OTTAWA — TransCanada Corp announced Monday it would go ahead with construction of part of its Keystone XL oil pipeline that does not require US presidential approval, a stretch from the state of Oklahoma to the US Gulf Coast.
The company also said it will resubmit its proposal for the entirety of the pipeline from Canada’s oil sands to US Gulf Coast refineries that was rejected last month by US President Barack Obama, a move that sparked an election-year row over energy policy and the environment.
The new presidential permit application would include “an alternative route in Nebraska as soon as that route is selected,” as well as an “already reviewed route” in Montana and South Dakota, TransCanada said.
Construction of the leg from Cushing, Oklahoma to Texas is expected to be completed by mid to late 2013 at a cost of $2.3 billion.
Company president Russ Girling said he also hoped the lengthy environmental review of the original project will mean a shorter approvals process for the rest of the pipeline once a new route in Nebraska is determined that avoids the ecologically sensitive Sandhills area.
The White House welcomed the plan to move ahead with the Cushing-to-Texas portion of the pipeline, saying “we support the company’s interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight-year high.”
Obama’s office said in a statement that “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.”
“We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary Federal permits.”
As well, Obama said TransCanada’s re-application to build the rest of the pipeline would be “in no way prejudged” by his rejection of the original in January when he said he could not vouch for its safety by a deadline.
Obama’s political rivals had given him 60 days to make a decision on whether to approve the entire $7 billion, 1,700-mile (2,700-kilometer) pipeline route through the Great Plains to Texas, forcing him to choose between environmentalists and industry.
The Obama administration had said TransCanada could resubmit its proposal but officials were not able to assess its plan by a February 21 deadline put into law by Republican lawmakers.
The oil pipeline had turned into a major issue in US politics, with environmentalists waging months of street protests against it and the oil industry funding an advertising blitz saying the project would immediately create shovel-ready jobs amid a weak economy.
In an assessment submitted to Congress, the US State Department said TransCanada’s stated plans would result in 5,000 to 6,000 US construction jobs for two years but not lead to significant longer-term employment.
The new stretch of pipeline from Oklahoma to Texas does not involve the State Department, according to spokeswoman Victoria Nuland, “because it doesn’t cross an international border.”
But she added: “We have now received a letter here at the department from TransCanada advising us that it does intend to apply for a new presidential permit for the piece of pipeline that would cross the border.”
Nuland added: “We will make use of the work that we have already done to the degree that it is applicable to the new application.
“But we’re obviously going to have to evaluate a new application based on what’s in it and do the necessary work on pieces that are new, but also do a full consultation,” she said.
Environmentalists raised fears of an accident along the original route, which would run through sensitive terrain like the Sand Hills of Nebraska, where residents are widely opposed to the pipeline.
Girling said proceeding immediately with the Cushing-to-Texas leg of the pipeline will allow increasing crude oil production in Oklahoma, Texas, North Dakota and Montana to flow to large refining markets in the US Gulf Coast.
“Gulf Coast refineries can then access lower cost domestic production and avoid paying a premium to foreign oil producers,” he said.
“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.”
Completing the link would allow the pipeline to carry crude oil from Alberta’s tar sands, which emit an unusually high amount of carbon blamed by scientists for the planet’s rising temperatures and chaotic weather.