TORONTO (Reuters) - TransCanada Corp (TRP.TO) said on Thursday it is considering how to proceed with its Keystone XL pipeline, a day after a court overruled the Nebraska governor’s decision to allow the controversial line to pass through the Midwestern state.
“We are disappointed and disagree with the decision of the Nebraska district court and will now analyze the judgment and decide what next steps may be taken,” the company said in a statement. “Nebraska’s attorney general has filed an appeal.”
Canada’s No. 2 pipeline operator also reported higher fourth-quarter earnings on strong results from its gas pipelines and higher volumes on its broader Keystone oil pipeline system. Shares were down C$1.02 at C$48.88 Thursday morning on the Toronto Stock Exchange.
On Wednesday, the District Court of Lancaster County voided state approval of the Keystone XL pipeline project, siding with landowners who said legislation allowing the $5.4 billion line disregarded their property rights.
The move is expected to further delay the project, which has spent more than five years in regulatory limbo, though it is unclear how long the Nebraska appeal will take.
Supporters say the pipeline, which would transport crude from Alberta’s oil sands to refineries on the U.S. Gulf Coast, would create thousands of jobs and cut U.S. fuel costs, while critics say it would harm the environment and hasten climate change by promoting expansion of Alberta’s oil sands.
U.S. President Barack Obama will have the final say on the 1,179-mile (1,898-km) line, with the project expected to come online two years after a Presidential Permit is issued. TransCanada said it has so far spent $2.2 billion on the line.
With Keystone XL potentially facing another indefinite delay, focus may now shift to the company’s other large development project, the $12 billion Energy East pipeline, which would pump crude from Alberta and Saskatchewan to refineries in Eastern Canada and a deepwater export port at Saint John, New Brunswick.
TransCanada said it expects to apply for permits for Energy East by mid-2014, with first deliveries anticipated in 2018. The proposed pipeline would ship 1.1 million barrels per day (bpd), about 30 percent more than Keystone XL.
“With $30-odd billion in development, they really are more than just one $6 billion pipeline,” Steven Paget, an analyst with FirstEnergy Capital in Calgary, said of TransCanada.
While Keystone XL would transport oil to existing markets in the United States, Energy East would carry crude to the coast, opening up access to valuable new international markets for Canadian oil. TransCanada is also developing smaller oil pipelines in Canada and numerous natural gas projects.
The Calgary-based company’s net income in the fourth quarter was C$420 million, or 59 Canadian cents per share, compared with C$306 million, or 43 Canadian cents per share, a year earlier.
Comparable earnings, which exclude one-time items, rose to C$410 million, or 58 Canadian cents per share, from C$318 million, or 45 Canadian cents per share.
Analysts on average expected net income of 59 Canadian cents per share, according to Thomson Reuters I/B/E/S.
TransCanada also increased its quarterly dividend by 4 percent to 48 Canadian cents.
Editing by Lisa Von Ahn and Paul Simao and Alden Bentley