Keystone XL: TransCanada To Build Texas, Oklahoma Leg Of Pipeline Ahead Of Approval

Keystone Xl Transcanada Build Southern Leg

First Posted: 02/27/2012 12:09 pm Updated: 02/29/2012 10:36 am

CALGARY - Energy giant TransCanada plans to build the most urgently needed portion of its controversial Keystone XL oil pipeline as a US$2.3-billion stand-alone project.

The Gulf Coast project will be subject to regulatory approvals, but because it will not cross the Canada-U.S. border, it will not need the U.S. presidential approval that tripped up the company's original proposal to pipe crude from Alberta to Texas.

The Calgary-based pipeline company (TSX:TRP) said Monday the Cushing, Okla., to Gulf Coast leg — meant to relieve a supply glut of oil in the middle of the U.S. and boost prices and producers' bottom lines — should be in service by mid to late 2013.

"The Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas," said TransCanada CEO Russ Girling in a release

"Gulf Coast refineries can then access lower cost domestic production and avoid paying a premium to foreign oil producers. This would reduce the United States' dependence on foreign crude and allow Americans to use more of the crude oil produced in their own country."

The original US$7.6-billion project would have sent oilsands crude from northern Alberta across the border through six U.S. states to Texas refineries. Oil from some U.S. fields like the Bakken in Montana and North Dakota would have also fed into that line.

However, the State Department denied a key permit in January after the project was assailed by environmentalists and other critics worried about its impact on water systems in Nebraska.

The State Department has final say over whether pipelines that cross international borders are in the national interest. The move Monday will allow crude to start flowing on part of the line sooner than if TransCanada were to seek a new permit for the whole Alberta-to-Gulf Coast system.

"In our view, TRP’s effort to advance the southern leg ahead of the larger (and more contentious) northern portion of (Keystone) XL is likely to speed up the regulatory process, which should ultimately allow the company to complete the proposed pipeline more quickly," said Desjardins Securities analyst Pierre Lacroix in a note to clients.

"At the same time, TRP is also likely to be able to better serve shipper demand by placing the southern portion into service as rapidly as possible."

White House press secretary Jay Carney said Monday that U.S. President Barack Obama was pleased with TransCanada's latest announcement.

"Moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production," Carney said in a statement.

"We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary federal permits."

Travis Davies, a spokesman for the Canadian Association of Petroleum Producers, said the decision to move the Gulf Coast portion first is a "pretty positive" development, and that it's happy to see TransCanada continuing to pursue the northern part of the line at the same time.

"Of course that's what we're most concerned about, getting access to that market," Davies said.

Oilsands crude can get to the U.S. market now through TransCanada's base Keystone system, which currently delivers crude to the U.S. Midwest and Cushing, and an extensive network of oil pipelines operated by rival Enbridge Inc. (TSX:ENB).

Enbridge itself is looking to tap into the Gulf Coast market through two pipeline projects — one that runs from the Chicago area to Cushing, and the reversed Seaway pipeline from Cushing to the Gulf.

TransCanada's move won't change Enbridge's plans, said CEO Pat Daniel, who announced Monday he'll be retiring later this year.

"We have assumed all the way along that Keystone XL — not only this portion, but in its entirety — will be built. That's in our plan and we work around that."

Oilsands producers say there's enough pipeline capacity from Canada to the U.S. for now, but their planned expansion in the years ahead depends on new pipelines — the full Keystone XL or Enbridge's Northern Gateway pipeline across northern B.C. to the West Coast. Some have touted rail transport as a stop-gap solution.

On Keystone XL, the State Department dealt TransCanada two blows in recent months. In the fall, it delayed a decision until early 2013 so TransCanada could work out a new route through Nebraska to avoid ecologically sensitive areas.

Then, last month, it denied TransCanada a permit for the project, but left the door open for the company to apply for a new one.

Obama said a deadline imposed on his administration by the Republicans to make a decision by Feb. 21 didn't allow enough time to adequately study a new route through Nebraska, so he had no choice but to reject the project.

But he said the decision had less to do with the pipeline's merits than with the arbitrary deadline the Republicans had set.

