TransCanada weathers the storm.
Calgary Herald
Thursday, December 24th, 2009
Canwest News Service
CALGARY – TransCanada Corp. managed to weather the downturn surprisingly well.
After an uncertain start to 2009, the Calgary-based pipeline company, which operates Canada's largest natural-gas network, managed to advance its suite of growth projects despite the financial crisis and the recession.
Pipelines are notoriously capital-intensive undertakings, yet TransCanada managed to raise $8 billion on more or less its own terms to help fund ambitious new endeavours such as the $12-billion US Keystone heavy oil pipeline to the Gulf of Mexico.
And 2010 promises to be an even bigger year for the company, which will begin commercial operations on the first phase of its link to Wood River, Ill., in the first quarter. In addition, it expects to learn in the first half of the year whether it will get the long-awaited green light to begin construction of the Mackenzie Valley pipeline. Other major projects on the drawing board include preliminary work for the Alaska pipeline from Prudhoe Bay.
The Herald sat down to talk with CEO Hal Kvisle about the year that was and the company's prospects in the new decade.
Q: How would you describe the past year?
A: You know, 2009 was really a year in which a lot of things were ramping up. The summer of '09 was the busiest pipeline construction period in the company's history. Not only did we have the Keystone project in the U.S., but we had the big conversion project in Canada. So you look at it from inside the company and you see this tremendous build in our capability to execute these big projects.
Now we're going into 2010, which will be another big construction year as we extend down into Nebraska and down into Oklahoma with the Cushing extension, which has all been approved, it's going to go ahead and it's going to be the big build this summer.
One of the big differences from '09 to '10 is going to be Keystone coming into operation. I'd say the last four months have been the busiest in the history of the company and certainly the busiest for me.
Q: You don't seem to have been hampered by the recession.
A: I don't think we have. I think one effect is that we've seen a dampening in power prices and that's affected our income and cash flow from the power business. Part of that dampening is from reduced demand, more of it is from the decline in gas prices.
Q: You recently returned from the climate change conference in Denmark. What were some of your impressions of the deal that was reached and the negative portrayal of Canada and the oilsands?
A: Copenhagen, in terms of its objectives I think would be seen as a disappointment in that there was no firm binding agreement reached. But the Canadian government, I think, did a superb job. I was pretty close to what was going on over there. The team under (Environment) Minister (Jim) Prentice was very competent and capable. But frankly, I was embarrassed by some of the other groups from Canada and the other provinces of Canada that chose to come to Copenhagen to try and embarrass the federal government. It was really uncalled for and I think very unfair and unproductive.
Q: The joint review panel into the Mackenzie Valley pipeline is expected to issue its report before the end of the year. Do have any idea of what it might say?
A: We don't have any particular expectation of what they will say in the report. I've complained a fair bit about the amount of time it takes to get these things done and I'd have to acknowledge the people that have worked so hard on this who have been through a very difficult time of having to deal with a lot of complicated issues and a relatively uncertain regulatory environment. It's been a very long process and we just don't know what they'll come up with.
But whether you like it or not, something like $3 billion has been added to the cost of the project by this regulatory process.
Q: A couple months ago, indications from Ottawa seemed to indicate the project was dead. You say it's not looking for subsidies, but does it need federal support to work?
A: Frankly, we were surprised by that report when it came out. I don't know. It's really not our call; it's up to the big producers and the big reserve holders in the Mackenzie. Given all the additional costs that have been burdened on this project and given the uncertainty of future development activity up there, it would be pretty difficult for this project to go ahead if the government of Canada isn't involved one way or another.
The government of Canada supported the construction of the TransCanada pipeline in 1958 in a way that never cost the government a dime. They provided the necessary support and they were able to get the project done.
http://www.kelowna.com/2009/12/24/transcanada-weathers-the-storm/
