Utility TransCanada faces a major milestone on Thursday, as federal regulators weigh in on its planned $7-billion Keystone pipeline.
The National Energy Board is expected to release its ruling on Keystone at 2:30 PM (Calgary time) on Thursday, and the long-awaited announcement will have major implications for TransCanada's stock price.
Regulatory approval will clear the way for an expanded link between Alberta's oil fields and U.S. Gulf Coast refineries. The project could be in service by 2012. But as RBC Dominion Securities noted in a report on Wednesday: "If the NEB stops short of approving Keystone and instead asks TransCanada to explore the 'Gretna Option', it will depend on the finer details of the decision as to whether it is positive or negative for the stock."
The "Gretna Option" means using rival Enbridge's existing Alberta Clipper pipeline to move oil from Hardisty, Alberta to Gretna, Manitoba, then allowing TransCanada to construct a new pipeline south of Gretna to the Gulf Coast. RBC Dominion said regulators could opt for this to prevent what they see as potential overcapacity in pipelines. The investment dealer estimated that this alternative could reduce TransCanada's capital costs by up to $2-billion.