Battle lines on KXL harden in Nebraska
‘IF IT WAS NORMAL CRUDE, WITHOUT THE DILUENTS, I WOULDN’T HAVE A PROBLEM WITH IT’
William Scheele’s front porch looks out on t he t own where he has lived for 47 years, where he served as mayor for 14 of those years and which he says is dying.
Steele City, a hamlet of 55 people on Nebraska’s southern border with Kansas, had a population of more than 300 in the 1930s, Scheele said, but bank branches, businesses, jobs and residents have left, leaving the town facing a number of funding issues.
Scheele s ai d t he ci t y received an ec o n o mic boost when Calgary- based TransCanada Corp. built a pumping station for the southern leg of its Keystone XL pipeline roughly a mile up the hill from his house. “They brought business to town,” he said, adding the company also helped pay for the town’s small fire hall.
Now Steele City needs funding for a new water line from the nearby town of Endicott and Scheele said he’s hopeful the long- delayed northern portion of Keystone XL, which will connect to the southern leg here, will help provide some money. “I’m kind of looking forward to it,” he said.
To reach that point, howe ver, TransCanada will need to cross the farms of 90 landowners who oppose the pipeline, and receive approval from the Nebraska Public Service Commission, which heard f i nal arguments for and against the US$8-billion Keystone XL in Lincoln last week. Nebraska is the last state to rule on the project.
The regulatory hearings for the pipeline may be finished — after a prolonged nine-year process in the U. S. — but the drama is far from over.
Multiple landowners in the group of 90 told The Financial Post they plan to appeal if the commission approves the project. Some have also put obstacles in the pipeline’s path for TransCanada to remove if the northern leg is sanctioned in November, when a decision from the five-person Nebraska Public Service Commission is expected.
It is also possible that TransCanada may for the second time be asked to reroute the pipeline through Nebraska to further avoid an area called the Sand Hills, where porous soil could worsen the impact of an oil spill and where the water table is exceptionally high.
The company submitted a preferred route and alternate routes in its application to Nebraska and David Domina, an Omahabased attorney acting for the landowners, argued the line could be moved.
“It could be in the public interest in our state to designate an area of the state where major oil pipelines must pass through,” Domina said while cross-examining a TransCanada executive.
He specifically referred to the existing, smaller Keystone pipeline in the eastern part of the state and suggested TransCanada should relocate Keystone XL next to it. After the hearings, Dom- ina tweeted that TransCanada had spent billions on the project so far, but “put on a weak case where it had a chance for best facts forward.”
In response, TransCanada spokesperson Matthew John said Keystone XL’s merits were without question and both the U. S. State Department and the Nebraska Department of Environmental Quality “evaluated exhaustively” the preferred route.
“This application has been shaped by direct, ont he- ground i nput f r om Nebraskans,” John said in an email, adding that more than 90 per cent of landowners on the route have signed voluntary easements with TransCanada. “The thousands of Nebraskans we have met over the last eight years understand the value of this project and what it means to the state,” he said.
The state’s public service commission will not consider the potential for oil spills in making its decision, because Keystone XL already has a federal environmental permit. The commission will instead consider the benefits to the state versus the impact on landowners, which Domina’s team argued were substantial.
“Our biggest concern is the perpetuity,” said Earl Miller, a landowner from Holt County opposed to the pipeline.
He said a pipeline on his land would halve its current estimated resale value of US$ 1,900 per acre because fewer buyers would be interested in property that has a permanent heavy- oil pipeline easement.
S i mil ar l y, Jim Car l - son said he’s concerned TransCanada is offering a one- time payment — more than US$300,000 in his case — for a permanent easement on his 1,000- acre corn and soybean farm in Merrick County.
Carlson said he wasn’t initially opposed to the pipeline, but joined with other farmers and anti- pipeline advocacy group Bold Nebraska when he learned it would carry diluted bitumen from Canada’s oilsands rather than light oil.
“If it was normal crude oil, without all the diluents they have to put in it, I wouldn’t have a problem with it going across my farm,” he said.
Carlson, in partnership with Bold Nebraska, recently installed solar panels on his farm directly in the path of Keystone XL’s planned route as a symbolic obstacle, “so the public would know that it was put in the pipeline’s path so they’d have to tear out renewable energy.”
Other landowners plan to do the same. Robert Allpress, a rancher in Keya Peha County, will be installing solar panels on his land this week for the same reason.
“They represent clean energy versus oil i nfrastructure energy,” he said. “If TransCanada ever does get the permits, they would have to destroy a solar array to run their pipeline across our ranch.”
Asked how the company would deal with the solar panels obstructing its path, TransCanada’s John said the company would co- operate with landowners “to ensure any site- specific concerns are addressed proactively.”
He also said TransCanada’s power business has substantial wind and solar generation interests.
Many l andowners also said they thought the benefits of the pipeline would flow back to Canada, rather than the U. S.
Domina argued during the hearings that the jobs created by the pipeline’s construction were temporary and, given the depreciation of the pipeline, the state tax benefits were temporary, too.
David Barnett, who represents the union of pipefitters that would build Keystone XL, said describing the jobs as temporary mischaracterizes how tradespeople work.
“A career in construction is made up of a series of temporary jobs,” he said. “We know when we take a job that there’s an end to it shortly down the road, but we also expect there’s going to be some other construction coming after that — that’s what keeps us going.”
Barnett said his members have experienced a period without work in the time that Keystone XL has been delayed.
Keystone XL was initially expected to be in service by 2012, but has been delayed a number of times and, given the project’s timelines discussed on TransCanada’s most recent earnings call, it may not be shipping oil until 2020.
The company expects to make a decision on building the line by the end of this year, after the Nebraska Public Service Commission renders its decision and after shippers have contractually committed to the line.
Then it will t ake approximately six months of preparatory work before the two- year construction process begins — a timeline that puts the in- service date around the middle of 2020.
Back in Steele Ci t y, Scheele said he’s aware some Nebraskans are opposed to the project, but said the alternative is to move it by train and “most people feel it’s more dangerous to train it.”
He pointed out there are other oil pipelines that run through Nebraska, including the Platt and Pony Express pipelines and the existing Keystone mainline.
“What t he hell i s one more going to hurt?”
THEY REPRESENT CLEAN ENERGY VERSUS OIL INFRASTRUCTURE ENERGY. IF TRANSCANADA EVER DOES GET THE PERMITS, THEY WOULD HAVE TO DESTROY A SOLAR ARRAY TO RUN THEIR PIPELINE ACROSS OUR RANCH. — ROBERT ALLPRESS, NEBRASKA RANCHER Geoffrey Morgan in Steele City, Neb.