TransCanada to push ahead with part of Keystone pipeline from Oklahoma through Texas


The Canadian firm announced that it will push ahead with plans to extend a pipeline between Cushing, Okla., and Port Arthur, Texas. (Matt Strasen/AP)

The Canadian firm hoping to build a massive oil pipeline from Canada to the U.S. gulf coast announced Monday that it will push ahead with plans to construct the segment running from Cushing, Okla., to Port Arthur, Texas, and will apply for a federal permit for the cross-border section of the pipeline.

The move by TransCanada would alleviate the glut of oil at Cushing, a major terminal, and address one of the main reasons for building the controversial Keystone XL pipeline. The $2.3 billion pipeline will transport 700,000 barrels per day starting in mid- to late-2013. Plans for the segment of pipeline crossing the U.S.-Canada border would come “in the near future” the company said.

President Obama and congressional Republicans have feuded over whether to grant a federal permit for the pipeline extension. Obama rejected the permit last month when faced with a congressionally mandated deadline of Feb. 21, though he said he supported the idea of expanding shipping capacity between Cushing and the Gulf of Mexico.

In a statement Monday, White House spokesman Jay Carney said Obama welcomes TransCanada’s plans for the southern pipeline segment, and he pledged that the new application for the cross-border section would receive a thorough assessment.

“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,” Carney said. He added that the administration would “take every step possible to expedite the necessary federal permits” for the segment.


As for the Keystone XL pipeline segment from Canada to Steele City, Neb., Carney blamed House Republicans for forcing a rejection in January “by not allowing sufficient time for important review or even the identification of a complete pipeline route.” He stressed that Obama “in no way prejudged future applications” and that the administration would base its decision to provide a permit on the completion of the review.

TransCanada’s Keystone XL proposal became entangled at the State Department, which handles cross-border pipeline proposals. But the segment of the pipeline from Oklahoma to Texas would not require State Department approval.

The company said that segment “has its own independent value to the marketplace and will be constructed as a stand-alone Gulf Coast Project, not part of the Presidential Permit process.” The company predicted that 4,000 jobs would be created to build the segment.

Proponents say the full Keystone XL project would enhance the nation’s energy supply and create short-term construction and manufacturing jobs. Foes, meanwhile, say the energy-intensive extraction of Alberta’s oil sands will accelerate climate change and express concern that the oil could spill onto sensitive habitat along its route.

“A pipeline for tar sands from Oklahoma to the Gulf will raise U.S. oil prices, send tar sands overseas and be bad for our climate and waters — just like the full Keystone XL tar sands pipeline,” said Susan Casey-Lefkowitz, director of international programs at the Natural Resources Defense Council.

Nebraska was in the middle of reevaluating an alternative route for the pipeline when Congress imposed a 60-day deadline for approval or denial of the permit and Obama rejected it, so that process is now on hold.

TransCanada said Monday that it is still working on an alternative route for the Nebraska segment so that it circumvents the environmentally sensitive Sandhills area.

All the major GOP presidential hopefuls have criticized Obama for blocking the pipeline and have pledged to approve it if elected president.

A Quinnipiac University poll released Feb. 23 showed that voters support the Keystone pipeline by 64- to 23-percent margin.

Sen. Richard Lugar (R-Ind.) issued a statement Monday blaming Obama for the firm’s change in plans.

“Americans are screaming for more affordable oil supplies,” Lugar 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.”

Opponents of the pipeline argue that relieving the glut at the Cushing terminal, which the New York Mercantile Exchange uses as a benchmark, could increase crude oil prices nationwide.

But industry supporters of the pipeline said that relieving the bottleneck of crude oil at Cushing would benefit consumers by bringing more supplies to gulf coast refineries while leading to lower prices at the pump.

“The ability to bring oil from the Cushing hub to the Gulf Coast refinery complex will have tremendous benefits for drivers nationwide,” said Michael Whatley, executive vice president of the Consumer Energy Alliance, a group that includes major producers and industrial users of oil and gas.

Steven Mufson covers energy and other financial news.
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