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Jan 18, 2018

TransCanada confirms commercial support for Keystone XL, primary construction to begin in 2019

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CALGARY -- TransCanada Corp. said Thursday that it has confirmed enough commercial support for its controversial Keystone XL pipeline thanks in part to a commitment from the Alberta government.

The company said it has secured 500,000 barrels a day of 20-year commitments for the project after concluding an open season, locking up about 60 per cent of the 830,000 barrels of planned capacity.

TransCanada chief executive Russ Girling thanked U.S. President Donald Trump for his continued support of the project as well as the efforts of other U.S. backers and the Alberta government.

"We appreciate Alberta Premier Rachel Notley for her government's commitment to the project which was instrumental to achieving the commercial support needed to proceed," said Girling in a news release.

The Alberta government stepped in to commit 50,000 barrels a day for the project from some of the royalty payments the province accepts as barrels of oil, with Notley spokeswoman Cheryl Oates saying it will help the industry.

"It's good for the project, it's good for the industry in terms of stability, and it's good for our differential," she said.

The province had also committed volumes to TransCanada's now-defunct Energy East project, but not to Kinder Morgan Canada's Trans Mountain expansion (KML.TO) or Enbridge's Line 3 replacement (ENB.TO).

Adam Scott at environmental advocacy group Oil Change International criticized the province's support for a project that would harm the climate and continues to have significant opposition.

"Any project that needs a government bailout amid a quagmire of ongoing legal and regulatory challenges has little chance of moving forward," Scott said in a statement.

In November, Nebraska regulators approved a route for the pipeline though the state, but not the company's preferred choice, instead shifting the path away from sensitive ecological areas.

TransCanada (TRP.TO) said it's working with landowners to obtain the necessary agreements for the approved route, but the company also faces lawsuits regarding how the alternative route was approved.

The company said construction preparation has started and will increase as the permitting process advances throughout this year, with primary construction expected to begin in 2019.