Nebraska Public Service Commission approves pipeline
On November 20, 2017, the Nebraska Public Service Commission approved TransCanada’s (TRP) Keystone XL Pipeline project. This was the last major approval pending for the controversial project. However, the commission has approved an alternative route for the pipeline, instead of the company’s preferred route.
After several years of protests and obstructions, the United States Department of State issued a presidential permit authorizing the Keystone XL Pipeline in March 2017. The map below illustrates the approved Mainline Alternative Route.
The way ahead
TransCanada noted that the company is evaluating the Commission’s decision.
Russ Girling, TransCanada’s president and chief executive officer, noted, “As a result of today’s decision, we will conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project.”
The decision comes days after a 5,000-barrel oil spill from TransCanada’s existing Keystone system in South Dakota. The Keystone XL project faces ongoing opposition from environmental activists.
In addition to opposition from environmentalists, the economic feasibility of the project—after the delays and for the alternative route—remains to be determined. Much has changed since 2008 when the project was first announced.
Low energy prices have changed the economics of the project. Considering Canada’s commitment to reduce carbon emissions under climate agreements, along with lower crude oil prices, the Canadian oil sands reserves might not develop to the anticipated extent as a source of oil.
TransCanada launched an open season to solicit commitments for the project. Its open season closed on October 26, 2017. The company said it received “broad interest” in the project, and it is currently analyzing the results of the open season.
Notably, TransCanada announced the termination of its proposed Energy East Pipeline and Eastern Mainline projects last month, mostly due to changed market conditions.
TransCanada’s Keystone XL pipeline would transport oil from Alberta’s oil sands reserves to Nebraska. Along with Kinder Morgan’s (KMI) Trans Mountain expansion project, Keystone XL is a key proposed project to transport oil from Alberta’s reserves.