TransCanada Corporation (TSX:TRP)(NYSE:TRP) got bad news on Tuesday when Nebraska regulators denied the company’s request to reconsider the route for the Keystone XL pipeline. Although TransCanada initially got the okay from the state to go ahead with the pipeline project last month, it was not its preferred route, and the alternative presents more risk and higher costs for the company.
Despite the decision, TransCanada still remains optimistic that the project is economically viable, but still said that it would review the decision and did not commit on what it would do next.
The Keystone XL got renewed life this year when new U.S. President Donald Trump approved the project. Ultimately it would be approved by all the states it needed to go through, with Nebraska being the last one to vote on the project in November.
Earlier this year, TransCanada cancelled the Energy East project after costs were deemed too high to continue as regulators wanted to see a broader review of the pipeline’s emissions. It’s unclear if we’ll see a similar result with the Keystone XL after this latest decision.
As oil prices continue to rise, the temptation is certainly there to go ahead with the project. The big question is over the long term whether there will be enough demand for oil to justify the pipeline.
TransCanada’s stock was flat on the news and year-to-date has produced returns of just 2%. Although the company has made progress on the Keystone XL project this year, it hasn’t been enough to get investors excited about the stock.
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