500 years from now I'll worry about our oil running out. Until then, I'll enjoy the benefits of all of Canada's wealth.
		
		
	 
If you can...
Keystone delay may force shippers to opt out
U.S. decision puts project 2 years behind
Further delays to Trans Canada Corp.'s Keystone XL  pipeline could sound a death knell for the massive Alberta-to-Texas  bitumen line if shippers pull out, according to industry observers.
The  $7-billion project was dealt a blow Thursday after the U.S. State  Department put off a decision on the transborder line until early 2013  to review alternative routes, citing public concerns about XL traversing  a sensitive water resource.
At a minimum, the U.S. ruling  presents a delay; at worst it could see key financial support being  withdrawn from the $7-billion pipeline, said analysts.  "I believe  it could lead to the project not going ahead because the shippers have  sunset clauses," said Juan Plessis, with Canaccord Capital, from  Vancouver.
"If TransCanada cannot reasonably expect to have a  commencement date of December 31, 2013, then the shippers are not bound  to the original agreement."
Conditions attached to shipper  agreements filed with the National Energy Board include TransCanada  proving by the end of 2011 it had all the U.S. regulatory approvals to  launch the line "no later than December 31, 2013." Observers now expect  the project to be at least two years late because of the newest  development and not built until the end of 2014 - assuming enough  shippers stay on board.
"The critical issue is what happens to the  445,000 barrels per day plus of shipper contracts in place, which are  necessary for the project to proceed, said analyst Chad Friess, with UBS  Research in a research note Friday. 
"With the delay, we expect most  shippers will have the right to opt out of their contracts under various  'sunset clauses' and commit their volumes to other Gulf Coast projects,  such as Enbridge's Wrangler, which proposes to be on stream mid 2013."
Rival  Enbridge Inc. has forwarded an 800,000 barrel per day pipeline proposal  which would move oil from benchmark pricing point Cushing, Okla., to  near Houston, Texas.
Friess said a late 2014 completion would be  tolerable to most shippers, but added "there is no guarantee that a new  route won't meet the same resistance as the current one, which has been  under review since 2008."
TransCanada included 14 routes crossing  Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas. when  submitting its application to U.S. regulators.
The final  environmental impact statement approved by the State Department in  August noted alternative routes would disturb more land and add about  $1.7 billion to the project.
The State Department move Thursday  was seen as highly political, in part to placate influential Democratic  voters in light of large public demonstrations against the pipeline, and  help President Barack Obama's administration avoid controversy around  the project until after the 2012 U.S. election.
Environmental and  landowner groups argued the 800,000-barrelper-day Keystone would  facilitate carbon-intense development of Alberta's oilsands and could  pollute the Ogallala aquifer in Nebraska.  
Oilsands producer  Cenovus Energy would not discuss its shipping agreements, but said it  was meeting with TransCanada for updates.  "Cenovus has taken a  position on Keystone XL and we remain supportive of the project," a  spokeswoman, Rhona DelFrari, wrote in an e-mail. "There has been a great  deal of work already completed to determine this was the best route and  we are hopeful any remaining concerns can be addressed so this pipeline  gets built."
Shipper options include Kinder Morgan's proposed  TransMountain pipeline expansion to the West Coast, Enbridge's Wrangler  and its equally controversial Northern Gateway pipeline project, which  could be gaining force on the Keystone delay. The 525,000-barrel-per-day  line would ship Alberta bitumen to a marine terminal in British  Columbia and on to Asian markets, opening new buyers for Canadian crude.
The  Canadian Association of Petroleum Producers quickly assured investors  production would not be affected in the short term by Thursday's  announcement.  "Other alternatives are being pursued to ensure  market access over the medium term," president David Collyer said.  "Delaying Keystone XL  will motivate exploration of other markets for Canadian crude oil products,"
The  sentiment was echoed by federal Finance Minister Jim Flaherty, who  questioned the project's survival if subjected to another lengthy  regulatory review. 
 "It may mean that we may have to move quickly  to ensure that we can export our oil to Asia through British Columbia,"  Flaherty said at the Asia-Pacific Economic Cooperation summit in  Honolulu.