Nebraska board OKs new route for oil line

LINCOLN, Neb. — Nebraska regulators Monday approved a Keystone XL oil pipeline route through the state, breathing new life into the long-delayed $8 billion project, although the chosen pathway is not the one preferred by the company that hopes to build it and could mean more time is needed to study the changes.

The Nebraska Public Service Commission’s vote also is likely to face court challenges and may even require another federal analysis of the route, if the project’s opponents get their way.

“This decision opens up a whole new bag of issues that we can raise,” said Ken Winston, an attorney representing environmental groups that have long opposed the project.

Environmental activists, American Indian tribes and some landowners have opposed the project since it was proposed by TransCanada Corp. in 2008. It would carry oil from Canada through Montana, South Dakota and Nebraska to meet the existing Keystone pipeline, where it could proceed as far as the U.S. Gulf Coast. Business groups and some unions support the project as a way to create jobs and reduce the risk of shipping the oil by trains that can derail.

President Barack Obama’s administration studied the project for years before finally rejecting it in 2015 because of concerns about carbon pollution. President Donald Trump reversed that decision in March.

The route approved 3-2 by the Nebraska commission would be 5 miles longer than the one TransCanada preferred and would require an additional pumping station. Commissioners who voted for it said the alternative route would affect less rangeland for endangered species.

TransCanada Chief Executive Officer Russ Girling issued a statement after the ruling saying the company would study “how the decision would impact the cost and schedule of the project.”

The uncertainty expressed by Girling was quickly reflected in analyst notes.

“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 Gavin MacFarlane, a vice president at Moody’s Investors Service.

TransCanada has said that it would announce in late November or early December whether it planned to proceed with building the pipeline — which would carry an estimated 830,000 barrels of oil a day — and would take into account the Nebraska decision as well as whether it has lined up enough longterm contracts to ship oil.

Withering supplies of heavy crude from Venezuela and Mexico are making U.S. Gulf Coast refineries more dependent on the thick, sticky bitumen that Keystone XL would carry from the Canadian oil sands. That’s the kind of oil those refineries were built to process.

Since the start of the decade, U.S. imports of heavy crude have fallen by more than a third from Venezuela, and by almost half out of Mexico, according to data compiled by Bloomberg. Years of underinvestment, mismanagement or simply declines in petroleum reserves have taken their toll in

both countries. Meanwhile, Mexico’s drive to lure oil majors to develop its deep-water reserves may take years to translate into more production.

Canada’s gone in the other direction, as companies have poured billions of dollars into new projects in the oil sands region where Keystone originates. U.S. imports from its northern neighbor have almost doubled since 2010, with more expected to flow if the pipeline is ever completed.

TransCanada submitted three proposed routes to the Nebraska commission. The route preferred by the company would have taken a more direct diagonal north to south path across the state and a third route was rejected because it would have crossed the environmentally fragile Sandhills area.

Keystone XL would expand the existing Keystone pipeline network, which went into service in July 2010. The current pipeline network runs south through North Dakota, South Dakota, Nebraska, Kansas, Oklahoma and Texas

and extends east into Missouri and Illinois.

More than 90 percent of Nebraska landowners along TransCanada’s preferred route have agreed to let the company bury the pipeline beneath their property, but those who oppose it have managed to thwart the project for years. Approval of the route gives TransCanada the ability to gain access to the land of holdout landowners through eminent domain proceedings. The company has said it will still try to negotiate with landowners and use eminent domain as a last resort.

Jane Kleeb, executive director of Bold Alliance, a pipeline opposition group, said her coalition still needed to review its options, but said, “We will stand and fight every inch of the way.”

Kleeb said her group believes that the U.S. State Department will have to review the project once again because it involves a new route. If that happens, the process would require additional public hearings and could take two years.

Nebraska’s Public Service Commission is composed of four Republicans and one Democrat, all directly elected by district. Kleeb said pipeline opponents plan to challenge two of the Republican commissioners, Frank Landis and Tim Schram, who voted for the alternative route and are up for re-election in the 2018 general election. The commissioners said they wouldn’t comment beyond their written statements because their decision could be subject to a court review.

Commissioner Crystal Rhoades, the commission’s lone Democrat, said in a dissenting opinion that TransCanada had failed to show the project was in the public

interest. Rhoades said she was particularly concerned that the alternative route could violate the due process rights of landowners who live along the new alternative route.

“These landowners will now have their land taken by the applicant and they may not even be aware that they were in the path of the approved route,” she said.

Opponents could appeal the Nebraska commission’s decision to a state district court, and the case would likely end up before the Nebraska Supreme Court. The commission was forbidden by law from considering a recent oil spill in South Dakota on the existing Keystone pipeline in its decision.

“This is a long and winding road,” said Brian Jorde, an attorney for the landowners. Jorde declined to specify how his clients would proceed, saying he didn’t want to reveal their legal strategy.

On Saturday, TransCanada said it sent additional crews and equipment to the site of a 210,000-gallon oil spill in South Dakota from the Keystone pipeline.

TransCanada said it is making progress in its investigation into the spill cause on farmland in Marshall County, near the North Dakota border, about 250 miles west of Minneapolis. The company did not elaborate on the cause.

Crews shut down the pipeline Thursday after discovering the leak. TransCanada said the leak was under control and there was no significant environmental impact or threat to the public.