Approvals For TransCanada Tar Sand Pipeline Gets Sticky; Plus PMHSA Low-Stress Tug-Of-War And FERC Posting Edict

October 2010 Vol. 237 No. 10

Despite criticism of his company's proposed nearly 2,000-mile pipeline through six states, Robert Jones, vice president, Keystone Pipelines, TransCanada Corporation, is very confident the U.S. State Department will approve construction of the Keystone XL pipeline which would take tar sand from Hardisty, Alberta through six states, picking up conventional oil along the way, and depositing the tar and oil at Gulf Coast refineries. The Environmental Protection Agency (EPA) and Rep. Henry Waxman (D-CA), influential chairman of the House Energy & Commerce Committee, have raised questions about the pipeline.

In response partly to those concerns and others by landowners, TransCanada withdrew in August an application it had submitted to Pipeline Hazardous Materials and Safety Administration (PHMSA) asking to operate XL at a higher operating pressure. That decision came after House and Senate members questioned TransCanada's plans to use thinner steel in the pipeline if the application to operate at 80% of maximum pressure instead of 72% granted by PHMSA. Jones explains TransCanada pulled the application because it was not doing a good enough job communicating that the permit would have resulted in a safer pipeline.

The withdrawal of the "special permit" application came weeks after the EPA said a State Department draft environmental impact statement (EIS) was “inadequate.” Among concerns is potential for harm to the Ogallala Aquifer, which provides drinking water for almost 80% of Nebraskans. Waxman's objections related to greenhouse gas emissions. In a letter to Secretary of State Hillary Clinton, Waxman said, "Extracting tar sands bitumen and upgrading it to synthetic crude oil produces roughly three times greater greenhouse gas emissions than producing conventional oil on a per unit basis. Tar sands development also has devastating effects on boreal forests and wetlands, wildlife habitat, migratory bird species, water quality, and air quality. Yet the draft EIS for the Keystone XL decision fails to consider the primary environmental concern associated with the project."

Jones says he expects a final EIS from the State Department by the end of the year and construction approval soon after. State must approve construction because the pipeline crosses the Canadian-U.S. border. He points out that the Bush administration approved the Alberta Clipper and the Obama administration approved the Keystone pipeline, the only two tar sands pipelines in the U.S. He adds that approval of Keystone XL would help ensure U.S. energy security because the alternative to bringing tar sands from Alberta to Gulf Coast refineries is bringing foreign oil from places such as Saudi Arabia. On greenhouse gas emissions, Jones states that when emissions from transporting Saudi oil are figured in, GHG emissions on tar sands are only 5-15% per barrel more. He notes that Keystone XL will carry conventional oil from the Bakken basin in Montana and North Dakota, where there are pipeline bottlenecks.

The U.S. Geological Survey estimated mean undiscovered volumes of 3.65 billion barrels of oil, 1.85 Tcf of associated/dissolved natural gas, and 148 million barrels of natural gas liquids in the Bakken Shale Formation of the Williston Basin Province located in Montana and North Dakota. In late August, Enbridge Inc. said it will spend about $550 million to expand its pipelines serving oil producers in the Bakken and Three Forks formations in North Dakota, Saskatchewan, Montana and Manitoba.