February 26, 2010

TransCanada says construction on Keystone crude oil line to start next year

CALGARY

TransCanada Corp. which reported a big jump in fourth-quarter profits this week, said it expects to begin construction on the next phase of its Keystone crude oil pipeline in about a year.

The Calgary-based pipeline builder and power generator said its comparable earnings for the final quarter of 2009 were $328 million, up from $271 million for the same period a year earlier.

“Our 2009 financial results highlight our ability to generate strong earnings and cash flow from a diverse portfolio of North American energy infrastructure assets,” TransCanada chief executive Hal Kvisle said in a statement.

“Looking forward, we expect that our $22-billion capital program will lead to significant growth in cash flow and earnings over the next five years as a number of attractive, low-risk projects are placed into service.

“This has enabled our board of directors to increase the dividend on common shares for the 10th consecutive year.”

TransCanada said it had higher earnings from natural gas storage and two major power projects in Ontario, offset by lower power prices in its western and U.S. power segments as well as business development costs associated with its Alaska pipeline project.

The company said Canada’s federal energy regulator is expected to give the green light to an expansion of the Keystone pipeline project by the end of March and that U.S. approvals are expected by the fourth quarter.

The Keystone pipeline currently stretches from Hardisty, Alta., to refining hubs in Illinois. Commercial operations are expected to begin in the middle of this year.

An expansion, called Keystone XL, would extend it to the U.S. Gulf Coast, where refineries are hungry for heavy crude like that produced in Alberta’s oilsands. Construction on the expansion facilities is expected to begin around the beginning of 2011.

Canadian Press

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