TransCanada weighs alternative routes to save Keystone XL

TransCanada Corp. has begun studying alternative routes for the Keystone XL project in an attempt to salvage the $7 billion pipeline after U.S. officials said it couldn’t proceed without more review.

“We needed this project before yesterday’s announcement,” Sean McMaster, general counsel for Calgary-based TransCanada, said in an interview in Houston today. “We’re going to do what we can to move this project forward.”

Yesterday, the U.S. State Department ordered more consideration of alternate routes for Keystone XL to avoid environmentally sensitive areas in Nebraska. TransCanada Chief Executive Officer Russ Girling had previously said any delay would “seriously jeopardize” the project. The review may be finished as soon as early 2013, the State Department said.

McMaster said 14 routes were studied and the path chosen was determined the best. The company has been trying to avoid a delay in the project since TransCanada and shippers want the project completed as soon as possible, he said. Some alternatives inside and outside of Nebraska would avoid the Sandhills region, which is of concern to environmental groups.

“To move it, would have led to exactly what we’re in now – – some significant delay, and we didn’t want to go down that route,” McMaster said. “Now, we’re there. We’re forced to be there, so we’ll consider alternative routes.”

Political Decision

TransCanada was “surprised” by yesterday’s announcement and believes it was a “political decision,” McMaster said.

“I hate to be a cynic, but this latest delay conveniently moves the approval just past the presidential election,” he said.

The 1,661-mile (2,673-kilometer) Keystone XL pipeline would deliver 700,000 barrels a day of crude from Alberta’s oil sands to the Gulf of Mexico by crossing Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.

Re-routing would require 250 additional miles of pipe and increase the cost of the project by $1.6 billion, according to a State Department report.