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Nebraska approves TransCanada’s Keystone XL: Update

20 Nov 2017, 5.29 pm GMT

Nebraska approves TransCanada's Keystone XL: Update

Adds details on route; comments from Sierra Club, other groups.

Houston, 20 November (Argus) — Nebraska regulators today approved a route for TransCanada's long-delayed 830,000 b/d Keystone XL crude pipeline, the last major regulatory hurdle for the project to proceed.

The Nebraska Public Service Commission voted 3-2 to approve a route through the state, but not TransCanada's preferred 275-mile route. Rather it approved an alternative that avoided some environmentally sensitive areas.

The $8bn Keystone XL project would transport crude from Alberta's oil sands to Steele City, Nebraska, which is already linked to Cushing, Oklahoma, and the southeast Texas coast.

The project may still face challenges in court, including an appeal of the commission's decision. TransCanada said it is evaluating the ruling's impact on the cost and schedule of the project.

TransCanada first proposed Keystone XL in 2008 but it was delayed repeatedly. The administration of previous US President Barack Obama in 2015 blocked Keystone XL after years of review, citing environmental concerns.

The project was revived this year, receiving a cross-border permit from the administration of President Donald Trump on 24 March.

Opposition against Keystone XL flared most strongly in Nebraska, where the company still did not have a route approved when it pulled its state application after Obama denied the border-crossing permit. The Nebraska Public Service Commission held formal hearings on the project in August.

At a brief hearing today commissioner Crystal Rhoades made a statement in opposition to the project, saying it violates the due process of landowners. The alternative route still runs through several miles of fragile soils, she said, and that TransCanada has provided insufficient evidence for positive economic impact to Nebraska residents.

No other commissioners made statements before the vote.

Environmental groups said the vote was a partial success for those who oppose the project because it approved the "alternative route" and not TransCanada's preferred route.

Bold Nebraska, a citizen group, said opponents have the option to file an appeal in the Nebraska courts within 30 days of portions of the commission's Keystone XL approval. They could also petition the commission for a re-hearing within ten days.

The Sierra Club said the project is still unlikely to proceed because of a lack of customer support as well as an ongoing federal lawsuit which challenges the State Department's cross-border approval.

The American Petroleum Institute said the Nebraska commission set an example for how to carefully evaluate energy infrastructure projects, even in the face of strongly held views and opinions. "It's been a long path to today's approval and the commission should be commended," API president Jack Gerard said.

The Nebraska decision comes a week after a major spill on another TransCanada oil line. A large portion of the 590,000 b/d Keystone crude pipeline was shut on 16 November after a after a leak of an estimated 5,000 bl of crude in Marshall county, South Dakota.

TransCanada shut the line from Hardisty, Alberta, to Cushing, Oklahoma, and to Wood River and Patoka, Illinois. The southern leg of the system, known as Marketlink, from Cushing to the US Gulf coast was not affected.

The company is making progress on cleaning and remediating the site and the cause of the leak remains under investigation, a TransCanada spokesman said today.

Keystone XL is now the lone new TransCanada crude export project out of western Canada after the company in October cancelled its 1.1mn b/d, C$15.7bn ($11.9bn) Energy East project "after careful review of changed circumstances."

The move came after Canada's National Energy Board announced a broader review of the Energy East project, including its impact on upstream and downstream greenhouse gas emissions.

TransCanada said during its third quarter earnings call that it was encouraged by the results of a recent open season on Keystone XL. TransCanada expects shipper support to be the same as when it first applied for the Keystone XL permit in 2008 and is targeting 20-year contracts for about 500,000 b/d of the total capacity, said liquids pipeline president Paul Miller.

The company said it is reviewing the results of the open season, including some conditions requested by shippers that mostly refer to specific logistics issues.


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