TransCanada set to re-apply for Keystone permit

Mar 2, 2012

TransCanada Corporation announced last week that they had sent a letter to the U.S. Department of State (DOS) informing the department the company plans to file a Presidential Permit application (cross border permit) in the near future for the Keystone XL Project from the U.S./Canada border in Montana to Steele City, NE. According to their release, TransCanada would supplement that application with an alternative route in Nebraska as soon as that route is selected.

The company also informed DOS that what had been the “Cushing” to U.S. Gulf Coast portion of the Keystone XL Project has its own independent value to the marketplace and would be constructed as a stand-alone Gulf Coast Project, not part of the Presidential Permit process.

The Canadian company said last Monday it will build an oil pipeline from Oklahoma to Texas after President Barack Obama blocked the larger Keystone XL pipeline from Canada. Calgarybased TransCanada says the

new project does not require presidential approval, since it does not cross a U.S. border.

“The approximate cost is $2.3 billion and subject to regulatory approvals. We anticipate the Gulf Coast Project to be in service in mid to late 2013,” according to TransCanada officials.

“Our application will include the already reviewed route in Montana and South Dakota,” said Russ Girling, TransCanada’s president and chief executive officer. “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.”

TransCanada said they will continue to work with the state of Nebraska on determining an alternative route for Keystone XL that avoids the Sandhills.

According to the company, U.S. crude oil production has been growing significantly in states such as Oklahoma, Texas, North Dakota and Montana and producers do not have access to enough pipeline capacity to move this production to the large refining market at the U.S. Gulf Coast. The Gulf Coast Project will address this constraint.

“The Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas,” added Girling. “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.”

Press Secretary Jay Carney said Obama welcomed the announcement.

“Moving oil from the Midwest to the world-class, stateof-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.

The company said that the decision to reapply for the Keystone XL permit was supported by words used in Obama’s statement Jan. 18, 2012, when he said the denial of the permit was not based on the merits of the pipeline but rather on an imposed 60-day legislative timeline to make a decision on the project.

“In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security—including the potential development of an oil pipeline from Cushing, OK, to the Gulf of Mexico,” Obama said.

According to the company, they have negotiated over 99 percent of the easements in Texas and close to 100 percent in Oklahoma.

Pipeline supporters consider the project to be a huge job creator, while opponents say it would transport “dirty oil” with the potential of negative environmental consequences. — Traci Eatherton, WLJ Editor