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TransCanada is urging the government of Alberta to buy capacity for its proposed Keystone XL pipeline in a ‘take or pay’ agreement similar to the one the province had pledged for the now-defunct Energy East pipeline, Bloomberg reported on Thursday, citing people familiar with the issue.
Alberta had committed to a 20-year take or pay transportation service agreement with TransCanada’s proposed Energy East pipeline.
However, in early October, TransCanada said that it would not be proceeding with Energy East designed to carry oil from Alberta and Saskatchewan to Canada’s East Coast, a month after the company had sought a 30-day suspension of the project applications to review changed regulatory circumstances.
Alberta had supported that pipeline plan, and Premier Rachel Notley said “We are deeply disappointed by the recent decision from TransCanada,” following the scrapping of the project.
Now, according to Bloomberg sources, TransCanada’s urge for Alberta to commit to capacity for Keystone XL is putting Premier Notley in a difficult situation, because not fully supporting a pipeline in Canada’s largest oil province would not be a good political move, but supporting TransCanada’s project has placed her under pressure from rival company Enbridge.
According to former Progressive Conservative lawmaker, Ken Hughes, Alberta had strategic reasons to back the dead Energy East project because of the access to the Atlantic coast refineries, while support for Keystone would be a totally different thing.
“It had a wide range of benefits, and none of those benefits come about with Keystone,” Hughes told Bloomberg comparing Energy with Keystone.
TransCanada completed last week the “open season” to solicit binding commitments from shippers for Keystone XL—a proposed crude oil pipeline beginning in Hardisty, Alberta, and extending south to Steele City, Nebraska. During the open season, launched at the end of July 2017, TransCanada solicited additional binding commitments from interested parties for transportation of crude oil on the Keystone Pipeline and for the Keystone XL Pipeline Project from Hardisty, Alberta to markets in Cushing, Oklahoma, and the U.S. Gulf Coast.
Keystone XL hinges on TransCanada’s review of the open season bids, and a final decision by Nebraska whether to allow construction, expected no later than November 23.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.