Nebraska approves alternative route for TransCanada’s Keystone XL

Nebraska approves alternative route for TransCanada’s Keystone XL

NATI HARNIK/THE CANADIAN PRESS

SHAWN MCCARTHY AND JEFF LEWIS

Kinder Morgan pipe

NOVEMBER 20, 2017

TransCanada Corp. has received a new hurdle in its effort to complete its $8-billion (U.S.) Keystone XL pipeline after Nebraska’s Public Service Commission approved an alternative to the company’s preferred route through the state.

Nebraska’s Public Service Commission ruled on Monday that TransCanada’s Keystone XL can be built along a “mainline” route, which shifts the line east of its preferred path.

The company announced earlier this month that it had secured adequate commitments from crude oil shippers on the proposed line. TransCanada must now assess it will proceed with construction given the approval of the mainline route.

Keystone XL will deliver up to 830,000 barrels per day of crude from Alberta to Steele City, Neb., where it will connect with an existing pipeline network to the U.S. Gulf Coast. Alberta oil producers are hopeful that added pipeline capacity will accommodate expanding supply and bring them better prices and cheaper transportation costs.

TransCanada has been attempting to win approval for Keystone XL for nearly 10 years; it was turned down by then-president Barack Obama in 2015, only to be revived by President Donald Trump last March.

The Keystone XL project has faced a barrage of criticism from environmental activists and some landowners for nearly a decade. Activists – including some Indigenous leaders – are threatening to mount mass protests against the pipeline.

At the hearing before the commission, TransCanada argued its preferred route was far superior to the one that the commission approved on Monday. It said its preferred path had fewer ecological sensitive areas, fewer stream crossings and crosses the range of fewer threatened or endangered species.

The company will now have to obtain easements from landowners, after securing rights from 90 per cent of landowners along its preferred route. The mainline alternative is also longer which, in additional to other factors, will add to the costs. As well, it is unclear whether the federal approval for the KXL project covers the route approved by the state commission.

“If the Keystone XL pipeline were to follow the mainline in its entirety, it would require considerably greater length in the overall pipeline route than the preferred route currently uses,” the company argued in its submission to the commission. “This additional length would cause greater environmental impact and render the route inferior to the preferred route.”

Despite the hurdles, some analysts hailed the decision as a qualified victory for TransCanada.

“Nebraska’s decision today greatly diminishes the political risk for the project, likely clearing the way for increased volumes of Western Canadian heavy crude to reach the Gulf Coast,” Zachary Rogers, analyst at Wood Mackenzie consultancy, said in a note. “The pipeline’s commercial viability is strengthened as declining heavy oil production in Mexico and ongoing Venezuelan risk has recently tightened the heavy-crude market in the Gulf Coast.”

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on November 20, 2017, in miscellaneous, oil, potash. Bookmark the permalink. Leave a comment.

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