TransCanada Corp.’s proposed Energy East oil pipeline is only worth building as an alternative to the Keystone XL project because it offers fewer cost advantages and there’s not enough demand for both, Wood Mackenzie said.

Producers shipping oil-sands crude to Canada’s Atlantic Coast on Energy East will likely have to pay an extra $2 or $3 a barrel, and with both pipelines operating, there would be excess capacity in coming years, Michael Wojciechowski, manager of Americas refining and chemicals at the energy research firm, said in a briefing today in Calgary.

“It’s an either or for Energy East and Keystone XL,” Wojciechowski said. “Without Keystone, Energy East is the project with the clearest path to completion.”

TransCanada is waiting for approval from President Barack Obama to begin construction on Keystone XL, which would supply Gulf Coast refineries with Canadian heavy crude. The Calgary-based company plans to apply for a permit by mid-year for Energy East, which would supply tankers bound for European and Asia markets as well as the Gulf Coast.

Enbridge Inc.’s Northern Gateway project to ship oil-sands crude to Canada’s Pacific Coast probably won’t be needed until about 2025, with the expansion of Kinder Morgan Energy Partner LP’s Trans Mountain pipeline standing the best chance of being built in the next few years, Wojciechowski said.