Keystone XL pipeline operator TransCanada Corp. capitalized on higher demand for Canadian heavy oil at U.S. refineries, beating profit estimates in the first quarter. Pipelines shipping heavy crude from Canada to refineries in Texas have been running at full capacity after the country’s oil output hit a record last year.
TransCanada said Friday that earnings from its oil pipelines, of which Keystone is the biggest contributor, rose 50 per cent to $341-million in the first quarter ended March 31. The company did not give an update on its final investment decision on the controversial expansion of Keystone, which would increase export capacity from oil-rich Alberta to U.S. refineries. The company had earlier said it expects to start construction in 2019.
The expansion has pitted environmentalists worried about spills and global warming against industry advocates who say the project will shore up discounted Canadian oil prices and attract investment to Alberta’s oil sands. “We continue to advance more than $20-billion of medium- to longer-term projects, including Keystone XL, Coastal GasLink and the Bruce Power life extension program,” TransCanada chief executive officer Russ Girling said.
The company expects to invest $21-billion in the near term, down from the $23-billion it had earmarked earlier. TransCanada said earnings from its Canadian natural gas pipelines fell 10.2 per cent to $253-million in the reported quarter.
Net income rose to $734-million or 83 cents a share, from $643-million or 74 cents a year earlier. Excluding items, TransCanada earned 98 cents a share, beating analysts’ average estimate by 14 cents, according to Thomson Reuters I/B/E/S. Revenue rose marginally to $3.42-billion from $3.41-billion.