TransCanada files new application to build controversial Keystone XL pipeline

CALGARY – TransCanada is taking another crack at winning a permit to build its controversial Keystone XL oil pipeline after the Obama administration nixed an earlier iteration — a development that has opponents gearing up for another fight.

The Calgary-based company (TSX:TRP) said Friday it has filed a new application with the U.S. State Department for a segment of pipe between the Canada-U.S… border and Steele City, Neb.

The proposal, loathed by environmentalists for the oilsands crude it would carry and the danger of a spill in the American heartland, has been dealt numerous setbacks since the process began around four years ago.

“There’s no question there’s been surprises, no question I’ve been disappointed at the pace and some of these events,” CEO Russ Girling said in an interview from Toronto.

“But that said, it’s pretty clear that this project is in the national interest of both of our countries to a great, great degree. That gives me very, very high confidence that we will ultimately get our permit once we deal with those issues that were specifically raised about the routing of the pipeline.”

He said it is “patently wishful thinking” to believe the United States can meet its own energy needs without importing oil from elsewhere. Piping oil south from Canada is a better option than getting it from overseas from an economic, energy security and even an environmental perspective, as it would mean fewer oil tankers along U.S. shores, he added.

Keystone XL has become a major political flash point south of the border as President Barack Obama seeks re-election this fall.

Earlier this year, the Obama administration rejected the original US$7.6-billion Alberta-to-Texas proposal in its entirety, not because of the pipeline’s merits, but because Republican manoeuvring to speed the process didn’t allow enough time to properly weigh a new Nebraska route.

Shortly thereafter,TransCanada announced plans to break the project into two parts, going ahead first with the most urgently needed leg from Cushing, Okla., to Texas refineries.

TransCanada expects to begin construction in early 2013, with oil flowing in late 2014 or early 2015.

The application will include a new route through Nebraska — which the state is also reviewing — that will skirt the Sandhills region, a fragile ecosystem of grass-covered sand dunes.

TransCanada believes the new State Department review can take place in an expedited manner, since the only changes that needed to be made to the original filing were in Nebraska.

Pipeline opponents on a conference call with reporters Friday said they want the project to be reviewed from scratch instead of relying on what has been filed in the past.

“TransCanada’s application might be the same-old same-old, but the State Department review needs to take a fresh look at a risky, dirty and expensive energy project,” said Susan Casey-Lefkowitz with the Natural Resources Defense Council.

She also urged the State Department to pick a truly independent contractor to conduct the review. Last time, Cardno Entrix was accused of having too cosy a relationship with TransCanada. The pipeline company was ultimately cleared of any wrongdoing.

The previous environmental review did not include experts in the Sandhills or the Ogallala aquifer, an important water source to the Plains states, said Jane Kleeb with the group Bold Nebraska. Nor did it set out clear criteria for what type of land a pipeline should and shouldn’t be allowed to run through.

“That was a clear oversight on the State Department, and we hope that is remedied this time around,” she said.

Rancher Karl Connell, who considers where he lives to be part of the Sandhills region, said the new route proposed by TransCanada is more harmful to his land than the original one. He, too, says the new review needs to be based on better information.

“They need to be using all the expertise down at the university that they can get their hands on to possibly make half an educated idea of the route it needs to be going at,” he said.

Federal Natural Resources Minister Joe Oliver, speaking in Toronto, said the new route increases the likelihood the project will be approved.

“I’ve been cautiously optimistic, I’m a little less cautious now,” Oliver said at a news conference Friday.

Alberta Premier Alison Redford said she’s “encouraged” by Friday’s news.

“I continue to respect that this is a U.S. decision but I am optimistic that this review will be guided by science and fact,” she said in a statement.

“Albertans can feel confident that our government will continue to advocate for our energy interests and tell our American friends that we remain their most reliable, most secure and most responsible energy supplier.”

TransCanada has firm, long-term contracts to transport more than 500,000 barrels per day of Canadian crude and 65,000 barrels per day from U.S. fields. The line has an initial capacity of 830,000 barrels per day.

Shippers remain “extremely supportive” of the project, said Girling.

“The marketplace is saying they very much want and need this pipeline as quickly as you guys can get it on.”