Keystone XL Clears Major Obstacle in Nebraska
By a 3-2 vote, the Nebraska Public Service Commission (NE PSC) on Monday found that TransCanada’s Keystone XL (KXL) crude oil pipeline project is in the public interest. The decision clears the pipeline’s route through Nebraska and marks the final major hurdle in the project’s long regulatory path.
The NE PSC approved the “Keystone Mainline Alternative Route,” which appears in this map along with TransCanada’s “Preferred Route” and a “Sandhills Alternative Route” that avoids an environmentally sensitive area.
"As a result of today's decision, we will conduct a careful review of the Public Service Commission's ruling while assessing how the decision would impact the cost and schedule of the project," Russ Girling, TransCanada's president and CEO, said in a company announcement following the vote.
Various backers of the project, which was proposed nine years ago, applauded the NE PSC’s action.
“Nebraska recognizes the Keystone XL pipeline is in the public interest bringing good paying jobs and more affordable energy for U.S. consumers,” stated Andy Black, President and CEO of the Association of Oil Pipe Lines (AOPL).
“The Nebraska Public Service Commission set an example for how to carefully evaluate critical energy infrastructure projects, even in the face of strongly held views and opinions,” Jack Gerard, President and CEO of the American Petroleum Institute (API), remarked in a written statement. “It’s been a long path to today’s approval and the Commission should be commended. Their action allows the Keystone XL pipeline to be built by highly-trained, skilled tradesmen using state-of-the-art technologies aimed at protecting the environment and promoting the safety of our communities.”
Michael Whatley, executive vice president of the Consumer Energy Alliance (CEA), said the project will benefit oil producers, oil refiners and oil product consumers.
“This project will not only be the most efficient and safest way to move oil from Canada and the Bakken Shale to markets, but according to the U.S. Department of Energy, it’ll also help lower the price of fuel that all Americans – including local families and small businesses in Nebraska – use to power their daily lives,” Whatley said. “What’s more, this project will help American drivers by providing a stable and reliable supply of North American crude oil for refineries in the Gulf Coast region.”
The 1,179-mile, 36-inch diameter crude oil pipeline will extend from Hardisty, Alberta, to Steele City, Neb. Citing a U.S. State Department economic analysis, AOPL said the project would create more than 42,000 U.S. construction jobs and $2.1 billion in U.S. worker payroll.
According to one prominent KXL opponent, the outlook for the project remains uncertain. The Sierra Club commented that the NE PSC “rejected TransCanada’s preferred route” for the pipeline and instead granted “conditional approval along a route the company claimed would be unworkable.” Moreover, the environmental group pointed out that TransCanada has argued that building the pipeline along an alternative route would require it to secure additional easements if it goes ahead with the project. Moreover, the organization noted that TransCanada still needs to obtain approvals from the Army Corps of Engineers and Bureau of Land Management. In addition, it stated the project faces an ongoing lawsuit filed by the Sierra Club and other groups.
“It is disappointing that the Public Service Commission sided with a foreign oil company over the interests of American communities who would be threatened by this pipeline, but we remain confident that Keystone XL will never be built,” stated Michael Brune, the Sierra Club’s executive director. “The Sierra Club and our allies will continue to explore all legal options to fight back against the project.”
Zachary Rogers, refining and oil markets research analyst at Wood Mackenzie, said that TransCanada will now evaluate the results for their open season before making a final investment decision on KXL.
“Nebraska’s decision today greatly diminishes the political risk for the project, likely clearing the way for increased volumes of West Canadian heavy crude (WCS) to reach the Gulf Coast,” stated Rogers. “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.”
Rogers also pointed out the biggest winners – should TransCanada actually build KXL – will likely be West Canadian producers.
“By ensuring a cheaper, more efficient route to the U.S. Gulf Coast, WCS would likely not need to be discounted to the extent we’ve seen over the past few years,” Rogers commented.
NE PSC has posted Monday’s final order on its website.
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