* West-East pipeline could start up in 2017
* Keystone XL approval now seen in first half
* Comparable earnings fall 13 pct to C$318 mln
* Raises quarterly dividend by 5 percent
By Jeffrey Jones
CALGARY, Alberta, Feb 12 TransCanada Corp's
plan to ship Alberta oil to Eastern Canada through a
converted natural gas pipeline is quickly gaining traction,
executives said on Tuesday, as the company's wait for a U.S.
decision on its long-delayed Keystone XL project drags on.
TransCanada, which reported a 19 percent drop in
fourth-quarter profit, expects to file an application by the end
of this year for its mainline conversion project, which could
allow up to one million barrels a day of oil sands-derived crude
to flow to Quebec and the Atlantic provinces by 2017.
Last week, the premiers of Alberta and New Brunswick made an
enthusiastic show of support for the made-in-Canada concept,
partly as a way to avoid the cross-border regulatory delays that
have engulfed the $5.3 billion Keystone XL project.
Chief Executive Russ Girling said TransCanada will hold an
open season, or call for commercial support, for the as-yet
unnamed West-East project shortly, and stressed he expects a
"very favorable response" from oil producers and refiners.
"We have determined that the project is both technically and
economically feasible and that we will be able to continue to
meet the needs of our natural gas customers," Girling said in a
conference call. "Discussions with potential shippers and other
stakeholders are well under way to determine if it is a project
that the market wants, and I would say to date those discussions
have been very, very encouraging."
The project would involve converting one of the company's
mainline gas pipelines to Quebec from Alberta to oil use, then
building a new pipeline to the Maritimes; Saint John, New
Brunswick, site of the 300,000 barrel a day Irving Oil Ltd
refinery, has been discussed as a potential terminus.
From there, some crude could also be exported to refineries
along the U.S. Eastern Seaboard.
Girling pointed out that Eastern Canadian refineries buy
about 600,000 barrels a day of pricey imported oil. Meanwhile,
land-locked Alberta crude, which currently has no pipeline
access to Quebec, is being slapped with deep discounts due to
limited export capacity and a glut of supply in its traditional
U.S. Midwest market.
That discount is straining both oil producers' bottom lines
and the Alberta government's revenues.
Rival Enbridge Inc is also planning to get Western
Canadian crude to Montreal and points East by reversing the flow
direction of a pipeline that runs to Sarnia, Ontario.
Alex Pourbaix, president of TransCanada's energy and oil
pipelines division, said the regulatory process for the project
would likely take 18 to 24 months, which would be more than two
years shorter than the U.S. review of Keystone XL so far.
Construction would take another two years.
Girling said he now expects U.S. regulatory approval for the
contentious Keystone XL project in the first half of this year,
representing a longer timeline than earlier expected.
The next step is for the U.S. State Department to issue a
supplemental environmental impact statement, expected shortly.
Once that happens, it could be two to three more months
before TransCanada finally gets a decision, executives said.
U.S. environmental groups opposed to the 830,000 barrel a
day project have complained that the impacts of increasing
Canadian oil sands development are not being factored into the
New Secretary of State John Kerry said last week he hopes
his department can make a decision in the near future. He
stressed the importance of the Canada-United States energy
Ottawa, Canada's energy industry and green groups will be
listening to U.S. President Barack Obama's State of the Union
speech closely later Tuesday for clues into the project's fate,
though Girling said he would focus on the regulatory process.
"That's where we'll take our cue from as to what the next
steps in the process are and how long they'll take," he said.
The oil pipelines are among C$12 billion of projects
TransCanada aims to complete within the next three years.
POWER BUSINESS HAMPERS RESULTS
In the fourth quarter, net income fell to C$306 million, or
43 Canadian cents a share, from year-earlier C$376 million, or
53 Canadian cents a share.
Excluding unusual items, profit fell 13 percent to C$318
million, or 45 Canadian cents per share, lagging an average
estimate among analysts by 4 Canadian cents a share, according
to Thomson Reuters I/B/E/S.
The company blamed the lower profit on reduced returns from
its power business and from some natural gas pipelines.
However, it raised its quarterly dividend by 5 percent to 46
Canadian cents per share.
TransCanada shares fell 69 Canadian cents to C$47.56 on the
Toronto Stock Exchange, representing a gain of about 15 percent
in the past year.