Keystone backers keep their faith in embattled pipeline plan

Mon Apr 21, 2014 7:45pm EDT
 
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By Scott Haggett and Julie Gordon

CALGARY/VANCOUVER April 21 (Reuters) - Six years after applying to build the Keystone XL pipeline, Canada's frustrated oil industry appears steadfast in its support of the plan even though Washington has again delayed a decision on whether to approve the politically charged project.

The reason is simple: A massive new pipeline to the U.S. Gulf Coast remains the most elegant solution for producers looking to export burgeoning supplies of crude from Canada's oil sands to the United States. TransCanada Corp's $5.4 billion pipeline would seamlessly pump enough crude from Alberta to Texas to meet 4 percent of total U.S. demand.

"We're definitely supportive of the project," said Brad Bellows, a spokesman for MEG Energy Corp, which produces crude from Alberta's oil sands though it has not committed to ship on Keystone. "It's good for the whole circulatory system of the energy industry."

That is not to say the latest setback for the ambitious project sits well with its backers. And the decision could build momentum behind a host of other pipelines proposals as well as plans to expand shipments of oil by rail. But those options, as currently configured, could only supplement, not replace, the export capacity of the massive Keystone project, experts say.

"There's never certainty that any one pipeline will be approved. We've made commitments to the East Coast, the Gulf Coast and the West Coast, plus rail," said Rhona DelFrari, a spokeswoman for Cenovus Energy Inc, one of the largest developers of Alberta's massive oil sands reserves. "There's always a Plan B and a Plan C as well."

"DISAPPOINTED AND FRUSTRATED"

Citing uncertainty over Keystone's route because of a legal dispute in Nebraska, the Obama administration said on Friday it would allow more time for federal agencies to weigh in on the project, setting no new deadline for comments. As a result, it is likely a decision will not occur before November elections.   Continued...