Great Plains Tar Sands Pipelines

Plans to Get Tar Sands Crude to Texas Raise New Safety, Legal Issues

Carrie La Seur — Fri, 27 Jan 2012 16:19:17 +0000

A new article in the Austin (TX) Statesman describes TransCanada and Enbridge/Enterprise’s maneuvering to provide additional pipeline capacity from the Cushing (OK) oil terminal to the Gulf Coast, without construction of the full Keystone XL pipeline, which would expand OK-TX capacity by 830,000 barrels per day. Because there is unlikely to be full capacity on Keystone XL for many years, the OK-TX portion of the new pipeline could relieve congestion at the Cushing terminal. Options include:

Building only the Cushing to Texas portion of Keystone XL (quite possibly a NEPA lawsuit trigger, as discussed in a previous post);
Get permission from the Federal Energy Regulatory Commission to reverse the flow of the 36-year-old Seaway Crude Oil Pipeline, adding capacity of up to 400,000 barrels per day within a few years (as reported in greater detail in financial press); or
Wait until the November elections to reapply for the full Keystone XL permit (which will probably happen in any event).

That second option, reversing an old pipeline that has only carried higher quality crude, raises serious safety concerns over the suitability of Seaway to carry diluted bitumen from the tar sands. The highly corrosive nature of the product has triggered significant additional review and calls for heightened pipeline quality and safety controls. It seems unlikely that Seaway is a safe option, but the Pipeline and Hazardous Materials Safety Administration has been very hesitant thus far to intervene in ordinary pipeline operations. Calls for thorough PHMSA analysis of this proposal, before any action by FERC, are in order.

What Next on Keystone XL?

Carrie La Seur — Wed, 25 Jan 2012 11:17:33 +0000

Plains Justice has gotten several inquiries since President Obama denied the Keystone XL presidential permit application last week about what happens now. Our Magic 8 ball is warmed up and ready to answer your easy questions.

Is this whole circus over with now? Outlook not so good.
Will TransCanada reapply? You may rely on it.
Will there be more proceedings in the states? It is decidedly so.
Will landowners continue to fight eminent domain proceedings? Without a doubt.

The tougher questions are about timeline. TransCanada needs some guarantees soon about when it will have pipe in the ground and stop hemorrhaging money. There have been suggestions that Keystone XL may be segmented to avoid the need for a presidential permit. Since segmentation of a project with a major federal component to avoid Environmental Impact Statement requirements under the National Environmental Policy Act is, in a word, illegal, we expect the bright spark at TransCanada who started talking to the press about that idea to be extinguished as soon as lawyers are consulted. Either that or a pack of lawyers can count on full employment in the upcoming NEPA litigation.

Other predictions and recommendations relate to what will happen in the states. Montana alone of all the route states has a “mini-NEPA” that allows for environmental review during major project siting, and used that authority to good effect in getting much better review and conditions out of TransCanada – including pipeline access for in-state oil producers – than any other state managed. Down in Nebraska, the head of the Department of Environmental Quality recently made his way to Washington, D.C., to explain what happened in Nebraska to the (take a deep breath) U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Energy and Power.

Long story short, Nebraska retroactively decided that a little environmental review would be a good idea and rushed to do it on short time and a shorter budget. Comparatively speaking, Montana did a better job and got a better result by having a good siting law in place. So Plains Justice predicts that at least one or two other route states – Nebraska being an obvious candidate – will learn from this episode and pass some pro-active siting legislation so that they don’t wake up one morning to find another ill-advised project wreaking havoc in an ecologically sensitive area without any serious state review. We certainly recommend it.

Many people are currently making careers out of demanding that the feds get out of everything. They’d better have as good or better state level governance solutions, or radically bad projects like Keystone XL will become the norm, not the exception.

Obama Rejects Keystone XL Presidential Permit

Carrie La Seur — Thu, 19 Jan 2012 12:01:10 +0000

Certainly everyone who’s interested has heard by now, but we’d be remiss here at the Great Plains Tar Sands Pipelines blog not to note that yesterday afternoon, President Obama rejected the Congressional effort to force him to approve the Keystone XL pipeline without complete environmental review and siting changes to protect the Ogallala Aquifer and Nebraska Sandhills. Opponents and supporters are already cheering and condemning the president’s decision. We like the response by Zona Vig of Dakota Rural Action, early Plains Justice clients in South Dakota PUC proceedings to review Keystone XL, which drew attention to its many risks and flaws. DRA points out that eminent domain actions by TransCanada are still pending against landowners.

This is more than likely not the end of the project. Stay tuned.

