Canadian energy infrastructure group TransCanada has started legal actions following the decision of the US Administration to deny a presidential permit for the Keystone XL pipeline project on the basis that the denial was arbitrary and unjustified. The company filed a Notice of Intent to initiate a claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) and a lawsuit in the US Federal Court in Houston, Texas. Through the NAFTA claim, TransCanada will be seeking to recover more than US$15bn in costs and damages.
In November 2015, the US President vetoed the proposed US$8bn Keystone XL crude oil pipeline, after having vetoed the law approving the project in February 2015. This decision ended a 7-year political fight over the project, developed by TransCanada and aimed at transporting up to 800,000 bbl/d of crude oil from Hardisty, Alberta (Canada) to Steele City, Nebraska (United States).
Earlier in November 2015, TransCanada had asked the State Department to suspend the review of the project until after the resolution of a dispute over the route in Nebraska, which could take several months. TransCanada had then preferred to delay the approval process rather than risking a presidential veto ahead of the Paris Climate Summit.
TransCanada is now reviewing the approximate C$4.3bn (US$3.1bn) carrying value invested in the project and related assets and expects that an estimated C$2.5-$2.9bn after-tax write-down will be recorded in the company's fourth quarter result.