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Despite Delays, Keystone to Get OK, TransCanada CEO Says

Despite last Thursday's announced delay in U.S. State Department processing and earlier criticisms of inflated economic benefits from the project (see Shale Daily, Nov. 9), the Keystone XL oil pipeline from Alberta, Canada to the U.S. Gulf of Mexico ultimately should be approved, according to project sponsor TransCanada.

CEO Russ Girling called Keystone "shovel-ready" and didn't back off previous claims that the project can create 20,000 construction-related jobs.

Given growing concerns about the Nebraska portion of the proposed pipeline route through the Sandhills region, the State Department last Thursday announced it needed to undertake an "in-depth assessment of potential alternative routes," and Girling subsequently said the added assessments could be completed in the first quarter of 2013.

TransCanada had been promoting the possibility that the State Department would render its decision by the end of this year (see Shale Daily, Nov. 3).

Saying the State Department delay brings "new uncertainty" in what has become a controversial project in the national political mix, Jackie Forrest, at IHS CERA Global Oil, issued an analysis that talked about the need for being able to find new markets beyond the Midwest for Canadian oil sands supplies. If no pipeline solution is approved, there likely will be "a very significant buildout of rail capacity," which is more costly than pipelines as a transportation option, Forrest said.

With the added look at alternatives for routing in Nebraska and added environmental assessments, the State Department said the additional work could be completed in the first quarter next year, based on the federal department's experience in other pipeline cases that required an assessment of whether a project is in the national interest of the United States.

"We remain confident Keystone XL will ultimately be approved," said Girling last Thursday, noting that TransCanada expects to "have conversations" with the State Department "to discuss next steps." He called Keystone XL "too important to the U.S. economy" -- not to mention the Canadian economy and the U.S. national interest -- not to be approved in some form. He said the company has worked with the U.S. State representatives on the project for the past three years.

TransCanada touts the fact that 14 different routes for Keystone XL have been studied, eight of which impacted Nebraska. "They included one potential alternative route in Nebraska that would have avoided the entire Sandhills region and Ogallala aquifer and six alternatives that would have reduced pipeline mileage crossing the Sandhills or the aquifer," said a TransCanada spokesperson.

The Canadian energy company is hoping that this work will "serve as a starting point" for the additional review now ordered by the State Department.

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