First leg of Keystone pipeline slated for construction as standalone project

This Sept. 19, 2011 aerial photo shows a tar sands mine facility near Fort McMurray, in Alberta, Canada. TransCanada still needs federal approval to build a pipeline from the tar sands into the United States.

/ AP/ Jeff McIntosh

Updated at 1:55 p.m. ET

The Obama administration in January rejected TransCanada's application to build the controversial Keystone XL pipeline, but the energy company announced Monday it will begin to build the leg of the pipeline that doesn't need the administration's approval.

In a release, TransCanada (TRP) announced it will proceed with the construction of an oil pipeline from Cushing, Oklahoma, to the U.S. Gulf Coast -- a portion of the Keystone project that the company says has its own independent value.

TransCanada also informed the State Department today that will re-apply for a permit to complete the entire Keystone project -- a 1,700 mile underground oil pipeline linking the tar sands fields of northern Alberta to oil refineries on the Texas Gulf Coast.

The company needs the State Department's approval for the project, since it crosses international borders. Last year, tens of thousands of people objecting to the pipeline protested in Washington against its approval. The State Department subsequently said it would take more time to review the project, but after congressional Republicans tried to force the administration's hand on the matter, Mr. Obama rejected it.

The White House said in a statement today that Mr. Obama welcomes the construction of the Gulf Coast section of the pipeline. "We support the company's interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight year high," White House Press Secretary Jay Carney said in a statement. "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."

With respect to the new application for the cross-border Keystone pipeline, 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."

Critics of the pipeline have said it is a huge environmental risk, particularly for the sensitive Sand Hills area of Nebraska. TransCanada said today that it will re-file a permit application to build a pipeline from Canada to Steele City, Nebraska, and that it will supplement the application with an alternative route through Nebraska -- avoiding the Sand Hills -- as soon as the route is selected.

TransCanada pointed out that when Mr. Obama rejected the Keystone pipeline in January, he only objected to the rushed evaluation process, not the pipeline itself.

In the official statement he gave in January regarding the pipeline, Mr. Obama essentially endorsed the construction of the pipeline's southern leg, saying, "In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security - including the potential development of an oil pipeline from Cushing, Oklahoma to the Gulf of Mexico - even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas."

TransCanada claims the Gulf Coast leg of the pipeline will create about 4,000 jobs.

Critics, meanwhile, note that turning tar sand into oil is far more energy intensive than refining conventional oil and point out that the process has already resulted in the creation of more than 60 miles of toxic holding ponds that kill birds and pollute waterways. They also argue it won't lower oil prices, since the international market will simply adjust supply to account for increased production.

In a statement, TransCanada president Russ Girling sounded optimistic about the ultimate approval of the entire pipeline.

"The over three year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross border pipeline," he said. "Based on that work, we would expect our cross border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined."

Construction on the Gulf Coast leg is expected to start around the end of March.

While the Obama White House has suggested the entire Keystone project could be approved once the new Nebraska route is found, the pipeline is still cast as a political issue.

Republican Sen. Richard Lugar, who faces a primary challenge in Indiana, released a statement Monday blasting Mr. Obama's earlier rejection of the pipeline as a "monumental dodge of responsibility."

"Americans are screaming for more affordable oil supplies," he said. "The irony is that Democratic Senate leadership is calling for more oil from Saudi Arabia even as they continue to oppose oil from Canada. President Obama has turned his back on secure, affordable oil supplies of domestic oil from North Dakota and Montana, and from our vital ally Canada."

[7ponies]

I would just LOVE to see how Obama would react to having a big'ol stinking, loud, air-land-water poluting gas fracking truck(s) & many, many weeks/months of non-stop BOOMING, RUMBLING, & GRINDING 24/7 right behind HIS home! It wouldn't happen! The rigs are so big,loud & stinking you have NO IDEA unless you've lived near where one or more are in operation. Not to mention the burn-off when the 20 to 50 ft. stacks belch black smoke & fire straight into the air for days on end. Where we live,(so far), can't see them. But, do smell them,alot. Not pleasant. It scares people, farm animals, pets, & wild life. And, the mixture the gas companies use to push the gas up & out of the earth is full of contamination. But, who cares if you happen to live in the cities. You don't have to live with it. ..(Not yet.)....Maybe alot of those folks out there will think differently when Mother Earth decides she's had enough & fights back.

[7ponies]

If this oil mess is going to be anything like what the fracking gas industry has done to our beautiful farm lands & forests in upper Penna. where my husband & I have lived for ages.....they can turn right back around! The gas companies have literally raped the land. It's a mess. They make their own roads straight across farm fields & lay barren our woods.....& poison water supplies for us & future generations. Upper Penna. will never be the same. Owners of some of these companies promise jobs for local people, when, instead, they bring their own workers from previous job sights. They get drunk & run all over our land at night, partying. The whole thing stinks. We've had enough. As for telling the farmers they will pay them for "rental"-?! of their precious land....alot of them have not been paid at all.

