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FACTBOX-Possible winners and losers from Keystone XL review

Source: Reuters - Fri, 31 Jan 2014 22:03 GMT
Author: Reuters
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(Updates to reflect release of report, paragraphs 1, 3; updates with closing TransCanada stock price, paragraph 7 )

Jan 31 (Reuters) - The U.S. State Department on Friday issued an environmental review of the proposed Keystone XL oil pipeline that indicated the project would not appreciably increase carbon emissions. The report moves the project a step closer to a decision by President Barack Obama.

The 1,179-mile (1,900-km) pipeline would move 830,000 barrels per day of oil sands crude from Hardisty, Alberta, across the U.S. border to Steele City, Nebraska, where it would connect with a previously approved line.

The project has been held up for years in regulatory review by the U.S. government. Environmentalists and other critics have called on Obama to reject the plan, saying it could hasten climate change by promoting oil-harvesting methods in Alberta that produce high levels of carbon dioxide emissions.

Below are details of which groups would benefit and which would be disappointed if, as expected, the State Department concludes the pipeline poses little climate risk.

WINNERS:

- Transcanada Corp

Canada's No. 2 pipeline company first proposed the Keystone XL pipeline more than five years ago. Since then, regulatory delays and environmental opposition have pushed costs up to $5.4 billion.

A "clean" environmental review puts the company one step closer to construction and would likely hearten investors.

TransCanada stock finished up 59 Canadian cents, or 1.23 percent, at C$48.42 on the Toronto Stock Exchange on Friday.

- Oil sands producers

Committed shippers on Keystone XL, such as Suncor Energy Inc and Cenovus Energy Inc, are eager to see the pipeline built to help relieve congestion on export networks and help oil sands producers get better prices for their crude.

Bottlenecks in Alberta last year pushed the price of Canadian heavy crude more than $40 per barrel below the West Texas Intermediate benchmark.

- The Canadian government

Stephen Harper's Conservative government is a staunch supporter of the Keystone project and Alberta's oil sands industry, with the prime minister last year saying U.S. approval of the project should be a "no-brainer."

A clean environmental impact statement would vindicate the Canadian government's stance that the pipeline will not affect greenhouse gas emissions and is important for jobs and energy security.

- Gulf Coast refiners

Owners of Gulf Coast refineries, North America's largest refining center, that are configured to run heavy crude would benefit from access to cheaper Canadian oil.

These companies include, among others, Exxon Mobil, Chevron Corp, Total, Valero Energy Corp , Royal Dutch Shell, LyondellBasell Industries and Phillips 66 Partners LP.

Some Gulf Coast plants, like those run by PDVSA unit Citgo, or the Motiva plants run by Shell and Saudi Aramco, could continue to run large volumes of Venezuelan crude or Saudi crude.

The Gulf took about 100,000 barrels per day of Canadian crude in 2012, according to the Canadian Association of Petroleum Producers, out of total heavy crude imports of 2.2 million barrels per day.

- Contractors

U.S. engineering company Bechtel is handling engineering management, procurement and construction management of the project for TransCanada, according to Bechtel's website.

TransCanada has said Keystone XL will create 13,000 jobs in construction, management and inspection oversight.

LOSERS:

- Environmentalists

Climate change activists have made pipelines - and Keystone XL in particular - the proxy for their battle against exploiting Alberta's oil sands, which they say use some of the most environmentally damaging production techniques on the planet.

- Crude-by -ail

Seemingly endless delays on the Keystone project have spurred more producers and midstream companies to start using rail to ship crude out of Western Canada.

Industry analysts estimate that about 200,000 barrels per day are loaded onto rail cars in Canada, but forecasts of how quickly volumes will rise vary, depending on pipeline approvals.

If Keystone goes ahead, demand to ship crude-by-rail could wane, to the detriment of train terminal operators, rail companies, and railcar manufacturers.

- Exporters of Latin American heavy crudes

Gulf Coast refiners are expected to replace heavy Latin American imports with cheaper Canadian imports. Venezuela in particular could suffer. To a lesser extent there may also be less demand for crude form Saudi Arabia. (Reporting by Nia Williams and Julie Gordon; Editing by David Lindsey, Mohammad Zargham and Jonathan Oatis)

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