TransCanada Not Held Back by Keystone XL Pipeline
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The U.S. State Department announced Friday plans to prepare a new supplemental environmental impact statement for TransCanada Corp.'s (NYSE: TRP) proposed Keystone XL pipeline.
In January, the White House rejected a proposal for the Alberta-to-Texas pipeline over environmental concerns regarding the Nebraska Sandhills. The Sandhills are nearly 20,000 square miles of unbroken prairie with hundreds of transient lakes, with a very high water table running through it (Ogallala Aquifer). The potential for oil leaks along the pipeline into the water table has raised concerns by the Obama Administration. TransCanada responded with a newly proposed alternative route that avoids the Sand Hills.
The new proposal by the company, submitted last month, is broken into two parts. The first is a pipeline from Oklahoma to the Gulf-Coast. It does not need federal permits to proceed, since it does not cross international boundaries. However, Oklahoma Governor Mary Fallin, is tired of waiting. According to the governor, the Keystone XL pipeline will bring about 1,200 jobs to her state.
"To me, it's been enormously frustrating that President Obama and our nation have not been able to get through the permit for the Keystone XL pipeline to move from Canada down throughout the United States," Mary Fallin told delegates at the Global Petroleum Show on Wednesday.
The second part of the proposal includes a pipeline from the Montana border with Canada to Steele City, Nebraska, and requires federal approval.
Opponents of the Canadian pipeline project said the tar sands oil planned for Keystone XL is the dirtiest type of crude oil. Supporters say the pipeline will moderate gas prices and is better for U.S. domestic security.
The lack of movement on the pipeline has not held TransCanada back. The company was recently picked by Shell Canada Limited, a unit of Royal Dutch Shell (NYSE: RDS-A) to design, build, own and operate the proposed Coastal GasLink project, an estimated $4-billion pipeline. The Coastal GasLink project will transport natural gas from the Montney gas-producing region in British Columbia to the recently-announced LNG Canada liquefied natural gas export facility near Kitimat, BC.
The LNG Canada project is a joint venture led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited (NYSE: PTR), which are based in the world’s three largest LNG importing markets.
TransCanada has the ability to continue to grow, expand, and take on large international projects, regardless of the allowances of the Obama Administration. The company offers a strong, stable stock with an average annual return of 14% and a 10-year annual return of 13%. With the prospects for continued growth, and a fighting spirit, this company gets a strong “buy” recommendation.
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