BUSINESS

Oklahoma Governor Mary Fallin frustrated by Keystone XL pipeline delays

06/13/2012 12:13 EDT | Updated 08/13/2012 05:12 EDT
CALGARY - Oklahoma's governor is losing patience with delays in building the controversial Keystone XL oil pipeline, which would cross through her state on its way from Alberta to the Texas coast.

"To me, it's been enormously frustrating that President (Barack) Obama and our nation has not been able to get through the permit for the Keystone XL pipeline to move from Canada down throughout the United States," Mary Fallin told delegates at the Global Petroleum Show on Wednesday.

However, Fallin said she's encouraged that the backer of the US$7.6-billion project, TransCanada Corp. (TSX:TRP), plans to start building a stretch of pipe from her state south to Texas refineries soon.

"We've had some great meetings while we've been here with TransCanada to talk about those operations and they're anticipated to begin construction on that section of the pipeline in July in our state."

During her visit to Canada, Fallin also visited a steam-driven oilsands operation near Fort McMurray, Alta., operated by Oklahoma-based Devon Energy (NYSE:DVN).

Oklahoma is home to a huge oil storage hub at Cushing and several pipelines lead in that direction.

However, a massive supply glut there has depressed the price North American producers get for their oil, so they want to see more pipeline capacity out of Cushing to funnel some of the excess to more lucrative markets.

Enbridge Inc. (TSX:ENB) and its partner, Enterprise Products Partners, reversed the flow of their Seaway pipeline between Cushing and the Gulf earlier this month, and have plans to expand it substantially.

Fallin also says the U.S. should be buying crude from a "friend" and "ally" like Canada instead of from hostile regimes.

"In the future I do think it's important that whoever our president is in the United States will be able to stand up to political pressure, be able to finalize the production of the Keystone XL pipeline from Canada down throughout the United States, because I believe it's important for our economic security and it's important for our national security," said Fallin.

She said the project will create 1,200 jobs in her state.

The Obama administration rejected the project as a whole earlier this year, saying Republican efforts to speed up the process did not allow enough time to work out a new route through Nebraska to address environmental concerns. It did, however, invite TransCanada to reapply, and last month the company submitted a new application.

While the government weighs the northern segment between the Canada-U.S. border and Nebraska, TransCanada is going ahead with the portion south of Oklahoma, which does not need a U.S. federal permit to proceed.