TransCanada chops up Keystone XL to push it ahead

Mon Feb 27, 2012 5:20pm 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.

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.

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.   Continued...

A man holds a sign at a rally in front of the Lamar County courthouse where landowner Julia Trigg Crawford is set to go to court in a battle with TransCanada over the trenching of her private property for the Keystone pipeline in Paris, Texas February 17, 2012.  REUTERS/Mike Stone