One of Canada’s largest pipeline companies, TransCanada Corporation (NYSE:TRP) (TSE:TRP), just announced they will be building a large and expensive pipeline directly across the country. The project named Energy East and with a price tag of $11.7 billion, will ship oil from Western Canada to the East Coast. The proposed pipeline is an upgrade from an original plan and a bit more expensive. With the capacity to carry 1.1 million barrels per day, the project will be able to co-exist if the Keystone XL pipeline receives approval from Washington. The production potential for Canadian oil is large and with an ever increasing energy demand, it appears to be only a matter of time until more and more of these controversial projects come to fruition.
“Energy East is one solution for transporting crude oil but the industry also requires additional pipelines such as Keystone XL to transport growing supplies of Canadian and U.S. crude oil to existing North American markets,” Chief Executive Officer Russ Girling said in the statement.
Oil sands production is expected to more than double to 5.2 million barrels a day by 2030, according to the Canadian Association of Petroleum Producers. Canadian oil has traded below the U.S. benchmark West Texas Intermediate crude, because producers lack transportation to ship it to refiners. Western Canada Select averaged $16.75 per barrel below WTI in the second quarter, according to Bloomberg data.