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TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) confirmed today the vast majority of the pipe for Keystone XL would be manufactured in North America. In addition, the company intends to purchase approximately 90 per cent of all other goods for the $7.6 billion project from companies on the continent.
"Seventy-five per cent of the pipe used to build Keystone XL in the U.S. would come from North American mills, including half made by U.S. workers in Arkansas," said Alex Pourbaix, TransCanada's president, Energy and Oil Pipelines. "In addition, we have already sourced goods for the pipeline valued at approximately $800 million from U.S. manufacturers."
Pourbaix points out that the American Iron and Steel Institute recently sent a letter to the U.S House of Representatives and Senate stating its support of Keystone XL, describing it as vital to the national economic recovery. The Institute's member companies represent 80 per cent of both U.S. and North American steel capacity.
We estimate 821,000 tons of high strength line pipe will be used on the project in Canada and the U.S. TransCanada has estimated it will use 660,000 tons of steel for the U.S. portion of the Keystone XL pipeline. The following are the line pipe mills who are manufacturing the pipe:
-- Welspun - Little Rock, Arkansas, USA 332,800 tons 50%
-- Evraz - Regina, Saskatchewan, Canada 156,266 tons 24%
-- ILVA - Italy 103,147 tons 16%
-- Welspun - India 69,457 tons 10%
It is important to understand pipeline companies do not purchase raw steel. Rather, we purchase sophisticated manufactured products such as high strength steel pipe and pumps that are fabricated from steel and other metals. It is the responsibility of the manufacturers of these products to source the necessary raw materials and to produce a product that meets all relevant regulations, codes and our internal specifications.
There are a number of materials and equipment items containing steel that have not yet been contracted for, which would amount to approximately 35,000 tons of steel yet to be sourced. The major items are as follows:
-- Houston lateral and Nebraska re-route - line pipe and associated
materials such as fittings, valves, etc.
-- Cushing, Oklahoma and Baker, Montana Terminals - steel will be required
for the construction of tanks plus the steel required for the other
materials related to the terminal such as tanks, piping, pumps.
-- Pump stations - pumps, motors and other related materials such as
valves, fittings, etc. to be added at each location in the U.S.
We anticipate that virtually all of the 35,000 tons of steel products described above will be purchased from North American mills and manufacturers. TransCanada has already entered into contracts to purchase over $800 million of finished pipe and other products from United States manufacturers for Keystone XL. We anticipate purchasing additional products from United States manufacturers as we complete procurement for the project.
Continued delays of approving Keystone XL are hindering the recovery of the U.S. economy. Oil producers and state governments in Montana, North Dakota, Oklahoma and Texas whose oil has been heavily discounted relative to oil imported from OPEC are feeling the effects, along with Gulf Coast refiners who are forced to buy more expensive OPEC crude oil as a result of the ongoing debate over this pipeline.
With more than 60 years experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and oil pipelines, power generation and gas storage facilities. TransCanada's network of wholly owned natural gas pipelines extends more than 57,000 kilometres (35,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with approximately 380 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns or has interests in over 10,800 megawatts of power generation in Canada and the United States. TransCanada is developing one of North America's largest oil delivery systems. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP. For more information visit: www.transcanada.com or check us out on Twitter @TransCanada.
FORWARD LOOKING INFORMATION This publication contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as "anticipate", "expect", "would" or other similar words). Forward-looking statements in this document are intended to provide TransCanada security holders and potential investors with information regarding TransCanada and its subsidiaries, including management's assessment of TransCanada's and its subsidiaries' future financial and operation plans and outlook. All forward-looking statements reflect TransCanada's beliefs and assumptions based on information available at the time the statements were made. Readers are cautioned not to place undue reliance on this forward-looking information. TransCanada undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to TransCanada's Management's Discussion and Analysis dated February 14, 2011 under TransCanada's profile on SEDAR at www.sedar.com and other reports filed by TransCanada with Canadian securities regulators and with the U.S. Securities and Exchange Commission.
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