TransCanada chops up Keystone XL to push it ahead
Mon, Feb 27 17:20 PM EST
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By Jeffrey Jones and Roberta Rampton
CALGARY/WASHINGTON (Reuters) - TransCanada Corp said on Monday it will build the southern leg of its $7 billion Keystone XL oil pipeline first, skirting a full-blown U.S. review and giving President Barack Obama ammunition to hit back at Republicans who have blasted his energy policy.
Building the portion of the contentious pipeline that would run to Texas refineries from the Cushing, Oklahoma, storage hub before the northern section would help remove a pinch-point that has led to deep price discounts for U.S. and Canadian crude and forced refiners to rely more heavily on imports.
In a press release, the Canadian pipeline company TransCanada said that it will move forward with construction of the southern half of the Keystone XL tar sands pipeline from Cushing, Okla., to Texas refineries and reapply for a cross-border permit for the northern half of the pipeline from the Alberta tar sands down to the mid-west.
TransCanada said it wants the $2.3 billion southern leg in service by mid- to late 2013. It said construction would create 4,000 U.S. jobs, compared with its previous estimate of 20,000 for the overall project, a figure environmental groups disputed.
The company also wrote to the U.S. State Department on Monday detailing plans to refile an application shortly for the remainder of line running to Steele City, Nebraska, from the Canada-U.S. border, reminding officials that much of the environmental assessment work is already done.
The development in the long-running battle over the pipeline comes as Obama seeks to fend off Republican jibes about quashing the project, with surging U.S. gasoline prices and a push for job creation among top election issues.
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2. To agree; to harmonize.))
Obama rejected the initial Keystone XL application in January after more than three years of study, saying it needed more environmental review than could be completed before a tight deadline that had been set by Congress.
The White House welcomed the move, and said it would work to expedite permits for the southern portion of Keystone XL, which in its entirety is widely criticized by environmentalists for its route near underground water supplies in Nebraska and its potential to fuel more development of Canada's oil sands.
"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," White House Press Secretary Jay Carney said in a statement.
One benefit to TransCanada of building the 700,000 bpd Cushing-to-Texas portion is the elimination of a lengthy State Department approval, as the line would not cross the Canada-U.S. border. That is where the project stalled in January.
For the northern portion that still requires the agency's green light, TransCanada believes it can have a new route finalized with the state of Nebraska by October or November of this year, Alex Pourbaix, the head of the company's pipeline division, said in an interview.
Given environmental work done to date, the State Department could make its decision as early as the first part of next year, Pourbaix said. That would mean startup in 2015.
The department said it would have to see the application before it could talk about timelines.
"The hope is that it could be more expeditious because we could make use of the work that we've already done, but we still have to do this right and we still have to allow an opportunity for input from all of the folks who we are mandated to allow to have an opinion," State Department spokeswoman Victoria Nuland said.
COOL RESPONSE FROM REPUBLICANS
A chopped-up project comes as cold comfort to Canada's oil sands companies, which have been struggling with widening price discounts for their burgeoning output, partly due to tight export pipeline capacity.
Ottawa has lobbied Washington intensively to move Keystone XL forward as a way to increase returns for one of the country's most lucrative exports. Since it was rejected, the Canadian government has pushed hard for a new export route to the West Coast, where the crude could be shipped to Asia.
That has spurred warnings, especially from Republicans, that China would be the ultimate winner in the debate.
"Under this administration, this is perhaps the best that can be done right now to help move domestic supply to Gulf Coast refiners," said Republican Senator David Vitter of Louisiana.
But completing the whole line is essential to bringing in Canadian oil to offset Middle East imports, Vitter said.
Republicans in Congress vowed to continue their battle to legislate approval for the entire project as part of a highway and infrastructure funding bill.
The full Keystone XL project would extend 1,661 miles to the Port Arthur, Texas, area from Hardisty, Alberta, moving 830,000 barrels a day. Canadian approval is already in hand.
http://maps.google.ca/maps?f=q&source=s_q&hl=en&geocode=&authuser=0&q=Cushing,+OK,+United+States&aq=0&oq=Cushing&vps=5&sll=4.717067,-74.115572&sspn=0.045336,0.055189&vpsrc=0&g=Bolivia,+Bogota,+Colombia&ie=UTF8&hq=&hnear=Cushing,+Payne,+Oklahoma,+United+States
The Gulf Coast portion would help lessen a glut of oil supply at Cushing, a major factor cited for deep price discounts on land-locked North American oil compared with international grades, such as the Brent benchmark.
In the past month, the spreads, especially on Canadian and North Dakota crudes, ballooned, in some cases to record levels, due to tight pipeline space and surging production.
The segment would compete with the Seaway pipeline, run by Enbridge Inc and Enterprise Products Partners.
A reversal in the direction of flow in that line is expected to be completed by June, allowing 150,000 bpd to move to Houston-area refineries. The companies have talked about expanding it to as much as 800,000 bpd.
Pourbaix said he believes that there is more than enough forecast new supply at Cushing - up to 2 million barrels a day - to accommodate both projects.
