TransCanada hopes to stick to 2014 timeline for Keystone pipeline
By Rebecca Penty, Calgary Herald; With Files From James Wood And Dina O'meara, Calgary Herald January 19, 2012
Keystone XL backer TransCanada Corp. is maintaining an ambitious plan to have its proposed Alberta-to-Texas oil pipeline operating by late 2014, though the Obama administration that rejected the line Wednesday says any subsequent application would spark a fresh review.
TransCanada CEO Russ Girling said the company will file a new proposal for the $7-billion project and that he expects its review would be "expedited," allowing the firm to stick to its schedule.
"While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL," Girling said in a statement after U.S. President Barack Obama rejected the 2,700-kilometre, crossborder pipeline that would cut through six states.
In a statement from the White House, Obama blamed an "arbitrary deadline" imposed by Republicans in Washington for preventing a full assessment of the pipeline's impact.
"Plans are already underway on a number of fronts to largely maintain the construction schedule of the project," Girling said.
TransCanada said it expects an "exhaustive record" compiled over more than three years of study on Keystone XL to be considered in a new review.
Prime Minister Stephen Harper's office said Obama phoned Harper earlier in the afternoon and explained his ruling was not on the merits of the project and that TransCanada is free to reapply.
Harper expressed his "profound disappointment" with the news and said he hoped the project would continue, according to a summary of the conversation.
Denial of a presidential permit for a project that has become a lightning rod for the debate over fossil fuel consumption, and a pre-election political issue in Washington, prompted cheers from environmental opponents and disappointment from politicians and oil industry supporters of the line.
Facing a Feb. 21 deadline imposed by a Republican-dominated Congress, the White House had warned that if Obama was forced to rule on Keystone XL in haste, the pipeline would be rejected.
Keystone XL in its current form is not in U.S. "national interest," said Kerri-Ann Jones, assistant secretary of the U.S. Bureau of Oceans and International Environmental and Scientific Affairs.
On a conference call, Jones couldn't say when review of a new Keystone XL application could be completed.
"If TransCanada comes in with a new application, it will trigger a completely new review process," Jones said. "We cannot state that anything will be expedited at this time," she said, noting the department could use existing information on Keystone XL for a new review.
Jones said the U.S. State Department did not have "sufficient information" on potential pipeline detours through Nebraska to make a recommendation.
TransCanada applied in September 2008 to build Keystone XL, designed to transport 830,000 barrels of oil per day, much of it oilsands bitumen, from Hardisty, Alta. to refining centres on the Texas Gulf Coast. The State Department was expected to make a decision by the end of 2011, but delayed its ruling into 2013 last November, when it said more study on alternative routes through Nebraska was required.
Ranchers and political leaders in Nebraska feared an oil spill would damage the ecologically fragile Sand Hills region.
TransCanada executive Alex Pourbaix said last week a detour in Nebraska could be agreed upon "in a matter of weeks," though a TransCanada representative later said a final route through the state is still expected six to nine months after last November's delay.
An idea Pourbaix floated to investors in November, that the company could split Keystone XL into different phases and build a leg from Cushing, Okla. to the Texas Gulf Coast first, could have found its light of day.
Obama said his administration would work with the oil and gas industry in the months ahead "including the potential development of an oil pipeline from Cushing, Okla. to the Gulf of Mexico." Jones confirmed an entirely U.S. line would not require a presidential permit.
Keystone XL is viewed as essential to removing future pipeline bottlenecks for oilsands production expected to double by 2020 and has been supported by industry and the Alberta and federal governments who have lobbied Washington in favour of an approval. It has also been eyed for its ability to address a current bottleneck at Cushing by delivering stockpiles of oil there to the Gulf Coast, which could lift North American oil prices.
Tom Huffaker, a vice-president at the Canadian Association of Petroleum Producers, was disappointed by the U.S. decision, but heartened TransCanada will be allowed to reapply.
"We do not believe that this causes an immediate problem in terms of capacity to move oilsands as it ramps up to market," he said.
Environmental opponents to Keystone XL, who clasped hands and encircled the White House last November in protest, painted Wednesday's presidential denial of the project as a wake-up call for the oil industry.
Backed by a host of Hollywood celebrities, Nobel laureates and wealthy Democrat donors, groups that inspired demonstrations in Washington and Ottawa have aimed to block the project over the risk of pipeline leaks and greenhouse gas emissions tied to oilsands development, which they say Keystone XL enables.
"The denial of this project provides clear evidence that industry and government must do much more to address the impacts of developing and transporting oilsands," said Ed Whittingham, executive director of the Pembina Institute, an environmental group.
Whittingham suggested Ottawa needs to take "important lessons" from the U.S. in its consideration of Enbridge Inc.'s proposed 525,000barrelper-day oil pipeline, Northern Gateway, from Bruderheim, Alta. to Kitimat, B.C. The pipeline is now being reviewed by federal regulators.
Political wrangling over a U.S. decision on Keystone XL has caused Harper, who has called approval a "no-brainer," to promote Northern Gateway, which promises to open oilsands production to Asian markets.
Alberta Premier Alison Redford said the government will offer whatever support it can to move Keystone XL forward and is "very optimistic about the success" of the project.
TransCanada shares closed down 47 cents or one per cent at $41.89.
rpenty@calgaryherald.com
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