If President Barack Obama’s rejection of Keystone XL is a sign of things to come, TransCanada Corp.’s main rival might want to take note.
Enbridge Inc. has been waiting since 2012 for a decision from the U.S. State Department on a permit to almost double the capacity of its Line 67 cross-border pipeline, known as Alberta Clipper. Obama’s denial of Keystone XL Friday, over the determination it would undercut U.S. leadership on climate change, means all pipelines are going to be harder to build, according to Edward Jones & Co.
“It’s not great for Enbridge,” said Rob Desai, an analyst at Edward Jones in St. Louis. “There’s going to be some push back, more so than they would have gotten a few years ago.”
Like TransCanada’s Keystone XL, Enbridge’s proposal requires presidential permits for construction because it crosses the U.S. border with Canada. Both Calgary-based companies are trying to build new transportation capacity to carry rising volumes of oil-sands crude out of Canada. Even with slumping crude prices shrinking expansion plans, oil-sands projects under construction will require another export pipeline by early next decade, according to an analysis Friday by Desjardins Capital Markets.
The Keystone XL decision doesn’t mean no more pipelines will be constructed under the Obama administration, Josh Earnest, the White House press secretary, told reporters in Washington on Friday.
‘Thousands of Miles’
“There are thousands of miles of pipelines that have been built inside the United States while President Obama has been in office,” Earnest said. With Keystone XL, the “argument we’re making here is very specific.”
Enbridge found a temporary way last year to boost shipments on its existing Alberta Clipper system, by switching crude from one pipeline to another before it crosses the border, while the State Department review of the expansion drags on. As environmental and indigenous groups fight the workaround in court, Enbridge remains committed to the pipeline’s expansion.
“KXL and Alberta Clipper are two very different projects,” Graham White, an Enbridge spokesman, said in an e-mail Friday. “Line 67 is an existing, fully-operating pipeline that the State Department permitted in 2009 after concluding that its operation would serve the national interest.”
Pooja Jhunjhunwala, a spokeswoman for the State Department, said in an e-mail Friday that she was checking on the status of the Alberta Clipper expansion review.