TransCanada Corp. (TRP) may shorten the initial path for its rejected Keystone XL project, bringing oil from Montana’s Bakken Shale to refiners in the Gulf of Mexico and removing the need for federal approval.
“There certainly is a potential opportunity to connect the Bakken to the Gulf Coast,” Alex Pourbaix, TransCanada’s president of energy and oil pipelines, said in a telephone interview today. “That is obviously something we’ll be looking into over the next few weeks.”
TransCanada’s $7 billion Keystone XL proposal to bring crude from Canada’s oil sands to the Gulf was rejected yesterday by the Obama administration. The project required U.S. approval because it crossed the border with Canada. The company may seek that approval after it builds the segment from Montana to the Gulf, Pourbaix said.
The Bakken shale-rock formation is estimated to hold as much as 4.3 billion barrels of technically recoverable oil in North Dakota and Montana, according to a 2008 U.S. Geological Survey report. Oil production in North Dakota surged 42 percent to 510,000 barrels a day in November, exceeding the output of Ecuador.
Production in the Bakken field may reach 750,000 barrels a day this year, Edward Morse, managing director of commodities research for Citigroup Inc., said at a conference in Calgary today.
President Barack Obama’s decision yesterday to reject a permit for TransCanada Corp.’s Keystone XL oil pipeline may prompt Canada to turn to China for oil exports.
Prime Minister Stephen Harper, in a telephone call yesterday, told Obama “Canada will continue to work to diversify its energy exports,” according to details provided by Harper’s office. Canadian Natural Resource Minister Joe Oliver said relying less on the U.S. would help strengthen the country’s “financial security.”
The “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market,” Oliver told reporters in Ottawa.
Currently, 99 percent of Canada’s crude exports go to the U.S., a figure that Harper wants to reduce in his bid to make Canada a “superpower” in global energy markets.
Canada accounts for more than 90 percent of all proven reserves outside the Organization of Petroleum Exporting Countries, according to data compiled in the BP Statistical Review of World Energy. Most of Canada’s crude is produced from oil-sands deposits in the landlocked province of Alberta, where output is expected to double over the next eight years, according to the Canadian Association of Petroleum Producers.