between President Barack Obama and Congressional Republicans, announced today that they will begin building part of the pipeline.

Obama drew heat last month for blocking the entire Keystone XL Pipeline project, due to concerns about harming the environment in a section of Nebraska, and after Congress imposed a deadline on whether or not to issue a permit for the project. Obama said this rejection did not spell the end of the Keystone XL Pipeline project, and encouraged TransCanada to suggest an alternate route.

TransCanada plans to start construction on a $2.3 billion pipeline that will run from Cushing, Okla. to Port Arthur, Texas. Cushing is a major terminal point for crude oil, and Port Arthur sits on the Gulf of Mexico, near the Gulf Coast refinery complex. Because it is not a cross-border pipeline, this section does not require approval of the State Department, which was where the previous proposal got hung up.

Political support for this segment of the pipeline is mixed. Supporters say it will add jobs, lower energy costs, and increase our energy supply, while detractors are against it for different reasons. Some say that extracting oil from oil sands — the source of much of the oil being shipped — and shipping it across a pipeline is bad for the environment, while others believe it might actually lead to higher crude oil prices.

TransCanada estimates that 4,000 jobs will be created by building the pipeline. Plans are still being developed for an alternate route for the full pipeline project.

Will building this section of the Keystone XL Pipeline lower our energy costs? Is it an unnecessary environmental risk? Let us know what you think at letters@investorplace.com.

– Benjamin Nanamaker, InvestorPlace Money & Politics Editor

The opinions contained in this column are solely those of the writer.

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