|
TransCanada plays a wildcard Rolls out plans for standalone pipeline from Cushing to Texas Gulf Coast; reconfigures Keystone XL; says shippers need outlet Gary Park For Petroleum News
TransCanada is adopting a divide-and-conquer strategy to keep alive its bi-national Keystone XL pipeline, splitting off the Cushing to Texas Gulf Coast portion as a standalone project to ease a glut of crude at the Oklahoma hub, while announcing it will reapply in the “near future” for the disputed leg from central Alberta to Nebraska.
The approach has already won favor with President Barack Obama, whose press secretary Jay Carney said the proposed US$2.3 billion southern leg would be a welcome relief for the “bottleneck of oil” in the U.S. Midwest.
“We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to taking every step possible to expedite the necessary federal permits,” Carney said.
That stance is seen as a significant victory for TransCanada, coming only a month after Obama and the U.S. State Department denied a presidential permit to build the full US$7 billion Keystone system.
TransCanada said its planned Gulf Coast Project from Cushing to Port Arthur, Texas, would proceed as soon as it received approval and could be carrying crude by mid- to late-2013, starting at 700,000 barrels per day with additional pumping stations building capacity to 830,000 bpd.
Crude marketers warned, however, that if the Gulf Coast Project is built there may not be enough supply from Canada and the Bakken to fill both it and the 400,000 bpd Seaway reversal Enbridge and Enterprise Energy Products plan to introduce this summer.
Strong support for southern leg Alex Pourbaix, TransCanada’s pipelines president, said there has been strong support for the southern leg from shippers who want to move crude from the U.S. Bakken and Midcontinent “from the Cushing region down to the Gulf Coast.”
TransCanada said the growth of crude oil production in Montana, North Dakota, Oklahoma and Texas has overloaded pipeline capacity to the Gulf Coast.
Refining company Valero Energy said its focus remains on “getting heavy Canadian crude to the Gulf Coast, where the refining capacity exists to process it.”
Because the southern leg does not involve crossing the Canada-U.S. border, a presidential permit is not required, although regulatory approval is needed from the U.S. Army Corps of Engineers under the Clean Water Act.
Pourbaix said TransCanada is counting on having those permits in time to start construction this summer.
Political issue Since Obama denied TransCanada’s Keystone XL application in January, Republicans in Congress and the Republican presidential candidates have vowed to make the decision an issue in the Nov. 6 election, accusing Obama of thwarting the use of North American crude to curb the rise in U.S. gasoline prices.
Susan Casey-Lefkowitz, director of the international program at the Natural Resources Defense Council, accused TransCanada of taking its XL proposal, dividing it in half and “trying to sell it as a new project. To me this shows more that audacity, it shows ignorance. It’s as though TransCanada thinks it can do whatever it wants in building pipelines in the United States.”
Pourbaix said TransCanada does not expect “any significant problems” obtaining right-of-way easements for the Gulf Coast Project, estimating that voluntary negotiations with landowners have secured 100 percent of those easements in Oklahoma and 99 percent in Texas.
TransCanada Chief Executive Officer Russ Girling said the fresh Keystone XL application will involve an alternate route around the ecologically sensitive Sandhills region of Nebraska which he hopes will allow a permit to be processed “expeditiously.”
He said the objective is help Gulf Coast refineries access “lower cost domestic production and avoid paying a premium to foreign oil producers.”
| 