Nebraska commission approves final permits for Keystone XL in close vote

Published on: November 20, 2017

CALGARY – After nine years of regulatory reviews, TransCanada Corp. now has the approvals it needs to build its long-delayed and much-debated Keystone XL pipeline.

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The Nebraska Public Service Commission voted three to two Monday in favour of the 830,000-barrel-per-day pipeline crossing through the state.

The commission’s approval was not for TransCanada’s preferred route, but for a slightly longer alternative that could prove more difficult and costly to build. It was unclear whether the company will decide to pursue the project as it considers the commercial viability.

TransCanada did not immediately respond to a request for comment on the commission’s vote. Nebraska was the last state to formally approve the pipeline, which also has federal clearance after U.S. President Donald Trump signed an executive order approving it earlier this year.

The decision comes just four days after a rupture in the existing Keystone pipeline also owned by TransCanada leaked an estimated 5,000 barrels of crude oil in a rural part of northeast South Dakota.

But the commission’s decision focused narrowly on whether the pipeline is in the public interest, not environmental issues, which it is not allowed to consider.

TransCanda stock rose as much as 2 per cent to the session’s high of $63.80 after the decision, while the broader Canada stock index was up 0.2 per cent.

The commission includes Frank Landis, a lawyer first elected in 1988; newly elected Mary Ridder, a cattle rancher from the state’s ecologically sensitive Sandhills region; Rod Johnson, a former Republican state legislator; Tim Schram, a former county commissioner; and Chrystal Rhoades, who has worked with a variety of community organizations.

In her dissent, Rhoades said she opposed the pipeline regardless of the route. She said that the pipeline was not in the state’s public interest, that jobs would not go to Nebraskans, that it would create “significant burdens” on landowners whose use of the pipeline corridor would be limited, and that she was still worried about the environmental impact.

This is the equivalent of asking a distant relative for permission to do a major construction in your backyard

 

“All human-made infrastructure degrades and fails over time,” she wrote. “No infrastructure ever designed has lasted for eternity and there is no reason to believe this pipeline will be an exception.” Rhoades acknowledged that the commission was not supposed to weigh the risks of spills, but she said the state’s Department of Environmental Quality had included it in the record.

• Keystone pipeline leaks 5,000 barrels of oil in South Dakota, just days before Nebraska decides its fate
• ‘What the hell is one more going to hurt?’: Nebraska remains divided over Keystone XL
• Keystone XL hearings turn to dirt — a vital issue in U.S. agricultural heartland

While TransCanada has promoted the pipeline project as a jobs creator, Rhoades said that “there was no evidence provided that any jobs created by the construction of this project would be given to Nebraska residents.”

She also said that TransCanada had failed to consult Nebraska’s Native American tribes. She noted that the company said it had consulted with the Southern Ponca Tribe, but Rhoades said that resides in Oklahoma. “This is the equivalent of asking a distant relative for permission to do a major construction in your backyard,” she wrote.

For TransCanada, the Nebraska approvals clear the way for construction to begin in the spring of 2018 and the line could begin shipping oil from Alberta to the U.S. Gulf Coast by 2020.

It’s also the last step in a long process that began in 2008 when TransCanada first announced the project but had been delayed multiple times by former U.S. president Barack Obama, who ultimately rejected the pipeline in 2015.

TransCanada responded by suing Washington for US$15 billion and challenging the president’s authority to reject the line, after Congress had already approved it. Trump’s approval reversed Obama’s rejection.

Now, despite opposition from a minority of landowners in Nebraska and environmental groups, the project is likely to be built.

TransCanada liquids pipeline president Paul Miller said during the Calgary-based company’s third quarter earnings call this month it had received enough support from oil companies who would ship their crude on the line to proceed with the project. The company had been seeking commitments of roughly 500,000 bpd.

The company has yet to officially sanction the project but is widely expected to do so as Canada’s oil export pipelines are full and more domestic crude is being exported from the country on rail cars.

Research from AltaCorp Capital published in October shows that crude-by-rail shipments this year are on pace to match a record of 53 million barrels set in 2014 as a result of pipeline restrictions.

Alberta Premier Rachel Notley said Friday that pipelines remain the safest way to ship oil, notwithstanding the fact that TransCanada’s existing Keystone pipeline network leaked 5,000 barrels of oil in South Dakota just days before the decision in Nebraska.

“The timing was not great but it doesn’t actually negate from the fact that pipeline transportation continues to be the safest way to move this product when comparing it to the other options,” Notley said Friday.

The spill will take months to clean up, a state official said on Friday. TransCanada said it had contained the leak in the town of Amherst, South Dakota, and was investigating the cause. It said the pipeline will be shut until it gets approval to restart from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA).

That pipeline leak is likely to embolden opposition to the pipeline as TransCanada gets closer to building the project.

Environmentalists opposed to Keystone XL vowed “the fight’s not over yet” for the project and indicated their willingness to pressure banks to withhold funding for the project.

“Banks should drop TransCanada unless they want to get caught up in the controversy around the pipeline,” Rainforest Action Network Jason Disterhoft said in a release Friday.

With files from the Washington Post and Reuters