Despite TransCanada鈥檚 Keystone XL pipeline expansion project rejected by US President Barack Obama, the company is now attempting to make headway in the oil refinery complex, in America鈥檚 Gulf Coast.
TransCanada鈥檚 Houston Lateral pipeline and tank terminal is intended to be available by 2Q16. It will connect the existing Keystone pipeline system to the company鈥檚 Houston refineries.
Paul Miller from TransCanada stated: 鈥淭oday, we probably move over 300 000 bpd of crude oil from Canada to the US Gulf Coast, and we represent about a third of that. As we see the connection of our system going to these additional markets in the US Gulf Coast, we would look to increase both our share as well as the absolute volume.鈥�
In order to strengthen the relationship between its Houston Lateral pipeline and terminal and the Gulf Coast energy markets, the company 鈥� along with Magellan Midstream Partners LP 鈥� has decided to construct a US$50 million pipeline, which will transport 200 000 bpd from TransCanada鈥檚 terminal in Houston to Magellan鈥檚 East Houston terminal.
Miller explained: 鈥淚t鈥檚 small from a dollar perspective, but it鈥檚 hugely significant from a connectivity perspective, providing connectivity to both the Houston and the Texas City refineries. [Additionally,] Louisiana is another attractive market for TransCanada, considering the existing footprint we have down to the US Gulf Coast.鈥�
However, despite numerous smaller pipeline projects being undertaken by TransCanada, the Houston Lateral pipeline and terminal will not be able to replace the benefits or success the Keystone XL pipeline project could have brought.
Yet, TransCanada is not deterred from the Keystone XL鈥檚 rejection. In early January 2016, the company announced that it had filed a Notice of Intent to initiate a claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) in response to the US Administration's decision to deny a Presidential Permit for the Keystone XL pipeline on the basis that the denial was arbitrary and unjustified. TransCanada also filed a lawsuit in the US Federal Court in Houston, Texas, asserting that the President's decision to deny construction of Keystone XL exceeded his power under the US Constitution.
TransCanada CEO Russ Girling said the Keystone XL pipeline was still possible, continuing to state: 鈥淚t鈥檚 pretty clear we have been harmed in an arbitrary and discriminatory way. I don鈥檛 think there鈥檚 anybody that would say this isn鈥檛 an egregious abuse of authority and that we weren鈥檛 treated fairly or equitably to whatever standards you choose 鈥� cross-border pipelines, domestic pipelines, or imports from other countries.鈥�
Similarly, BMO Capital Markets Analysist Ben Pham argued that the company could have a 鈥渃redible case.鈥� However, he continued to explain that 鈥渉aving said that, the odds appear to be against TransCanada, as no company has been successful with a NAFTA challenge so far with the US, and the process could take years to resolve unless early settlement.鈥�
Edited from various sources by
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