Providing coverage of Alaska and northern Canada's oil and gas industry
February 2020

Vol. 25, No.05 Week of February 02, 2020

Reboot for Keystone XL; US reinforces approval of pipeline

Gary Park

for Petroleum News

The Trump administration has pumped fresh life into its 2017 approval of the Keystone XL pipeline, which holds out hope of delivering an extra 830,000 barrels a day of Alberta oil sands bitumen to U.S. refineries in Texas and Illinois and Gulf Coast terminals.

Interior Secretary David Bernhardt signed an approval for the line to cross the U.S.-Canada border and continue for 46 miles across land in Montana that is controlled by the Bureau of Land Management and the U.S. Army Corps of Engineers.

Despite endless wrangling and court battles with state governments along the right of way, environmentalists, landowners and Indian tribes, Keystone XL has been supported by President Donald Trump, who issued a federal permit for the project in 2017 after work was halted by the Obama administration in 2015, but there is a constant unease in the Alberta government and among oil sands producers over what might happen if Trump fails to get re-elected.

Casey Hammond, assistant secretary of the Interior Department, said Interior officials and other federal agencies have conducted a thorough review of Keystone XL’s potential impact on the environment.

He said TC Energy provided detailed plans to deal with any spill from the line, adding “we’re comfortable with that analysis that’s been done.”

TC Energy expects to start work in April

Keystone XL operator TC Energy (formerly Trans Canada) said earlier in January it expects to start work in April on the short cross-border section as part of its plans to spend US$8 billion over the next two years.

The company said in a filing with the U.S. District Court of Montana it also wants to commence building pumping stations along the entire route from Alberta to refineries in Texas in June, then shift its attention to pipeline segments in Montana and South Dakota in August.

To underpin those goals, TC Energy said it plans to start mobilizing heavy construction equipment in February for 10 worker camps in Montana, South Dakota and Nebraska along with moving sections of pipe by trains and trucks to storage yards.

Alberta Premier Jason Kenney welcomed TC Energy’s announcement as “very encouraging news ... we need to get this pipeline built” to relieve transportation bottlenecks out of Alberta.

Alberta Energy Minister Sonya Savage said the latest round of political instability in the Middle East has highlighted Canada’s role as a dependable oil producing country.

She said construction of Keystone XL would create thousands of jobs in Canada and the U.S.

Environmentalists to appeal to court

An attorney for environmental groups said they will attempt to overturn Trump’s permit and will ask a judge in the case to issue an order blocking the latest approval.

Steve Volker, who represents the Indigenous Environmental Network, said Trump’s permit was “unconstitutional” and his clients have “very confidence” the federal courts will set aside the approvals.

U.S. Rep. Greg Gianforte of Montana praised the administration for its commitment to “get this critical infrastructure project moving after years of unnecessary delays.”

The Nebraska Supreme Court removed the last major barriers to Keystone XL proceeding in the state in August when it ruled in favor of state regulators who approved the pipeline route in 2017. Opponents had argued that the regulators did not abide by all the procedures required by state law.

The project also continues to get tripped up by unexpected events, including a rupture on the existing Keystone pipeline in North Dakota late last year that leaked 1.5 million liters of crude oil in North Dakota following leaks in South Dakota in 2016 and 2017.

That dragged Alberta crude prices down to about US$34 a barrel compared with around US$56 for West Texas Intermediate.

Commissioned 10 years ago to ship 590,000 bpd of Alberta heavy crude to refineries in Illinois and Texas, the original Keystone pipeline accounts for 18% of Canada’s total oil exports to the U.S.


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