TransCanada pipeline path concerns ranchers

Sep 2, 2011

Ranchers across seven states have been asked by a Canadian company to sign easements for a 1,700-mile crude oil pipeline.

TransCanada Corporation’s proposed crude oil KeystoneXL pipeline will traverse across primarily private ranchlands from Canada to Texas, and includes areas directly over the Ogallala Aquifer and under the Niobrara River.

Along with other major water sources in the pipeline path, some ranchers and landowners have concerns over leaks or spills that they don’t feel were addressed clearly in the most recent Environmental Impact Statement (EIS).

Nebraska Gov. Dave Heineman is urging President Obama and Secretary of State Hillary Clinton to deny the permit. “I want to emphasize that I am not opposed to pipelines,” Heineman wrote. “I am opposed to the proposed Keystone XL Pipeline route because it is directly over the Ogallala Aquifer.”

“Of the current proposed route, 254 miles of the pipeline would come through Ne braska and be situated directly over the Ogallala Aquifer,” Heinemann added.

He pointed out that in Nebraska, much of the farmland is irrigated with 92,685 registered, active irrigation wells supplying water to more than 8.5 million acres of harvested cropland and pasture.

Running through Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas, the line is estimated to carry 700,000 barrels of oil each day, doubling the capacity of an existing pipeline that currently ends in Cushing and takes oil south to refineries in the Gulf Coast.

The EIS cleared the State Department last week, starting a final 90-day comment period to decide whether the TransCanada project is in the nation’s best interest before a final decision is issued by the end of the year.

Dwayne Vig, third-generation South Dakota rancher, doesn’t believe it is. Trust and eminent domain laws are his biggest concern with the project. Showing up on his ranch in 2008, Keystone XL employees quickly lost his trust when they drove across his

hay fields. He added that landowners signed nondisclosure agreements—now dubbed as “gag orders”—to comply with requests from Keystone XL in the early negotiation stages.

“The weakness of our eminent domain laws leave us unprotected,” Vig added. Lawsuits along the path have already started with company officials claiming rights because they believe the pipeline is in the best interest of the public, according to Vig.

The EIS states that the pipeline would have no major environmental impacts.

Along with agricultural concerns, environmental groups have been coming out in hordes claiming the opposite and sending letters to government officials opposing the pipeline and encouraging the Obama administration to reject it. Activists have also staged a number of protests, civil disobedience style, at the White House, with several ending in arrests, including actress Daryl Hannah.

In its analysis, the State Department dismissed con cerns from environmental groups that the pipeline would increase emissions of greenhouse gases blamed for global warming. Canada’s oil sands are likely to be developed with or without the pipeline, the report said, making concerns about climate change moot.

While the protests carry on, TransCanada officials discuss the economic benefits to the states it crosses and the U.S. as a whole. During construction and operation, the company says Keystone XL will contribute over $5 billion in property taxes to the communities the line will pass through. In total, the project has the potential to add $20 billion of economic stimulus to the U.S. during construction, according to TransCanada.

TransCanada also claims it has reached agreements with approximately 90 percent of the landowners across the path. According to Hugh Ingalls, South Dakota rancher, “We’ve agreed on some terms, and I guess the next move is up to them.”

Because it crosses borders, Clinton will have the final say on the federal permit. If all goes according to company plans, the pipeline could be completed in 2013.

As the TransCanada battle continues to play out, another recently finished pipeline is still tying up loose ends.

Lessons from Ruby

In contrast to the Keystone XL, the Ruby Pipeline primarily covered public lands and the jury is still out on the final impact it will have on local ranchers.

Running 680 miles from Opal, WY, to Malin, OR, through mostly public lands, Ruby has left some producers concerned about their public land leases.

The pipeline began running in July. According to Meghan Brown with the Nevada Cattlemen’s Association, “The rehabilitation work is still continuing.” While most of the permittees have been happy, there have been some communication problems, Brown added.

The pipeline, built by El Paso Corp., cost the company $3.7 billion, and just 3.5 years of headaches, presuming they are done now that the pipeline has begun operation.

In hindsight, it would appear that all things considered, El Paso Corp. finished this project in record time, from the initial plan to completion, despite all of their hurdles. Ranchers and landowners have been caught up in legal battles for years over endangered species and environmental issues.

But in a world where money talks, most ranchers just don’t have the ability to fight off huge lawsuits with a quick trip to the bank. In addition, there is a moral issue that seems to have been buried with Ruby. “That’s just not how we do business,” Brown said.

Questions are still unanswered on what will happen with the $20 million donation El Paso Corp. made to conservation groups. During the first year, the pipeline company quickly settled many environmental disputes and lawsuit threats with payments, dubbed “blackmail money” by some. These payments contributed to $590 million in cost overruns. There is concern that the money will be used to buy up public grazing permits. While the permits can not technically be retired, they can through a legal process be turned into single-use public lands areas, which would end grazing on the permits.

While the pipeline is in and running, El Paso Corp. and other stakeholders in and around the project may still have some negotiating to do in the future. — Traci Eatherton, WLJ Editor