Tuesday, February 28, 2012

Keystone XL Proceeds With White House Encouragement

Feb 27: TransCanada Corporation announced it has 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, Nebraska. TransCanada said it would supplement that application with an alternative route in Nebraska as soon as that route is selected. The company also informed the DOS that what had been the Cushing [Oklahoma] to U.S. Gulf Coast portion of the Keystone XL Project has its own independent value to the marketplace and will be constructed as a stand-alone Gulf Coast Project, not part of the Presidential Permit process. The approximate cost is US$2.3 billion and subject to regulatory approvals. The company said it anticipates the Gulf Coast Project to be in service in mid to late 2013.
    As WIMS has reported previously, despite the recent disapproval of the Presidential permit, talks of alternative pipelines and oil being sold to China, TransCanada Corporation, in its Annual Report to Shareholders Disclosure documents, is projecting the "in-service date" of the Keystone XL pipeline by early 2015. The company indicated that, "while disappointed, [it] remains fully committed to the construction of Keystone XL. Plans are already underway on a number of fronts to largely maintain the construction schedule of the project. TransCanada said it would re-apply for a Presidential Permit (which it is now doing) and expects a new application to be processed in an expedited manner to allow for an in-service date of early 2015." [See WIMS 2/16/12].

    In a lengthy release on the companies plans, Russ Girling, TransCanada's president and chief executive officer said, ""Our application will include the already reviewed route in Montana and South Dakota. 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 it will continue to work collaboratively with the State of Nebraska on determining an alternative route for Keystone XL that avoids the environmentally sensitive Sandhills area.  TransCanada has been working on assessing the routing in Nebraska since November 2011, following the State Department's notice to delay a decision on a Presidential Permit until an adjusted route that avoids the Sandhills was developed.

    The company said that U.S. crude oil production has been growing significantly in States such as Oklahoma, Texas, North Dakota and Montana.  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. Girling said,  "The Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas. 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 company noted that reapplying for the Keystone XL permit is supported by words used in President Obama's statement January 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 [See WIMS 1/23/12]. With respect to moving forward on an initiative like the Gulf Coast Project, President Obama stated:  "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, Oklahoma to the Gulf of Mexico."

    TransCanada said its  commitment is to treat landowners with honesty, fairness and respect.  The company said it has already negotiated over 99 per cent of voluntarily easements in Texas and close to 100 per cent in Oklahoma.  Easements make up the route of a pipeline and are similar to an easement for water, sewer and utility lines.  Residents maintain ownership of the land and landowners receive a payment equal to or greater than the land's market value. 

    The company said the Keystone XL remains in the national interest of the United States as it would allow Americans to move closer toward achieving energy security and create thousands of much needed jobs.  Building the Gulf Coast Project would be a positive step in creating approximately 4,000 jobs.  Also, the company notes that the U.S. manufacturing sector would continue to experience the economic benefits of the project, as the company has contracts with over 50 suppliers in various states including: Texas, Missouri, Pennsylvania, Michigan, Oklahoma, South Carolina, Indiana, Georgia, Maryland, New York, Louisiana, Oklahoma, Minnesota, Ohio, Arkansas, Kansas and California.  And, there are hundreds of additional suppliers sub-contracted through our suppliers for our material and equipment.

    The White House issued a statement on the TransCanada announcement saying, "The President welcomes today's news that TransCanada plans to build a pipeline to bring crude oil from Cushing, Oklahoma, to the Gulf of Mexico. As the President made clear in January, we support the company's interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight year high. 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. 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.

    "Separately, TransCanada gave the State Department advance notice of its intention to submit a new application for the cross-border segment of the Keystone XL pipeline, from Canada to Steele City, Nebraska, once a route through Nebraska has been identified. House Republicans forced a rejection of the company's earlier application in January, by not allowing sufficient time for important review or even the identification of a complete pipeline route. But as we made clear, the President's decision in January in no way prejudged future applications. We will ensure any project receives the important assessment it deserves, and will base a decision to provide a permit on the completion of that review."