TransCanada said Monday it will file a new presidential permit application for the northern part of Keystone XL from the Canada-U.S. border at Montana to Steele City, Neb., in the "near future."

"Our application will include the already reviewed route in Montana and South Dakota," Girling said.

"The over three-year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross-border pipeline. Based on that work, we would expect our cross- border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined."

Speaking to reporters by phone from Chicago, Alberta Premier Alison Redford said while the Gulf Coast project is "good news," her team is not taking its eyes off the bigger picture.

"In terms of being constructive and demonstrating success, this will assist in the other application for the presidential permit," she said.

"(But) I'm not going to take the position that somehow because the second piece has been built we don't need to concentrate on the first. I think it all matters."

Bill McKibben, an environmental activist who led high-profile protests against Keystone XL, said the Gulf Coast project won't bring more oilsands crude into the United States, a major concern amongst pipeline critics who say that type of oil is dirtier than other sources.

However, "we stand with our allies across the region who are fighting to keep giant multinational corporations from condemning their lands. This fight is uniting people, from environmentalists to Tea Partiers, in all kinds of ways," McKibben said in an emailed statement.

TransCanada shares rose 39 cents to $42.39 on the Toronto Stock Exchange.

Loading Slideshow...
  • Dalai Lama

    In September 2011, the Dalai Lama was one of nine Nobel Peace Prize laureates who <a href="" target="_hplink">sent a letter to U.S. President Barack Obama</a> urging him "to say 'no' to the plan proposed by the Canadian-based company TransCanada to build the Keystone XL, and to turn [his] attention back to supporting renewable sources of energy and clean transportation solutions."

  • Archbishop Desmond Tutu

    Archbishop Desmond Tutu was among<a href="" target="_hplink"> a group of Nobel Peace Prize laureates</a> who signed letters to both U.S. President Barack Obama and Canadian Prime Minister Stephen Harper, urging the men to stop the Keystone pipeline.

  • Al Gore

    Gore has said it is essential to stop the Keystone pipeline because the tar sands oil it would carry is "the <a href="" target="_hplink">dirtiest source of fuel on the planet</a>."

  • Robert Redford

    Actor and environmentalist <a href="" target="_hplink">Robert Redford</a> recently added his name to the list of prominent individuals who are calling on President Obama to reject the Keystone XL pipeline. <a href="" target="_hplink">In a video for <em>The New York Times</em>, produced with the Natural Resources Defense Council</a>, Redford described the negative aspects of the proposed tar sands pipeline and said, "By deepening our reliance on oil, the pipeline would be a job killer." Redford has previously been vocal about calling for alternatives to oil. <a href="" target="_hplink">Writing last month for HuffPost</a>, he said, "Let's build the next generation of energy efficient cars, homes and workplaces. Let's develop wind, solar and other cleaner, safer, more sustainable sources of power and fuel. Let's invest in high-speed rail and smart communities that give us better transportation options."

  • Mark Ruffalo

    Actor <a href="" target="_hplink">Mark Ruffalo</a>, famous for films like "<a href="" target="_hplink">The Kids Are All Right</a>" and "<a href="" target="_hplink">Zodiac</a>," is also an outspoken activist and opponent of the Keystone XL pipeline. Ruffalo <a href="" target="_hplink">said in a video</a> for the <a href="" target="_hplink">Tar Sands Action</a> group, "I've seen the kind of damage that out-of-control energy development can do to water and to communities near my own home, where fracking for natural gas is causing widespread pollution ... All these problems are connected -- we need to get off fossil fuels." In the past, Ruffalo has also expressed his ire for hydraulic fracturing natural gas extraction, or fracking. He told The Huffington Post, "The <a href="" target="_hplink">world is already leaving us behind</a>. We're being left behind. America. Because the gas and oil industry has a strangle hold on us. And our politicians."