It is unlikely TransCanada's conduit would run at capacity until the rest of Keystone XL gets built, UBS Securities analyst Chad Friess said.
"I would expect that the returns on this initially will be quite low," Friess said. "I don't think that in the end it will really change anything, other than what's been changed by the cost overruns that have happened so far."
TransCanada shares rose 39 Canadian cents, or 1 percent, to close at C$42.39 on the Toronto Stock Exchange.
Environmental groups were upset that a portion of a project they have fought hard against for more than a year appears to be moving ahead, calling it a "piecemeal gimmick."
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"Even though this doesn't bring new oil in from the tar sands, we stand with our allies across the region who are fighting to keep giant multinational corporations from condemning their lands," Bill McKibben, founder of 350.org, said in a statement.
"This fight is uniting people, from environmentalists to Tea Partiers, in all kinds of ways."
(Additional reporting by Jeff Mason and Ross Colvin in Washington; Editing by Rob Wilson)
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Keystone oil pipeline bill fails in Senate
Thu, Mar 08 20:25 PM EST
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By Roberta Rampton and Jeff Mason
WASHINGTON (Reuters) - Senate Democrats on Thursday defeated a Republican proposal to give a permit to the Keystone XL crude oil pipeline in a vote that will give Republicans more ammunition to criticize President Barack Obama's energy policies on the campaign trail.
Republicans argue the pipeline, which would ship oil from Canada and northern states to Texas, would create jobs and improve energy security at a time of surging gasoline prices.
Obama put TransCanada's $7 billion project on hold earlier this year pending further environmental review. He took the unusual step of calling some senators personally ahead of the vote, asking them to reject the proposal.
"He understood that a majority of the American public, a majority at least in the Senate, are strongly in favor of this project," said Senator Richard Lugar, the top Republican on the Senate Foreign Relations committee, who sponsored the bill to take control of the pipeline decision away from Obama.
The Republicans tried to advance their plan as an amendment to a highway funding bill. It failed on a vote of 56-42, four short of the 60 needed to pass, although 11 Democratic senators voted with the Republicans.
Republicans are using the proposal to highlight Obama's delay of the project ahead of November presidential and congressional elections, linking his decision to rising gasoline prices.
"We're going to continue this fight," said Republican Senator John Hoeven of North Dakota, who championed the bill.
He told reporters he hoped the measure might still be attached to the highway funding package when the Senate and House of Representatives work on a final version.
"With gas prices going up every day, with what's going on in the Middle East, I'll tell you what: the pressure is just going to increase on the administration to get this project done," Hoeven said.
Obama has supported construction of the southern leg of the pipeline, and his administration will assess a new route around an environmentally sensitive area of Nebraska once it has been identified, said White House spokesman Clark Stevens.
"Once again, Republicans are trying to play politics with a pipeline project whose route has yet to be proposed," Stevens said. The entire project will take more than two years to build once permits are granted.
GREEN GROUP: 'TEMPORARY VICTORY'
The Keystone amendment was among 30 measures - many of them energy-related - being voted on as the Senate pushes in coming days to renew funding for highways and other infrastructure projects, slated to run out at the end of March.
Earlier, the Senate defeated proposals to expand the area available for offshore oil drilling and extend the time for manufacturers to phase in new pollution regulations set by the Environmental Protection Agency for industrial boilers.
But the Keystone amendment attracted the most attention. The pipeline would carry crude from Canadian oil sands to Texas refineries and would also pick up U.S. crude from North Dakota and Montana along the way.
Environmental groups have fought the project, staging large protests last year that pressured the Obama administration to block approval.
"Today's vote was a temporary victory and there's no guarantee that it holds for the long run," Bill McKibben, founder of 350.org, said in a statement.
"We're grateful to the administration for denying the permit and for Senate leadership for holding the line."
With a 34-64 vote, senators also defeated a proposal from Democratic Senator Ron Wyden that would have blocked exports of oil from the pipeline, as well as refined products made from that oil.
Wyden said lawmakers need to carefully think through projects that would increase exports of oil, fuel and natural gas, lest the exports end up boosting prices for Americans.
"This is just a step in what is clearly going to be an extensive debate," Wyden told Reuters after the vote.
Democratic senators who voted for the Republican Keystone plan included Max Baucus and Jon Tester of Montana, Kent Conrad of North Dakota, Bob Casey of Pennsylvania, Claire McCaskill of Missouri and Jim Webb of Virginia.
Two Republican senators were absent, and all the 45 who were present voted for the amendment.
(Additional reporting by Thomas Ferraro; editing by Mohammad Zargham and Todd Eastham)
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FACTBOX - Changes to Canada's environmental reviews
17 Apr 2012 18:49
Source: reuters // Reuters
April 17 (Reuters) - Canada will streamline the way it performs environmental reviews on major industrial projects in a bid to speed the development of mines and pipelines, the government said on Tuesday.
The federal government now will focus only on major reviews, handing over responsibility for some projects to Canada's 10 provinces, while ensuring each proposed development is assessed only once and imposing timetables on reviews.
