February 2012, Vol. 239 No. 2

Projects

TransCanada Proceeds With Cushing To Gulf Coast Portion Of Keystone XL

TransCanada announced February 27 that it was proceeding with the Cushing, OK to Gulf Coast portion of the Keystone XL as a stand-alone project, at the approximate cost of $2.3 billion. The pipeline would be subject to regulatory approvals but not the state department permit required for cross-border pipelines, and the pipeline would be expected to be in service by late 2013.

The company plans to file an application for a cross border permit for the remainder of the original Keystone XL project from the U.S./Canada border in Montana to Steele City, Nebraska. TransCanada plans to supplement the application with an alternative route in Nebraska as soon as that route is selected.

“Our application will include the already reviewed route in Montana and South Dakota,” said Russ Girling, TransCanada’s president and chief executive officer. “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 will continue to work collaboratively with the State of Nebraska on determining an alternative route for Keystone XL that avoids the Sandhills. 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 Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas,” added Girling. “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.”

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.

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.”