Keystone pipeline cost may soar to $10 billion

The cost of building the Keystone XL oil pipeline, which is awaiting approval from the U.S. after an initial rejection, may climb 85 percent to $10 billion, according to developer TransCanada Corp.

The new estimate, confirmed by Calgary-based company spokesman Shawn Howard yesterday after comments made by Chief Executive Officer Russ Girling to the Wall Street Journal, increases the project cost from the current $5.4 billion.

TransCanada, the second-largest Canadian pipeline operator, applied six years ago to build Keystone XL to carry rising supplies of oil-sands crude to U.S. Gulf Coast refineries. The pipeline was rejected by President Barack Obama in 2012. TransCanada then split up the project to build the southern portion first and refiled for approval for the northern leg with an alternate route in Nebraska.

The U.S. State Department is awaiting the outcome of a Nebraska court battle over the regulatory review of the line's path through the state before making a ruling. The department has jurisdiction over the project because it would cross the U.S. border with Canada.

Environmental campaigners have stalled progress on the project, arguing it would boost carbon dioxide emissions and hurt the communities that live in its proposed path. The project is one of several that activists are due to highlight at demonstrations planned at the United Nations Climate Summit, which starts next week.

TransCanada CEO Girling this week called the opposition ignorant of the project's realities. The lack of a decision on whether the project will go ahead has resulted in it carrying costs of $150 million a year, Girling said.

A final environmental review of the project, released by the State Department in January, found that it would increase emissions by 1.3 million tons to 27.4 million tons of carbon dioxide each year. That's less than 0.5 percent of total U.S. greenhouse gas emissions in 2012.

The U.S. House of Representatives voted yesterday 226-191 to approve a broad package of energy measures that would give the green light to the Keystone XL project. Among the measures are processes to speed up lease sales and energy permit issuances.

Enbridge Inc. is Canada's largest pipeline company, by market value.