New Pipeline Videos from Texas

Carrie La Seur — Tue, 17 Jan 2012 20:54:34 +0000

The fiesty volunteer advocates down at Stop Tarsands Oil Pipelines (STOP) in Texas just posted four new videos on the following topics:

Keystone XL: Export Pipeline

Keystone XL: Unsafe and Risky

Keystone XL: Threat to Water

Keystone XL Equals Disaster

Contact David Daniel (ddaniel@stoptarsands.org) for more information.

Is This Any Way to Site a Pipeline?

Carrie La Seur — Fri, 06 Jan 2012 16:44:38 +0000

A new story from Inside Climate news describes the enormous disparity among regulatory and taxation requirements in states along the proposed Keystone XL route. Montana, which has a relatively robust environmental permitting process and advocacy groups (including Plains Justice) that have represented route landowners from the outset, can expect $63 million in annual tax revenue from the pipeline’s 283 mile right of way in the state. Montana also required TransCanada to create an “on ramp” for local oil production as a condition for the grant of common carrier status, which TransCanada must have to be able to exercise the power of eminent domain.

Montana’s Consumer Counsel analyzed potential impacts on electrical rates at small rural electric cooperatives and extracted a commitment from TransCanada to pay for all new electrical infrastructure costs. Locals may still see rates rise as a result of the pipeline if additional costly generation is needed, but not as much as if they had to shoulder part of the cost of new utility infrastructure. Montana also responded to landowner input by forcing TransCanada to reroute more than 100 miles of pipeline, over TransCanada’s objections, and required a bond to protect Montanans against potential damages.

This is not to say that Montana’s siting process has been perfect. Many landowners and locals are still disgruntled about having the pipeline sited against their will, across the priceless Missouri and Yellowstone Rivers, when the Yellowstone was fouled by a pipeline oil spill a few months ago. But at minimum, Montana has shown the backbone to negotiate a better deal. In South Dakota, where Plains Justice represented landowners and Dakota Rural Action in the siting process, additional protective conditions were also obtained. Kansas, Oklahoma, and Texas, on the other hand, more or less abdicated their authority to protect citizens and reap tax benefits. Kansas, most egregiously, chose to give away all its tax revenue to TransCanada. Why this incentive was deemed necessary is anybody’s guess. Inside Climate’s table is instructive.

2011 in review at the Tar Sands Pipelines blog

Carrie La Seur — Sun, 01 Jan 2012 16:54:47 +0000

The WordPress.com stats helper monkeys prepared a 2011 annual report for this blog.

Here’s an excerpt:

The concert hall at the Syndey Opera House holds 2,700 people. This blog was viewed about 29,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 11 sold-out performances for that many people to see it.

Click here to see the complete report.

Montana to Give Formal KXL Approval

Carrie La Seur — Fri, 16 Dec 2011 13:00:11 +0000

The Montana governor’s office announced today that within the next few weeks, the Montana Department of Environmental Quality will give TransCanada its Major Facilities Siting Act certificate for Keystone XL. That means that if and when federal approval comes through, construction in Montana can begin immediately. The news release includes warm praise for Governor Brian Schweitzer from TransCanada’s spokesman, but no word about the reaction from Schweitzer’s actual affected constituents, landowners in eastern Montana.

KXL Bill May Affect Elections in Route States

Carrie La Seur — Tue, 13 Dec 2011 16:58:57 +0000

Congressional Republicans are revving up to reverse the gains made by grassroots advocates in Keystone XL route states, short circuit environmental and safety reviews, and force through a project for the benefit of a foreign corporation taking land from Americans by eminent domain. Rep. Lee Terry (R-NE) is the sponsor of the House version of a bill currently moving through the U.S. House to short circuit review of Keystone XL, along with 51 co-sponsors, all Republicans. This isn’t going down particularly well with the large number of Nebraskans who’ve been trying to make their voices heard on a project that puts their most precious natural resources at risk. Threats of an electoral challenge to Terry are flying. But Terry clearly doesn’t feel vulnerable with the deep pockets of his party behind him. In the Senate, 37 Republicans (including Sens. Jerry Moran (R-KS), Pat Roberts (R-KS), Dick Lugar (R-IN), John Hoeven (R-ND), David Vitter (R-LA), and Mitch McConnell (R-KY)) are co-sponsoring the counterpart of Terry’s bill.

A little farther up the route, Rep. Denny Rehberg (R-MT) has inserted language into the payroll tax bill that would require approval or denial of Keystone XL within 60 days, a move that the State Department says might kill the project outright. Letters to the editor in the Billings Gazette, the state’s main newspaper of record, are flying on this subject, most of them in favor of full review. Rehberg is giving up his House seat to challenge Sen. Jon Tester (D-MT), so KXL may become an electoral issue in Montana as well. Tester supports the pipeline with caveats. He said recently:

The Keystone pipeline will create Montana jobs and it should not have to wait 14 months for an up-or-down decision. I look forward to the project moving forward as long as TransCanada protects private property rights and as long as it is committed to the highest safety standards across rural America.