Below is a list of some of those planned changes:
* Concentrate responsibility for environmental reviews on the National Energy Board (NEB), Canadian Nuclear Safety Commission (CNSC) and the Canadian Environmental Assessment Agency
* Impose a 24-month limit for panel reviews of planned projects, 18 months for NEB hearings and 12 months for standard environmental assessments
* Government to have responsibility for making go/no go decisions on major projects based on NEB's recommendations.
* Provincial reviews that meet the requirements of the Canadian Environmental Assessment Act can be substituted in place of federal reviews.
* Canada's provinces, the National Energy Board and the CNSC can issue authorizations under the federal Fisheries Act.
* Projects regulated by the NEB or CNSC will not be subjected to joint review panel reviews.
* Federal environmental assessments to focus on major projects.
* Required aboriginal consultations will be included in the review process.
(Reporting by Scott Haggett; Editing by Bernard Orr)
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Alberta to push on Keystone pipeline, bigger markets
24 Apr 2012 21:15
Source: reuters // Reuters
By Scott Haggett and Jeffrey Jones
CALGARY, Alberta, April 24 (Reuters) - Alberta remains a strong supporter of its oil industry after a provincial election that left the Progressive Conservatives in power to focus on new markets for Canadian crude and to try to persuade Washington to let the Keystone XL Pipeline go ahead.
The Conservatives, led by Alison Redford, won 61 of 87 seats in the provincial legislature in Monday's election, capturing 44 percent of the popular vote despite lagging in opinion polls throughout the campaign.
The victory came despite lingering resentment in the powerful oil industry over an attempt four years ago by Redford's predecessor as premier, Ed Stelmach, to raise royalties on oil and gas production.
That pushed many angry oil and gas producers into the arms of the new Wildrose Party, where they offered enough support to turn a right-wing splinter group into the Conservatives' main challenger in the hard-fought election.
It's a lesson the Conservatives are unlikely to forget as they seek to boost oil and gas output and find new markets for rising output from the province's oil sands.
"You don't take on big oil. The Conservatives have learned that," said Peter McCormick, a political science professor at the University of Lethbridge in southern Alberta. "So (Redford) won't. The royalty issue is dead."
The Conservatives, however, actually increased their share of the vote in Calgary, where most of Alberta's energy industry is based, winning 20 of the city's 24 seats in the legislature.
"We expect the focus of the government will be on maintaining a stable, healthy economy, one that continues to attract investment to our province, provides good jobs and improves Alberta's overall quality of life," the Canadian Association of Petroleum Producers said in a statement.
"Alberta has the opportunity to 'set the tone' and demonstrate leadership for policy and regulation that enables responsible oil and gas development."
Indeed, Redford used her first news conference after her victory to re-affirm her support for the industry.
She said she'll keep pushing the U.S. Obama Administration approve TransCanada Corp's Keystone XL pipeline to move crude from the oil sands to the Gulf Coast.
"We'll continue doing the work that we've done with the proponents of the project, with the Canadian ambassador in Washington, with our own representatives in Washington and Chicago to make sure we're advancing Alberta's position with respect to the pipeline," Redford told reporters.
"That is critical to what we do as we move forward because that is how we'll succeed in continuing to open up our markets."
Redford, who took over as premier in October following Stelmach's departure, campaigned on promises to increase Alberta's role within Canada and to boost support for increased oil sands production through a national energy strategy. That strategy would both push oil sands crude into Eastern Canadian markets now served by foreign oil and see new pipelines built to the Pacific to serve Asian markets.
"Now she'll have to put some meat on the bones of the national energy strategy that she campaigned on," said Andrew Leach, a business professor at the University of Alberta.
"She campaigned on the premise that you could get the other Canadian provinces and more of the Canadian people on side with oil sands development as a national priority. That's probably at job one, and job two is doing the same thing in the U.S."
Alberta, Canada's richest province, derives about a third of its revenue from its vast reserves of oil and gas. Its oil sands are the world's third-largest crude storehouse, and it is the single biggest supplier of energy to the United States.
Redford's support for a greater role for Alberta within Canada was in contrast to the policies of the Wildrose Party, led by Danielle Smith, a 41-year-old former journalist.
Like the Conservatives, Wildrose backed increased oil and gas production and promised to trim regulations on the industry. But it also wanted Alberta to limit its participation in federal programs such as the Canadian Pension Plan and to replace the Royal Canadian Mounted Police with a provincial force.
Observers say Smith's refusal to censure two candidates who made racially charged and anti-homosexual statements damaged the party, as did her statements that man-made global warming had yet to be proven.
"The people in Calgary and Edmonton who know how important the oil sands are to us ... were shaking their heads and thinking 'We cannot have a woman who denies climate change representing us in Ottawa, New York and Washington'," said Bruce Cameron, president of polling firm Return on Insight.
"So that the extremism that was tolerated by Danielle Smith became something that was economically scary."
Smith's party ended up with 17 seats and 34 percent of the vote as many voters who backed the moderate Liberal Party and the left-wing New Democrats voted Conservative to block a Wildrose victory. (Reporting by Scott Haggett; Editing by Janet Guttsman; and Peter Galloway)
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