[daffy64]

I think Americans should be happy to support their friendly neighbours to the north. When Canada's economy booms, we have more millionaires who can vacation in Florida and give you back some of your own money.

Obammy wants to push the idea of electric cars that use 100% American fuel. Don't fall for it. Buy Canadian gas.

[daffy64]

by nearl451 February 27, 2012 9:13 PM EST
Sure but at $2.50/gallon of gas. Tar sands don't make economic sense.

-

No. But when we get oil up to $5 a gallon (after you attack Iran) we'll REALLY be in the money.

I love Americans.

[unclebernies]

These clowns don't care about anything but making money. Why would a canadien company care about the environmental impact in the US anyway.

[daffy64]

We don't care. We just get the cash and you get the slimy oil. Keep it coming. Do NOT, repeat NOT buy an electric car.

[hhandyman]

it is time to pipe it to the NORTHERN refinery rather than miles of pipeline that can leak at every booster pump that or the furthest south any pipeline should run is the northern most navigable part of the Mississippi and barge ship to the most northern refinery it can be shipped to keeping more crude as close to its source as possable and away from the ground water it can pollute.

[omded]

Do you know how many levels of containment the law requires for a project like this? At a minimum, the law will require secondary containment of all liquid vessels, with leak detection between containment levels. The leak detectors will be connected to alarms to notify everyone when liquid is detected between the primary and secontary containment vessels.

The folks who stand to gain most from this project are the "environmental" inspectors who will, between donugts, take a casual look at the systems and write up every little thing they can find. The folks who sell "enviro-protective" gadgets will make a big killing too.

If this project leaks a single drop of oil into the water table, it will be because your "environmental inspector heroes" are sleeping on the job.

The only problem here is on the "environmental" side. When you create another beauracracy, you create waste and fraud, and, the "environmental compliance industry" is as big a fraud as you'll ever find. They will milk this project to death. I'm actually a little surprised that the Canadiens are even interested in building it.

[aubfmet]

Why aren't they refining this oil in Canada instead of piping it all the way to Texas. So we have to do all of the dirty work?

[daffy64]

The sooner you Americans vote out Buffoon Obama and vote in somebody who believes in foreign oil the better! Americans should happily hand their money to us Canadians for our free health care and booming economy. That way, we can take over North America and let YOU guys in on free health care.

Obammy wants to use American energy like coal, solar, and natural gad but I'm here to tell you that Americans aren't smart enough to use their own resources.

Canadian gas is the way to go!!! There's as much in the Alberta tar sands as there is in Saudi Arabia, and you've got plenty of cash!

[JV1970]

ghostfighter-2009 The internet worldwide and these forums are open to anyone who wants to chime in no matter where they live!

[retm-w]

Pipe to the west coast in your own country, since it's going to china anyway.

[greenlantern1]

Was it in the national interest for BIG OIL to drill at the US Naval oil reserve at Teapot Dome?

[omded]

Folks, I'm hearing your arguments for building a refinery in Montana or someplace closer to the Canadien border, however, there's one problem with this idea. The refinery wouln't only need to receive its unprocessed oil, but, it would also need to deliver the processed gasoline to the places it will be used. In other words, a pipeline would still need to be constructed to transport the refined gasoline to the various population centers where it's in greatest demand. So, the pipline wouldn't end in Montana. It would continue onward. Now, if a refinery were built in Montana, then it would probably be most prudent to construct pipelines from the refinery to several different population centers - something that would require several pipes to be built instead of the one currently being planned.

The oil industry is hugely influenced by logistics, and, a huge part of logistics is the geography of our country. The reason the oil industry has chosen to build it refineries along the gulf coast is that, here the refineries can receive incoming crude oil from tankers arriving from a variety of different origins, which is where the vast majority of our oil comes from. After the oil is refined into gasoline, it is then transported all over the region for sale and use, via a network of delivery pipelines and rail routes. So, building a refinery in Montana would necessitate the construction of a large delivery network from the refinery to the tank farms at the major population centers.

A refinery in Montana would also require a means of delivering the processing chemicals that are required for the refining process.

So, while the idea of a Montana refinery makes lots of initial sense, it ultimately would not be a desireable or profitable idea. Building the pipeline as proposed would work much better.

[JV1970]

MarineVet46 It's not treason if the rancher or land owner doesn't own the mineral rights below his land.

My grandfather was a rancher but he only owned the surface rights to his land. The oil company that owned the lease in that area owned the mineral rights. The oil company had the right to come on his property at any time and drill their wells and to operate the wells that were already in operation on his property. They also had the right to build roads across his property to their wells.

The real estate laws in the state where he lived state that the oil companies must have access to their property.

My grandfather was only paid a small fee for damages to his property whenever they drilled a well or built a road. He had no legal choice but to allow the oil company access to the oil and minerals below his property. He didn't own the oil and never received a dime for the oil that was pumped out.