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OIL AND GAS
Keystone XL clears Nebraska hurdle
by Daniel J. Graeber
Washington (UPI) Nov 20, 2017


US state gives key approval for Keystone pipeline
Chicago (AFP) Nov 20, 2017 - Regulators in the US state of Nebraska on Monday granted a key approval needed for construction of the Keystone XL pipeline, the source of a nearly decade-long feud between environmental activists and the energy industry.

Officials in Nebraska granted TransCanada the final major permit it needs to begin construction of the 1,180-mile (1,900 kilometer) pipeline, days after a leak in the existing Keystone line spilled around 5,000 barrels of oil in South Dakota.

In a 3-2 vote, the Nebraska Public Service Commission approved the project, but required the pipeline's operator to use an alternative to its original preferred route.

By state law, the regulatory body was not allowed to consider the risk of leaks or the potential environmental impact.

TransCanada said that, once built, the pipeline extension would connect to an existing network and ferry 830,000 barrels of oil per day from landlocked Alberta, Canada to US Gulf Coast refineries.

In a statement, the company's president Russ Girling said it would evaluate how the commission's decision to approve an alternate route through the state "would impact the cost and schedule of the project."

Meanwhile, Canadian Natural Resources Minister Jim Carr welcomed the decision, saying the pipeline would "strengthen the Canadian resource industry as a whole," and "bring significant economic benefits to Canada for years to come."

He also said increases in Canadian oil shipments through the new conduit to the United States would bolster the two nations' close energy relationship.

The controversial $5.3 billion project was first proposed in 2008. US President Donald Trump reversed his predecessor Barack Obama's decision to block it.

Construction had been held up by environmental groups and Nebraska landowners concerned about negative environmental and economic impacts.

Supporters have argued that the pipeline is a safer alternative to other forms of ground oil transport, and would create jobs and boost America's affordable energy supply.

Commissioner Crystal Rhoades, who voted "no", was the only one to make prepared remarks during the short morning meeting.

She expressed skepticism about the pipeline's touted economic gains, along with concerns that some landowners were not properly informed of the alternative route's path through their property.

"(TransCanada) provided insufficient evidence to substantiate any positive economic impact for Nebraska from this project," she said.

The approval of an alternative route could give new grounds for opposing landowners to file an appeal within the next 30 days.

A law firm representing landowners hailed the decision to deny TransCanada its preferred Keystone XL route through Nebraska.

"We will carefully evaluate the Order and meet with our clients," attorney Dave Domina said in a statement.

Opposition group Bold Nebraska said the alternative route raises concerns over possible environmental contamination of an area of sand dunes and an aquifer, and also provides new grounds to push back against the pipeline's construction.

"This decision today throws the entire project into a huge legal question mark," Jane Kleeb of Bold Nebraska told a news conference.

Kleeb said the alternative route was not reviewed by federal authorities and would force TransCanada to seek new approvals.

The approval of an alternative route "opens up a huge victory for us in order to fight this now on the federal level," she said.

A decision spanning two U.S. presidential terms came to a head Monday when regulators in Nebraska cleared a remaining hurdle for the Keystone XL oil pipeline.

Referencing long-standing concerns about the Sandhills region in Nebraska, some of which were the source of legal battles, regulators on the state Public Service Commission sided against the preferred route for Keystone XL and instead voted for an alternative route that allayed ecological concerns.

"After careful evaluation and consideration of all the evidence adduced, and the careful weighing of all the issues, factors and aspects of the proposed routes of the Keystone XL pipeline, we find that the alternative mainline route is in the public interest and shall be approved," the decision read.

The Nebraska Department of Environmental Quality published a report more than three years ago on the need to avoid the Sandhills area. Rod Johnson, a former Republican state legislator and commissioner for the PSC, said Monday that parts of the pipeline would be exposed and therefore vulnerable if TransCanada built the $8 billion pipeline through the region as planned.

The DEQ's report from 2013 on the Sandhills concerns was followed by widespread protests over the pipeline. Following Monday's decision, the Sierra Club said the pipeline planner still needs to clear a few more hurdles before it gets built.

"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," Sierra Club Executive Director Michael Brune said in a statement.

Apart from environmental concerns, Brune said TransCanada was already facing market headwinds given the lack of shipper commitments for the pipeline. The U.S. State Department under President Barack Obama denied a Keystone XL permit on environmental grounds.

In addressing third quarter performance, the company said it had about 500,000 barrels of oil per day committed to the pipeline, which is about 60 percent of the total design capacity.

Sandy Fielden, the director of research, commodities and energy at Morningstar, told UPI last week that TransCanada will commit to the project if shippers commit to the project, but stressed "the whole thing is kind of a chicken and egg saga, with producers reluctant to pull the trigger and TransCanada scared to invest without their support."

On Monday, Fielden said Keystone XL does nothing until it's up and running. While it does alleviate some concerns about the lack of infrastructure in North America, he said the project, despite the support from U.S. President Donald Trump, is primarily a foreign pipeline.

"Once built it will definitely deliver more Canadian crude to the Gulf Coast, and potentially some from the Bakken shale oil reserve in North Dakota," he said.

With more U.S. oil leaving the continent, meanwhile, Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, added Keystone XL breaks the Canadian landlock in North America and gives it an opportunity to displace the dwindling supplies of Venezuelan oil on the market.

U.S. analysis from 2015 said most Canadian pipeline projects would break even with oil holding steady at between $65 and $75 per barrel. The State Department under Trump said in its permitting decision the break-evens for Canadian oil projects remained the same, but the sector in general has proven itself to be resilient in the low-price cycle.

Brent crude oil was flirting with $60 per barrel in Monday trading.

State Commissioner Chrystal Rhoades in the dissenting opinion said she "vigorously" disagreed with the majority, saying no man-made infrastructure is fail safe.

"As we stated in our submission to the Nebraska Public Service Commission, this pipeline will mean greater energy security for all North Americans by making sure people have access to Alberta's responsibly developed energy resources," Alberta Premier Rachel Notley said in a statement.

Keystone itself has not yet issued a statement on the approval. The original leg of its Keystone pipeline in the United States ruptured and released 5,000 barrels of oil in rural South Dakota last week.

OIL AND GAS
More Trans Mountain hearings scheduled in Canada
Washington (UPI) Nov 20, 2017
Detailed route hearings for plans to expand the Trans Mountain crude oil pipeline in Canada are scheduled in British Columbia in early 2018, a regulator said. The National Energy Board said it scheduled two hearings for February for segments of the Kinder Morgan project. So far, the NEB said it's received 22 statements in opposition to the segments in question following 20 hearings. ... read more

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