Nebraska PSC approves Keystone XL's mainline alternative route

Nov. 27, 2017
Nebraska's Public Service Commission approved the proposed Keystone XL crude oil pipeline's mainline alternative route in a 3-2 vote. The new route maximizes co-location of the new system with the existing Keystone pipeline while having potential impacts on fewer miles of threatened or endangered species' ranges, PSC said in its Nov. 20 final order.

Nebraska's Public Service Commission approved the proposed Keystone XL crude oil pipeline's mainline alternative route in a 3-2 vote. The new route maximizes co-location of the new system with the existing Keystone pipeline while having potential impacts on fewer miles of threatened or endangered species' ranges, PSC said in its Nov. 20 final order.

The decision followed a more than 9-month legal process highlighted by a nearly week-long hearing in August, PSC noted. The process also included public participation with commissioners holding four public meetings on the OP-0003 docket. Public comment also was received via e-mail and in writing.

"The order speaks for itself," PSC Chairman Tim Schram said. "While we would like to thank everyone who participated in this process it would be inappropriate to comment further as legal challenges to the decision remain a possibility." Parties in the proceeding have 30 days to file appeals in the courts, he noted.

Russ Girling, chief executive officer of TransCanada Corp., the project's sponsor, said the Calgary-based company plans to evaluate the decision's potential impacts on Keystone XL's construction schedule and costs.

Officials from oil and gas associations and other groups welcomed the decision. "It's been a long path to today's approval and the commission should be commended," American Petroleum Institute Pres. Jack N. Gerard said. "[Its] action allows the Keystone XL pipeline to be built by highly trained, skilled tradesmen using state-of-the-art technologies aimed at protecting the environment and promoting the safety of our communities."

Association of Oil Pipe Lines Pres. Andrew J. Black said, "Nebraska recognizes the Keystone XL pipeline is in the public interest bringing good-paying jobs and more affordable energy for US consumers. He noted that locally in Nebraska, Keystone XL's predicted construction camp in Holt County is expected to generate the equivalent of a full year of property taxes, while sales and construction use taxes would generate $16.5 million of revenue for the Cornhusker State.

Where final decision rests

"We're pleased that the project has cleared this final hurdle, and appreciate the Nebraska PSC's thorough review and endorsement," said Karen A. Harbert, president of the US Chamber of Commerce's Global Energy Institute. "After years of government delays, the decision as to whether to move forward with the pipeline now rests with the company that will be making the investment."

Consumer Energy Alliance Executive Vice-Pres. Michael Whatley said, "This project will not only be the most efficient and safest way to move oil from Canada and the Bakken shale to markets, but according to the US Department of Energy, it will also help lower the price of fuel that all Americans-including local families and small businesses in Nebraska-use to power their daily lives."

Zachary Rogers, Wood Mackenzie's refining and oil markets research analyst, said, "Nebraska's decision today greatly diminishes the political risk for the project, likely clearing the way for increased volumes of West Canadian heavy crude to reach the Gulf Coast. The pipeline's commercial viability is strengthened as declining heavy oil production in Mexico and ongoing Venezuelan risk has recently tightened the heavy-crude market in the Gulf Coast."

Moody's Investors Service's initial response was cautious. "While today's Keystone XL pipeline approval is an important milestone, it does not provide certainty that the project will ultimately be built and begin operating," said Moody's Vice-Pres. Gavin McFarlane, who is its lead analyst for TransCanada. "Pipeline construction would negatively affect TransCanada's business risk profile through increased project execution risk, and would likely put pressure on financial metrics."