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.”