Canada’s Pipeline Transportation System 2016

TransCanada Keystone Pipeline GP Ltd.’s Keystone Pipeline

Table 8.2.1: TransCanada Keystone Pipeline GP Ltd.’s Keystone Pipeline
Commodity and NEB Group Crude oil
(Group 1)
Operating capacity 94 000 m³/d
(591 Mb/d)
Average utilization 2015 94%
Primary receipt points Hardisty, AB
Primary delivery points Wood River and Patoka, IL,
Cushing, OK,
Net Plant 2015 (millions) $2,090
Revenues 2015 (millions) $466
Abandonment Cost Estimate and Collection PeriodNote a $236 million;
25 years

Overview

The Keystone Pipeline (Keystone) 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.

Map – Keystone Pipeline

Sources: NEB

Text version of this map

This map provides an overview of the Keystone Pipeline System.

Commercial operations commenced for the first phase of Keystone in July 2010, providing 69 200 m³/d (435 Mb/d) of capacity from Hardisty, AB to the Wood River and Patoka market hubs. The second phase became operational in February 2011, extending the system to Cushing, OK and adding 24 800 m³/d (156 Mb/d) of capacity. This increased total system export capacity to 94 000 m³/d (591 Mb/d).

Key Developments

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.

Utilization

Figure 8.2.1 shows throughput on Keystone for 2010-2015. Throughput averaged about 84 300 m³/d (531 Mb/d) in 2014 and about 88 300 m³/d (556 Mb/d) in 2015.

Figure 8.2.1: Keystone Throughput vs. Capacity

Figure 8.2.1: Keystone Throughput vs. Capacity

Source: TransCanada, NEB

Text version of this graphic

This bar chart shows throughput and capacity for the Keystone Pipeline between 2010 and 2015. Capacity in 2015 was 93.9 10³m³/d (591 Mb/d). Throughput averaged 88.3 10³m³/d (556 Mb/d) in 2015, compared to 84.3 10³m³/d (531 Mb/d) in 2014.

Tolls

Figure 8.2.2 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 8.2.2: Keystone Benchmark Toll

Figure 8.2.2: Keystone Benchmark Toll

Source: NEB

Text version of this graphic

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 in 2010 to approximately $13.50 in 2015.

Financial

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 8.2.2: TransCanada Corporation – Yearly
TransCanada Corporation 2010 2011 2012 2013 2014 2015
RevenuesNote a (millions) – Keystone Pipeline $47.5 $310.2 $369.9 $399.1 $431.8 $465.8
Net PlantNote 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 PlantNote a – Keystone Pipeline 2.12% 7.78% 9.78% 10.39% 10.94% 11.61%
Interest and Fixed-Charges Coverage RatioNote b 2.01 2.39 2.18 2.39 2.59 2.7
Cash Flow-to-Total Debt and Equivalents RatioNote b 15.6% 16.4% 15.1% 15.5% 15.4% 14.7%
DBRS Credit RatingNote c A A A A A A
S&P Credit RatingNote c A- A- A- A- A- A-
Moody’s Credit RatingNote c A3 A3 A3 A3 A3 A3
Photos: left: A pump jack silhouetted against the setting sun; centre: The grey valves and wheels of a pump station on clear day; right: Folded hands hold a pen on a board room table in a large meeting room.

 

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