The stand-alone bill is called the North American Energy Access Act (because Chinese Energy Access Act wouldn’t sound as good). The bill would transfer jurisdiction over KXL approval to the Federal Energy Regulatory Commission, an entity with little expertise in the complex issues under review in the Environmental Impact Statement process. FERC “is an independent agency that regulates the interstate transmission of natural gas, oil, and electricity. FERC also regulates natural gas and hydropower projects.” Pipeline safety is the jurisdiction of the Pipeline and Hazardous Materials Safety Administration.

It looks like elections may be the only way to influence pipeline route legislators, but that wouldn’t change the dozens of non-route legislators who figure that promoting KXL is their business too. Why do they care so much about something that’s not happening in their states, creates few jobs, and by most reliable accounts either won’t affect domestic fuel markets or will make gas more expensive? Maybe because of the TransCanada shares held by a number of Congressionals.

TransCanada Status Report to Securities & Exchange Commission

Carrie La Seur — Sat, 10 Dec 2011 13:00:15 +0000

TransCanada’s third quarter 2011 report to the U.S. Securities and Exchange Commission provides some insight into how corporate headquarters is taking the latest twists and turns of the U.S. review of Keystone XL. TransCanada recently held two binding open seasons for contracts to ship on the Houston Lateral and Cushing MarketLink portions of the project, starting in 2013 and 2014:

The first offered capacity to attract long-term firm service contracts for crude oil transportation from Hardisty, Alberta to Houston, Texas (Houston Lateral). The approximate US$600 million Houston Lateral project would involve the expansion of capacity through the addition of pump stations and the construction of an approximate 80 km (50 mile) pipeline extension from the proposed Keystone XL System. The proposed project would double the U.S. Gulf Coast refining market capacity accessible from the Keystone Pipeline System. TransCanada Pipelines Ltd. is currently analyzing the results of the open season. Pending sufficient shipper commitments and regulatory approvals, the Houston Lateral is expected to be operational in 2014.

The second binding open season offered capacity to attract additional long-term firm service contracts for crude oil transportation from Cushing Oklahoma to Port Arthur or Houston, Texas (Cushing Marketlink). The approximate US$50 million Cushing Marketlink project uses a portion of the facilities that form part of Keystone XL including the Houston Lateral. TCPL is currently analyzing the results of the open season. Pending regulatory approvals, Cushing Marketlink is expected to begin shipping crude oil to Port Arthur in 2013 and to Houston in 2014.

These reports were filed before the November 10 news that the State Department’s decision on Keystone XL would be delayed until 2013. No portion of Keystone XL can be constructed until the environmental review is complete and the presidential permit has been issued, so these anticipated in-service dates now look unreasonably early.

The SEC report indicates that TransCanada has so far spent $1.9 billion of the anticipated $7 billion cost of the project, without ever breaking ground. The Vancouver Sun reported in mid-November on Keystone XL shipper contracts filed with the Canadian National Energy Board that require TransCanada to show by the end of 2011 that it has US approvals in place to “launch the pipeline no later than December 31, 2013.” Analysts can only speculate as to whether shippers will be willing to hold out for Keystone XL capacity – now looking more distant than ever – while alternatives gain momentum (such as Kinder Morgan’s TransMountain expansion to the West Coast of Canada, and Enbridge’s Wrangler and controversial Northern Gateway proposals).

Time alone may strangle Keystone XL, as the operational date drifts farther into the future.

Tar Sands Pipeline to BC Delayed

Carrie La Seur — Wed, 07 Dec 2011 16:15:51 +0000

The Calgary Herald reports that approval of TransCanada’s Plan B for Keystone XL – the Northern Gateway pipeline to the British Columbia coast – will be delayed at least until 2013. The joint review panel that is collecting information about the proposal had originally planned to release its environmental assessment and make a decision in 2012, but that timeline has changed. With 4300 intervenors submitting comments, the panel has a heavy burden to review all the information before it. TransCanada declines to speculate on whether this delay will push back the target operational date of 2017 for Northern Gateway.

This delay lends legitimacy to the U.S. State Department’s decision to lengthen its own review and approval timeline. The pipeline projects affect vast distances and raise complex issues. Consideration cannot be rushed. With the Northern Gateway and Keystone XL decisions now expected around the same time, the politics can only get more interesting. It also seems possible that analysis done on each project will begin to cross over and inform review in the other country.