TransCanada sees delays in Keystone XL pipeline

Pipe is stacked at the southern site of the Keystone XL pipeline on March 22, 2012 in Cushing, Okla. Tom Pennington/Getty Images

TORONTO The chief executive of TransCanada Corp. (TRP) said Friday the long-delayed Keystone XL pipeline will be in service months later than expected and cost more as it continues to await U.S. government approval.

TransCanada had been sticking to its late 2014 or early 2015 start-up target, but the regulatory process has dragged on. It has pushed out the start date to mid- to late-2015.

CEO Russ Girling noted on a conference call with analysts detailing first-quarter results that the controversial pipeline is in its 67th month of the approval process.

"Unfortunately, continued delays ... have an impact on both our schedule and our costs. Based on our current assessment of timing of the permit, we would currently anticipate the pipeline could become operational in the second half of 2015,'' Girling said.

The Calgary, Alberta-based company said the $5.3 billion cost estimate will increase depending on the timing of the permit.

The Obama administration is considering whether to approve the pipeline, which would carry 800,000 barrels of oil a day from Alberta across six U.S. states to the Texas Gulf Coast. A decision is expected this summer.

The pipeline has become a flashpoint in the U.S. debate over climate change. Republicans and business and labor groups have urged the Obama administration to approve the pipeline as a source of much-needed jobs and a step toward North American energy independence. Environmental groups have been pressuring President Barack Obama to reject the pipeline, saying it would carry "dirty oil'' that contributes to global warming. They also worry about a spill.

"The project very much remains in the interest of the United States, and we remain of confident that it will receive regulatory approval and be constructed,'' Girling said.

Obama's initial rejection of the pipeline last year went over badly in Canada, which relies on the U.S. for 97 percent of its energy exports.

The pipeline is critical to Canada, which needs infrastructure in place to export its growing oil sands production from northern Alberta. The region has the world's third-largest oil reserves, with 170 billion barrels of proven reserves.

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