Pipeline Profiles: Keystone Pipeline

Sources: TransCanada Keystone Pipeline GP Ltd., NEB

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The Keystone Pipeline System transports crude oil from Hardisty, AB to refining markets in the U.S. Midwest and U.S. Gulf Coast. The Canadian leg runs from Hardisty east to Manitoba, where it crosses the border into North Dakota and continues south across South Dakota and Nebraska. At Steele City, NE, the pipeline has two branches: one runs east through Missouri to Wood River and Patoka, IL, and the other runs south to Cushing, OK. At Cushing, it links to another pipeline (Cushing Marketlink) which delivers crude oil to the U.S. Gulf Coast. Keystone operates under long-term contracts with its shippers for 90% of its capacity.

In 2016, domestic heavy crude oil throughput at the international boundary near Haskett, Manitoba averaged 77.66 thousand cubic metres per day (488.49 thousand barrels per day). In 2016, domestic light crude oil throughput at the international boundary near Haskett, Manitoba averaged 5.4 thousand cubic metres per day (33.94 thousand barrels per day).

The throughputs at the international border near Haskett, Manitoba are for export and primarily serve refineries in the U.S. Midwest or U.S. Gulf Coast.

The physical capacity of a pipeline is based on many factors such as the product(s) being carried, direction of flow, ambient temperature, pipeline compression, and maintenance work or other pressure restrictions. The operational capacity at each key point may also reflect contracts for transportation service, and supply and demand across the system. The actual physical capacity of the pipeline may be higher than the assumed operational capacity stated here.

Open data can be freely used, modified and shared by anyone for any purpose. The data for these graphs are available here.

Key Developments

Last updated: August 2016

In September 2008, TransCanada applied to the U.S. Department of State for a Presidential Permit for the Keystone XL project, and in November 2015, this application was denied. TransCanada has since challenged the decision and has stated that it and its shippers remain committed to the project.

Regulatory Documents

Last updated: August 2016

Tolls

Last updated: August 2016

Figure 1 shows the Keystone benchmark toll (10-year committed toll for light petroleum from Hardisty, AB to the U.S. border for ultimate transportation to Cushing, OK) along with the GDP deflator (normalized) for 2011-2015. The benchmark toll increased steadily from 2011 to 2015. In 2012, the benchmark toll rose by 4%, reflecting an adjustment for final project costs. The toll increased by 6% in2013 and by 4% in 2014, each as a result of a change in operating, maintenance and administration costs.

Figure 1: Keystone Benchmark Toll

Figure 1: Keystone Benchmark Toll

Source: NEB

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This graph shows the Keystone benchmark toll as a solid red line and the GDP deflator as a black dashed line. The graph shows a slight increase in tolls from approximately $12.00/m³ in 2010 to approximately $13.50/m³ in 2015.

Financial

Last updated: August 2016

TransCanada Keystone Pipeline GP Ltd. is owned and operated by TransCanada Corporation. Throughput increased over the past few years and revenues and returns have also increased. Keystone operations represent approximately 20% of TransCanada Corporation’s earnings. TransCanada Corporation’s financial ratios continue to be stable and credit ratings for TransCanada Pipelines Ltd. are investment grade. In 2015, a $194 million impairment charge was recorded in connection with the denial of the U.S. Presidential Permit for the Keystone XL pipeline.

Table 1: TransCanada Corporation – Yearly
TransCanada Corporation 2010 2011 2012 2013 2014 2015
RevenuesTable Note a (millions) – Keystone Pipeline $47.5 $310.2 $369.9 $399.1 $431.8 $465.8
Net PlantTable Note a (millions) – Keystone Pipeline $1 805.5 $2 105.8 $2 096.8 $2 060.1 $2 035.1 $2 089.7
Return on Net PlantTable Note a – Keystone Pipeline 2.12% 7.78% 9.78% 10.39% 10.94% 11.61%
Interest and Fixed-Charges Coverage RatioTable Note b 2.01 2.39 2.18 2.39 2.59 2.7
Cash Flow-to-Total Debt and Equivalents RatioTable Note b 15.6% 16.4% 15.1% 15.5% 15.4% 14.7%
DBRS Credit RatingTable Note c A A A A A A
S&P Credit RatingTable Note c A- A- A- A- A- A-
Moody’s Credit RatingTable Note c A3 A3 A3 A3 A3 A3

 

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