New Keystone plan splits pipeline in parts

WASHINGTON – Trans-Canada Corp. said Monday it would seek to start building the southern segment of its Keystone XL pipeline while it prepares to file a new application for U.S. approval of a cross-border pipeline to import Canadian crude oil.

The company said it would first start building a segment from the storage hub of Cushing, Okla., to Gulf Coast refineries in Texas, citing the need to alleviate an ongoing supply glut at Cushing by providing an outlet for the oil to get to the Gulf.

The company also said it would soon reapply with the U.S. State Department for a permit for the border-crossing segment from Canada’s tar-sands region to Steele City, Neb. An existing pipeline segment links Steele City and Cushing.

TransCanada said it would reapply after the Obama administration denied a permit last month but left the door open for a new application. The administration’s decision prompted Republicans to push legislation, which is pending in Congress, to approve the cross-border permit.

TransCanada CEO Russ Girling said in a statement that the $2.3 billion southern segment, which would go to Port Arthur and Houston, would need various regulatory approvals but not from the State Department, which handles only the border-crossing part. The company hopes to bring the southern part online by mid- to late 2013.

He said TransCanada, which aims to have the entire Keystone XL pipeline online by early 2015, hopes the State Department will do a faster review by using three years of accumulated information from the previous application.

TransCanada already operates its Keystone pipeline, which runs from Canada through the Midwest, ending in Illinois.

Environmental concern

In denying the permit for the Keystone XL project, the State Department said a Feb. 21 congressionally imposed deadline didn’t allow enough time to assess alternative routes avoiding Nebraska’s environmentally sensitive Sandhills region, which sits atop a drinking-water aquifer.

Some Nebraskans and environmental activists raised concerns about the pipeline’s potential impact, including a possible spill, on land and water supplies.

The company said Monday it plans to supplement its new application with a new route avoiding the Sandhills once the Nebraska government signs off on it.

White House spokesman Jay Carney said President Barack Obama welcomes the plan for the southern segment because “moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs and encourage American energy production.”

Keystone XL would carry up to 700,000 barrels of Canadian crude a day while providing the additional pipeline capacity needed to move growing U.S. production to Gulf Coast refineries, TransCanada says.

Keystone XL’s oil would replace declining volumes of oil from Mexico and South America, said Bill Day, spokesman for San Antonio-based Valero Energy Corp., whose Port Arthur refinery would benefit from the pipeline. “We’re hopeful the project will go through,” Day said.

As for the cross-border segment, Carney said: “We will ensure any project receives the important assessment it deserves, and will base a decision to provide a permit on the completion of that review.”

Republicans’ bill

Earlier this month, the GOP-controlled House passed a bill that would bypass the State Department and authorize the cross-border pipeline. The bill, part of a larger energy-infrastructure package, faces long odds in the Democratic-held Senate.

Republicans point to the jobs and oil Keystone XL could bring. But many Democrats and environmentalists claim that government analyses show it wouldn’t change the future growth of U.S. imports of Canadian crude.

They also call the jobs claims inflated and say the few permanent jobs Keystone XL would create aren’t justified by pollution and climate risks associated with Canadian oil-sands crude, which is viscous and dense and requires more energy to extract than conventional oil does.

puneet.kollipara@chron.com

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