Pauls Valley, OK, Pauls Valley Democrat

February 28, 2012

TransCanada ready to build Keystone XL pipeline from Cushing to the Gulf Coast

“The Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas,”

Ricky O’Bannon
CNHI News Service

Stillwater, Oklahoma — TransCanada will go ahead with a portion of the Keystone XL pipeline that will connect oil storage facilities in Cushing with refineries along the Gulf Coast in Texas.

In January, President Barack Obama denied a presidential permit for the pipeline project, citing a lack of time to evaluate environmental concerns over the pipeline crossing the Ogallala Aquifer in the Nebraska Sandhills.

However, the presidential permit is only required for an approximately 50-mile section of the Keystone XL pipeline that crosses the U.S.-Canadian border. The company does not need a permit to build a portion of line connecting Cushing to oil refineries in Houston and Port Arthur, Texas. TransCanada announced Monday it will treat the segment from Oklahoma into Texas as a stand-alone project and proceed.

The line is expected to relieve a recent glut of oil being stored in Cushing’s tank farms, where there has not been sufficient pipeline capacity to send crude oil to refineries. 

The International Energy Agency said in a report earlier this year that Cushing could gain an additional 7 million to 8 million barrels of crude stored in tank farms this year because of a lack of pipeline capacity to deliver oil farther south.

In a release Monday, TransCanada said the portion of the line connecting Cushing to the Gulf Coast is a $2.3 billion project, and it expects the line will be in service late next year, subject to local regulatory approval.

“The Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas,” said TransCanada President and CEO Russ Girling. “Gulf Coast refineries can then access lower cost domestic production and avoid paying a premium to foreign oil producers. This would reduce the United States’ dependence on foreign crude and allow Americans to use more of the crude oil produced in their own country.”

Brent Thompson, executive director for the Cushing Chamber of Commerce, said Monday he is excited about the news. Thompson said he isn’t certain what the project will mean exactly but it could mean local jobs and possibly additional tank farms.

“Probably the most positive thing about it is it opens up that Cushing-South Texas distribution line,”  he said.

Gov. Mary Fallin applauded the decision to build the pipeline Monday.

“Connecting Cushing to oil markets in the Gulf Coast will provide both an immediate economic jolt to the state of Oklahoma as well as a long-term boost to our energy sector,” she said in a statement released Monday. “This is an important, positive step forward for Oklahoma, and my thanks go out to TransCanada for its leadership on this issue.”

Jim Dunlap, who spent 16 years in the Oklahoma Legislature prior to working as a lobbyist for the Canadian pipeline company, spoke at a Cushing Chamber of Commerce event in late January. At that event, Dunlap called the project “shovel-ready.”

The pipeline, he said, would be a major boon to the Cushing and Oklahoma economy. Dunlap cited figures that Oklahoma would see 1,200 union construction jobs on the pipeline connecting Cushing to the Texas Gulf Coast. Those jobs would last a year.

The line has received national opposition amid fears of oil spills and the use of oil from Canada’s tar sands region. Stillwater resident Deanna Homer went to Washington D.C., to protest the pipeline and was one of 1,200 protesters arrested. She said Monday the oil in the line will be sold to the world market and won’t affect prices at the pump.

“There are very few of us in Oklahoma who are not for oil, and I know the whole city of Cushing is really for this and most of the legislators, too. But I feel we don’t need it,” Homer said. “It’s not for the benefit of the country, the people or the environment. It’s for the benefit of companies, and I wish we could do something about it.”

Homer argued that existing segments of the pipeline have already leaked almost a dozen times and there are few assurances about future leaks. Homer said she worried about drilling and refining tar sands crude oil, which she contends is more ruinous for the environment than traditional crude.

Deborah Hirt has seen oil spills first hand. Hirt relocated to Stillwater 18 months ago from the East Coast. While there, she worked every morning for 10 weeks washing oil-covered birds that were affected by the 2004 Athos I oil tanker spill that washed into the Delaware River.

“These things will happen and will continue to happen as long as we are dealing with oil,” Hirt said.

She said she wished politicians would see the wide-ranging damage from oil spills first hand and realize the long-lasting consequences before they approve projects like the Keystone XL.

“I personally think it’s a mistake,” Hirt said. “Quite frankly, until someone is involved in an oil spill, you don’t have a clue.”

In late January, Dunlap was asked about some of the environmental concerns surrounding the project. He acknowledged the existing line has had leaks but said those occurred at pump stations, built on three to five acres of land that the company owns. He said no oil was spilled outside TransCanada property.

Dunlap said the Keystone line is more high tech and less prone to leaks than numerous pipelines already in service. He also argued that tar sands oil burns the same way other oil does and the reputation it has been given is “another effort to discredit what’s coming down the line.”

TransCanada has built two phases of the Keystone pipeline, a 30-inch line that connects Hardisty, Alberta, Canada, with Patoka, Ill., and Cushing. The company is looking to build the third and fourth phases of the Keystone XL pipeline — named for the proposed line’s 36-inch diameter — to connect oil reserves in Cushing with refineries in Texas and to increase capacity from Hardisty to other strategic points.

TransCanada will treat the third phase as a stand-alone project, but the company also announced Monday it would reapply for a presidential permit to build the fourth section, which was a recommendation from Obama and the U.S. State Department when the initial permit was denied in January.

The Canadian company will choose an alternate route through Nebraska, which was one of the main issues for environmentalists who opposed the line.

Ricky O'Bannon writes for the Stillwater NewsPress.