OSHOT: Regulatory delays threaten Keystone XL, Cushing MarketLink

Christopher E. Smith
OGJ Pipeline Editor

CALGARY, July 20 -- Continued regulatory delays could place the proposed 700,000-b/d Keystone XL pipeline in jeopardy, according to Robert Jones, TransCanada vice-president and manager of the Keystone Pipeline project, while speaking to reporters July 20 on the sidelines of the Oil Sands & Heavy Oil Technologies conference in Calgary. “US refiners will have to replace the oil they’re losing from Mexico and Venezuela and they will do that by whatever means they can,” he said.

Jones also noted that TransCanada’s Keystone Cushing MarketLink project, delivering 150,000 b/d of crude from Cushing to the US Gulf Coast by 2013, would not proceed without approval of Keystone XL, explaining that the economics do not work for the line as a stand-alone facility.

During his keynote presentation on Keystone XL, Jones described the pipeline as a target for environmental groups who simply oppose oil, noting that building the facilities to export the crude overseas instead, conducting those export activities, and then importing crude by truck, rail, or tanker onto the Gulf Coast would have environmental impacts, including greenhouse gas emissions, exceeding those of building and operating Keystone XL.

Addressing concerns surrounding Keystone XL’s crossing of the Ogallala aquifer, Jones noted that there are already 3,500 miles of hazardous liquids pipeline already crossing the aquifer. Keystone XL would cover a 250-mile stretch of Ogallala. Jones cited a University of Nebraska study stating that a leak from the Keystone XL would affect and area “from tens to hundreds of feet around the pipeline” and would not pose a risk to the aquifer.

Jones went on to note that the crude transported on Keystone XL would be no different from other heavy oils long-transported through US pipelines and that specifications for the crude were both widely used and broadly disseminated.

Lucian Pugliaresi, president of Energy Policy Research Foundation, emphasized both the potential job creation and the ongoing economic efficiencies Keystone XL would create during his presentation. TransCanada says Keystone XL will create 20,000 direct construction and manufacturing jobs, lead to 118,000 spin-off jobs, and inject more than $20 billion into the U.S. economy. Pugliaresi said savings gained in crude oil transport and in maximizing the match between Gulf Coast processing capacity and the crudes it could most efficiently process would alone yield $100-600 million/year.

Contact Christopher E. Smith at chriss@ogjonline.com.

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