  • Bill McKibben

    Environmentalist and author <a href="" target="_hplink">Bill McKibben</a> has expressed strong disapproval for the planned Keystone XL pipeline. In fact, he was <a href="" target="_hplink">one of the first</a> of over 1,200 who were arrested at the Tar Sands Action sit-in at the White House in August. Referring to <a href="" target="_hplink">his opposition to the Keystone Pipeline</a>, McKibben told HuffPost, "The people who've carried this fight for three years are indigenous people on both sides of the border who have a huge stake in it because it's on their land, and farmers and ranchers from places like Nebraska," he said. He added, "It wasn't until I sat down and read <a href="" target="_hplink">Jim Hansen</a>'s analysis of how much carbon was in those things that I understood that this was not just a national issue, it's a global issue of the first order."

  • Julia Louis-Dreyfus

    <a href="" target="_hplink">Julia Louis-Dreyfus</a>, known for her role as Elaine on the popular sitcom "Seinfeld," has released a video urging President Obama to reject the permit for the Keystone XL pipeline. Dreyfus recalls when Obama said "Let us be the generation that ends the tyranny of oil." But she says, "Big Oil is still pretty much running the show." She claims that by rejecting the pipeline, Obama has a chance to "make good on [his] word." <a href="" target="_hplink">Louis-Dreyfus asks Obama</a>, "Denying the permit for a brutally stupid, money-grab like the Keystone XL pipeline is a no-brainer, right Mr President?"

  • Nebraska Governor Dave Heineman

    Dave Heineman, the Republican governor of Nebraska, has officially stated that he opposes the Keystone XL project. As the governor of an agrarian state through which the pipeline would pass, Heineman expressed his concern for the pipeline's threat to Nebraska's vital water resources. According to the Associated Press, "Heineman said <a href="" target="_hplink">he supports pipeline projects</a> but opposes the proposed TransCanada Keystone XL route." In August, Heineman <a href="" target="_hplink">sent an open letter</a> to President Obama and Secretary of State Hilary Clinton urging them to "not allow TransCanada to build a pipeline over the Ogallala Aquifer and risk the potential damage to Nebraska's water."

  • Daryl Hannah

    Actress <a href="" target="_hplink">Daryl Hannah</a> has also lent her voice to the movement against the <a href="" target="_hplink">Keystone XL pipeline</a>. In August, Hannah was one of the over 1,200 people to be <a href="" target="_hplink">arrested as an act of civil disobedience</a> in front of the White House. Shouting "no to the Keystone pipeline" as she was handcuffed, Hannah made it clear she opposed the proposed Canada to Texas pipeline.

  • Maude Barlow

    Maude Barlow, a Canadian author and activist and chairperson of <a href="" target="_hplink">The Council of Canadians</a>, was arrested in September at a Keystone pipeline and oil sands protest on Parliament Hill in Ottawa. <a href="" target="_hplink">She was one of over 100 protesters</a> of the demonstration's estimated 400 to be arrested. Writing for HuffPost Canada about <a href="" target="_hplink">her first experience being arrested</a>, Barlow blogged, "I did it because I fear we are killing the planet and I can no longer be content to only write and speak about it. Today my feet spoke for me as I crossed that barricade and took away one more fear in my life." She also said, "By investing trillions of dollars into these pipelines, governments and the energy industry are ensuring the continued rapid acceleration of tar sands development, instead of supporting a process to move to an alternative and sustainable energy system."

  • Kyra Sedgwick

    <a href="" target="_hplink">Kyra Sedgwick</a>, star of the television crime drama "The Closer," has voiced her opposition to the pipeline. In a video for the <a href="" target="_hplink">Natural Resources Defense Council</a>, Sedgwick said "Just like the BP oil spill, one glitch in the tar sands pipeline could destroy our clean water sources, possibly forever."

  • David Strathairn

    Joining several other prominent actors, David Strathairn appeared in a video urging President Obama to reject the Keystone Pipeline. He calls on his fellow Americans to join the November 6 <a href="" target="_hplink">Tar Sands Action</a> in Washington, D.C. <a href="" target="_hplink">Strathairn</a>, who is known for his portrayal of journalist Edward R. Murrow in "Good Night, and Good Luck," said, "Obama ran for office speaking of the dangers of our fossil fuel addiction, promising to fight climate change and fully embrace a clean energy future. The <a href="" target="_hplink">Keystone XL tar sands pipeline</a> is a dangerous step away from that commitment."

  • Also on The Huffington Post...


Filed by Daniel Tencer  |