Kansas City, Mo. Trans-Canada Corp. said Tuesday that it expects to see an increase in prices for Canadian heavy crude oil in the Midwest if its Keystone XL pipeline is approved to move oil from Canada down through several states to the Gulf of Mexico.
That mirrors a forecast in a report that TransCanada presented to Canada’s National Energy Board in 2009 in which the Calgary-based company said existing markets for Canadian crude are oversupplied, which has led to lower prices — especially in its Midwest region. That report also said those lower prices would likely end if Keystone XL begins transporting about 500,000 barrels of crude a day to the Gulf Coast.
Canadian crude prices have been weak because of a glut to the large Gulf Coast market, the company said. The proposed Keystone pipeline would help boost the market price of Canadian crude by reducing the oversupply in the Midwest region. Canadian oil producers could see a price increase of at least $3 a barrel if Keystone XL begins moving oil to the U.S. Gulf Coast in 2013, according to the report.
TransCanada spokesman Terry Cunha said Tuesday that the $3-a-barrel increase is still expected.
He said it is focused on several states in TransCanada’s Midwest region, where about 400,000 barrels a day are currently being shipped on a sister Keystone pipeline. Those states are Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, the Dakotas, Ohio, Oklahoma, Tennessee and Wisconsin.
The proposed 1,980-mile-long Keystone XL pipeline, which is designed to move crude from Alberta’s oil sands to the Gulf Coast, still requires a permit from the State Department because it would cross the U.S.-Canada border.