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Nebraska Regulators Deny Request to Explore Different Keystone XL Route

TransCanada won't get another bite at the apple to change the Keystone XL oil pipeline's proposed route through Nebraska, as the state Public Service Commission (PSC) on Tuesday unanimously denied the company's request to consider a different path.

The PSC declined to reconsider its Nov. 20 order that approved the controversial pipeline, but established a new route for its portion traversing the state before interconnecting with the existing Keystone oil pipeline at the Kansas-Nebraska border.

TransCanada had hoped to amend the route specified in the PSC approval, so the denial is a potential setback in the Canadian company's plans to start construction of the project in the United States.

A TransCanada spokesperson on Wednesday told NGI's Shale Daily the company is reviewing the latest PSC decision to determine "the appropriate next steps" in Nebraska, but it continues to believe that Keystone XL "remains a viable project with strong commercial support," along with continuing federal and state/province support on both sides of the international border. Final federal approvals are expected early next year, he added.

Earlier this year, with encouragement from the Trump administration, TransCanada Corp. revived its cross-border project with an application to the PSC for seeking approval for a route through the state -- the most pivotal part of the $8 billion project.

A three-vote majority on the five-member PSC approved TransCanada’s route south across the state for the 830,000 b/d conduit to the Gulf of Mexico from Canada’s northern bitumen belt. At the time, Keystone XL's backers applauded the ruling but stopped short of setting construction or in-service target dates for the 1,179-mile line.

The PSC's approval did not include TransCanada's preferred route, instead approving an alternative that runs closer to existing pipeline rights-of-way where the existing portion of Keystone is located on its way to hubs at Patoka, IL and Cushing, OK. Opponents of the project argue that the route violates state law.

Following the final state approval last month, TransCanada executives indicated that the project appeared is still economically viable, although the pipeline company would need to more thoroughly review the PSC approval and conditions. CEO Russ Girling said they would focus on cost and scheduling impacts.

At an investors' conference last month, Girling said that an open season for the project that was launched in October has been successful, and TransCanada is confident that the company will sign "sufficient binding commitments" to advance the project.

In its latest action, the PSC also denied requests from Keystone XL opponents to reverse the approval, based on claims that state regulators exceeded their jurisdiction and denied due process to landowners affected by the choice of the new route.

If built, the pipeline would support long-held Canadian consensus projections of industry growth expressed in a recent supply/demand forecast by the National Energy Board (NEB). The NEB’s long-range outlook shows total oilsands plant gas use rising by 55% to 4.8 Bcf/d day in 2040 from the current 3.1 Bcf/d, propelled by bitumen output climbing to 4.5 million b/d from 2.5 million b/d.

The force driving oilsands consumption is expected to be increasing use of low-cost underground or in-situ production with gas-fired steam injections. The specialty’s fuel use is forecast to grow by 68% to 2.7 Bcf/d from 1.6 Bcf/d.

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