Judge Lets TransCanada Do Preliminary Work On Keystone XL

Montana District Judge Brian Morris, who earlier this month ordered the suspension of work on the controversial Keystone XL crude oil pipeline, has now allowed TransCanada to conduct preliminary activities related to the project, including engineering and planning, oil shipment contract confirmations, and the acquisition of land rights, equipment, and permits, the Associated Press reports.

Morris earlier this month asked the U.S. government to review its assessment of Keystone XL and revise it, taking into account the changes in the oil markets since 2014, the latest in climate change, and the presence of “cultural resources” along the route of the pipeline that was planned to carry heavy oil from Alberta to U.S. refineries. The 830,000 bpd pipeline will run from the Albertan oil sands through Montana and South Dakota, ending in Nebraska, where it would connect to the existing pipeline network that goes on to the Gulf Coast. 

Following the order, TransCanada asked the judge to allow it to perform some work at least while Washington reviews its project assessment. The request has now been granted, signaling TransCanada’s determination to start construction work on the project early next year despite the continued opposition.

“A one-year delay in construction of the pipeline would result in substantial harm to TransCanada, as well was to United States workers, and to TransCanada’s customers relying on the current in-service date of the project,” a senior TransCanada executive said in a statement for the court as quoted by the Associated Press. Such a delay would cost the company US$949 million in lost earnings and delay the hiring of 6,600 people.

Keystone XL, if it ever gets built, will provide some relief to Canadian oil sands producers who are being suffocated by pipeline capacity shortages that have seen the price of their crude plunge to unprecedented discounts against WTI.

By Irina Slav for Oilprice.com

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