Keystone XL is headed back to court, with environmental groups filing a new lawsuit after President Donald Trump mooted a previous lawsuit by issuing a new permit in March.
The groups contend in their new suit that the pipeline will hurt endangered species, such as pallid sturgeon, whooping crane, burying beetle, interior least tern, and piping plover. That sets the stage for a new battle over a pipeline that has become a symbol of the oil and gas industry on all sides of a national debate about the energy industry and the direction it should take.
In the midst of all that, the company behind the pipeline has meanwhile not only changed its name, but announced that it will sell some of its assets. The sale will help fund an ambitious, $30 billion capital program that includes the beleaguered Keystone XL pipeline.
TransCanada Corporation has recently become TC Energy, a rebranding company officials say better reflects the company’s presence in the United States and other countries besides Canada.
On Tuesday, TC Energy announced that it will sell midstream assets held by subsidiary Columbia Midstream Group for $1.275 billion in U.S. currency. The assets connect production to markets throughout western Pennsylvania, eastern Ohio and northern West Virginia.
While Keystone XL is still at risk from legal challenges, analysts saw the sale as a positive sign the company is still committed to building a pipeline for constrained supply in Canada.
“With this latest sale, we believe the company is committed to completing the project, as this would alleviate pipeline bottlenecks currently experienced by Western Canada,” Stratas Advisors said in its weekly oil and gas report. “The completion of the pipeline would help facilitate imports from Canada, and also remove any limitations for production growth in the Alberta region.”
The sale is expected to close the third quarter of this year, pending regulatory approvals, and does not include any interest in Columbia Energy Ventures Company, CEVCO, which is TC Energy’s minerals business in the Appalachian Basin. TC Energy will also continue to own and operate many pipelines in the Appalachian Basin with its Columbia Gas Transmission System, according to a media release from the company.
“The sale of Columbia Midstream Group advances our ongoing efforts to prudently fund our industry-leading portfolio of high-quality natural gas pipeline, liquids pipelines and power generation projects, while maximizing value for our shareholders,” said Russ Girling, TC Energy President and Chief Executive Officer.
The proceeds are in addition to about $3.4 billion in Canadian dollars from announced portfolio management activities in 2019.
“When combined with our significant and growing cash flow, access to capital markets and potential additional portfolio management activities, we are well-positioned to fund our $30 billion secured capital program in a manner consistent with achieving targeted credit metrics in 2019 and thereafter,” Girling said.
Keystone XL has been delayed a little more than 10 years now, and its construction costs have continued to escalate. When first proposed, its costs were an estimated $5 billion. Now they are $10 billion. Meanwhile, legal challenges have continued to haunt the project at every step, adding to its cost.
While the pipeline would primarily transport oil from Canada to Nebraska, it could also include an on ramp in Baker, Montana for as much as 100,000 barrels per day of Bakken crude.
Company officials have previously refused to say whether they received enough shipping contracts for the on ramp in Montana, citing confidentiality agreements, but did confirm at the time that the ramp was still listed in the design specs for the project when Trump issued his first permit.
Subsequent emails, as well as a telephone call to the phone number for media inquiries to ask for an update on whether the on ramp is still part of the project have not been returned.
TC Energy recently opened a binding open season for up to 50,000 barrels per day of incremental capacity on its existing Keystone pipeline on June 27. That line runs through the eastern edge of North Dakota.
Bids for the incremental transportation capacity are being taken until noon MT July 19.