    At a White House press briefing later in the day, a reporter asked why the Administration was "so supportive of a pipeline that goes from Oklahoma to the Gulf of Mexico. . ." Press Secretary Jay Carney responded:

"Well, I'll make a couple of points.  One, it's a global oil market.  Two, we made clear back in January, in the President's statement, that the pipeline from Cushing to the Gulf could potentially be important precisely because there are bottlenecks in Cushing right now that prevent what is essentially a glut of domestically produced oil from getting to market, getting to refineries and getting to market.  That glut exists in part because of the increase in oil production domestically in this country over the last eight years.  We are at an eight-year high, as you know. 

"And it highlights a little known fact -- certainly you wouldn't hear it from some of our critics -- that we approved -- pipelines are approved and built in this country all the time.  And this one is important because of the reasons I just mentioned -- the bottleneck that exists, the glut of oil that exists, and we need to get that oil to the state-of-the-art refineries in the Gulf and get it to market.  And that's an important process.  And we'll make sure that any federal permitting that is involved in the Cushing pipeline will be acted on very quickly.

"Everything will be done by the book and by the -- as it always is.  Again, it's important, because a lot of these issues get confused in the political debate -- the reason why Keystone XL required the review that it did is because it crossed -- that pipeline crossed an international boundary.  And the State Department, by tradition and rule, reviews those requests for permits and was in the process of doing just that when the Republicans forced it to -- forced us to deny it because they tried to compel the administration to grant a permit to a pipeline, the route for which didn't even exist, which was obviously not the right thing to do.

"And as I think the statement also went on to say, that TransCanada indicated that it would -- had plans to, anyway, to resubmit a new proposal, a new pipeline route, and that will certainly be reviewed by the book, without prejudice, because the decision the President made earlier had nothing to do with the merits of a pipeline proposal, it was simply that because of the decision by Republicans to play politics with this, forced him -- forced the administration to deny the permit request because there wasn't even a pipeline route identified."

    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW) said he welcomed the announcement by TransCanada. He said he was asking EPW Chairman Barbara Boxer (D-CA) to hold a field hearing in Cushing, Oklahoma to address the permitting process. He said, "The largest obstacles standing in the way of this pipeline from Cushing to the Gulf are Army Corps of Engineers permits under the Clean Water Act and potential consultations by the US Fish and Wildlife Service."

    House Energy and Commerce Committee Chairman Fred Upton (R-MI) issued a release saying,  "I am pleased to see TransCanada is moving forward, but remain deeply disappointed that construction of the full pipeline has not been approved after more than three years of stringent environmental review. Since President Obama has proved unwilling to make a decision on the permit for this project, we have passed legislation to take that decision out of his hands. The House has now voted three times to end the president's delay, and we will continue to fight to see that the permit is approved and the pipeline is built."

    Noah Greenwald, endangered species program director with the Center for Biological Diversity (CBD) issued a release indicating that there has been no analysis of how the pipeline from Cushing to the Gulf Coast in Texas will affect wetlands or imperiled species in the region, including the whooping crane, interior least tern, Arkansas shiner and piping plover. He said, "Government engineers have already said that Keystone XL will leak oil, so building a pipeline through endangered species habitat will put those species directly in harm's way.

    "The Obama administration today vowed to take every step possible to expedite the necessary federal permits. This isn't the time to be cutting corners on protecting our wildlife and environment. The Obama administration should be willing to take a hard look at this project and make sure it follows laws that protect clean water, wetlands and endangered species. The American people have spoken clearly against this project. Segmenting the project and building it in sections does nothing to reduce the tremendous damage that would be caused by this pipeline and further tar sands development."

    Access the TransCanada release (click here). Access the White House statement (click here). Access the White House press briefing transcript (click here). Access a release from Senator Inhofe (click here). Access a release from Rep. Upton (click here). Access a release from CBD (click here). Access the TransCanada Keystone XL project website for additional information (click here). Access complete details and background from the DOS Keystone XL Pipeline Project website (click here). [#Energy/Pipeline, #Energy/KXL, #Energy/OilSands, #Energy/TarSands]

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