Keystone pipeline’s southern leg to begin transporting oil to U.S. Gulf Coast


The northern section of the controversial TransCanada project is still awaiting U.S. government approval. (Brett Gundlock/Bloomberg)

TransCanada will start shipping crude oil through the southern leg of the Keystone pipeline Wednesday, easing the bottleneck at the sprawling storage-tank farms in Cushing, Okla., and feeding refineries on the Texas Gulf Coast.

But the company is still waiting for the State Department to decide whether to issue a permit for the 1,179-mile northern leg that would carry predominantly heavy oil from Canada’s oil sands, cross the border in Montana and run to the small town of Steele City, Neb. There it would connect with existing pipelines.

In recent weeks, TransCanada has been testing the pipeline’s southern portion, now called the Gulf Coast Pipeline. Because it does not cross an international border, that section did not require State Department approval. It received approvals from the Army Corps of Engineers. As recently as last week, TransCanada was still digging holes and making adjustments in Texas, informing one landowner that it was installing temperature gauges on a segment of the pipeline in the northern part of the state.

Foes of the $5.3 billion project are still fighting TransCanada. They have filed a lawsuit in Nebraska and one in Texas, where they have appealed to the state Supreme Court. And they have taken advantage of the public comment period to file criticisms of the State Department’s draft environmental-impact statement, which was issued March 1.

Texas landowners on Wednesday are launching a new oversight network — Texas Pipeline Watch — to ensure rapid detection of any leaks or other mishaps. They said they are worried about potential flaws in the pipeline, saying that the Pipeline and Hazardous Materials Safety Administration lacks adequate numbers of inspectors. In September, the agency told TransCanada that it had observed dents in the line and that the company had “failed to use properly qualified welders.”


Map of the Keystone XL pipeline

“We’re going to be watching these things,” said Julia Trigg Crawford, a north-Texas landowner who has been fighting a losing battle in state courts. “We’ll be taking measurements and testing water. Usually their fancy-schmancy detection systems are not what discover leaks. It’s ordinary people. This is like a giant neighborhood watch.”

TransCanada spokesman Davis Sheremata said in an e-mail that the high number of repairs were due to “the heightened standards for pipeline integrity” beyond what other pipelines would have bothered to fix. He said the discovery of flaws had led to the replacement of 700 feet of pipe, just 3/100ths of 1 percent, “a sign that our inspection programs work. Our extensive testing and inspection looked at every piece of the pipeline, every weld and the facilities that support it.”

Meanwhile, the outlook for a State Department decision remains murky. Last week, before a meeting with Canada’s foreign minister, Secretary of State John F. Kerry said the department still had to complete its final environmental-impact statement.

“An analysis will be made with respect to the national interests ultimately, and we’re just not at that point yet,” Kerry said before meeting with John Baird. “I haven’t received it. They haven’t finished it.”

The State Department is working on its second environmental impact statement after controversy discredited an earlier version and after TransCanada submitted a revised pipeline route to avoid more of the ecologically sensitive parts of Nebraska and more, but not all, of the enormous Ogallala Aquifer.

“I can promise our friends in Canada that all the appropriate effort is being put into trying to get this done effectively and rapidly,” Kerry added. “And my hope is that before long, that analysis will be available, and then my work begins.”

The current draft environmental-impact statement said, among other things, that the pipeline would have limited climate impact because oil from Canada’s tar sands, which require more energy to tap and therefore emit more greenhouse gases, would reach U.S. refineries anyway via railroads.

The amount of oil being transported by rail has soared. The Association of American Railroads reported that in 2013 the number of carloads of petroleum and petroleum products jumped 31 percent over the previous year.

But there has been a spate of railroad accidents involving oil shipments in the past few weeks, including the Monday derailment of seven cars from a CSX train that was crossing a rail bridge to the Philadelphia Energy Solutions refinery, partly owned by the Carlyle Group. The accident closed down the Schuylkill Expressway. CSX said that it has removed one oil-tank car and that it needed to transfer oil from five others. An additional car was carrying sand, a safety measure to put some distance between hazardous cargo and the locomotive.

No oil was spilled, but the incident frightened local residents and officials. A collection of environmental groups said the oil trains were putting lives at risk in an urban area that includes a hospital and university buildings. Iris Marie Bloom, director of Protecting Our Waters, a Philadelphia-based grass-roots nonprofit group, said she lives “just blocks” away and called the accident “truly terrifying.” She said the rail shipments were “oil bomb trains.”

Other accidents have happened in recent months involving railroad shipments of oil. In July, an accident in Lac-Megantic, Quebec, killed 47 people. On Dec. 30, an oil train spilled 400,000 gallons and caught fire after hitting a derailed train near Casselton, N.D. And on Jan. 7, a derailment in the Canadian province of New Brunswick near Maine triggered a fire and forced the evacuation of about 150 residents.

On Thursday, Transportation Secretary Anthony Foxx met with top railroad executives to discuss ways to cut the risk of accidents.

“Obviously all of us can and must do better,” said CSX spokesman Gary Sease.

Steven Mufson covers energy and other financial news.
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