Thursday the US State Department made the announcement anticipated all week: TransCanada’s Keystone XL Pipeline will be postponed. The announcement was a disappointment to area leaders, but it should not be a surprise. The midwest corridor is one of two regions who have attempted to create a transnational energy corridor since the 1960’s. The state of Alaska in the 1970’s was able to push through a transcontinental oil pipeline that is now only 2/9 full and has never been able to build the gas pipeline that would produce resources necessary for energy independence.
The US State Department held a press conference Thursday afternoon just after the announcement. Using language similar to what has been given to Alaskans in recent history, State Department officials said they they reviewed the process that created the cumulative decision.
Executive Order 13337 authorizes the Department of State to lead the review of Presidential Permit applications for transborder pipelines, granting the Department discretion in determining what factors to examine to inform a determination of whether the proposed project is in the national interest. Since 2008, the Department has been conducting a review of TransCanada’s application for the proposed Keystone XL Pipeline project. During the most recent round of hearings which included a hearing in Glendive, Montana, targeted concerns regarding the portion of pipeline travelling through Nebraska became apparent. As a result of those concerns in combination with the portion of the final environmental impact study dealing with Nebraska the State Department has decided they need to undertake an in-depth assessment of potential alternative routes in Nebraska and before they could move forward with a National Interest Determination for the Presidential Permit. They do not expect either to be considered until the first quarter of 2013.
The state department has confirmed that they will now be examining alternative routes for the pipeline. They are not commenting yet on how or if that will affect the route through eastern Montana and the Baker on-ramp. TransCanada officials told The Examiner that they are still examining the information received and it will take several business days before they are able to comment on eastern Montana impacts.
US Senator Max Baucus responded to the announcement quickly. Baucus criticized the Obama Administration for delaying a final decision on the Keystone Pipeline XL until 2013. Baucus, who has long argued that the process for approving the pipeline must include strict environmental considerations and proper public input, says sufficient analysis has been done. He noted “Montana jobs and our energy security are on the line here and I will not stand by and watch more bureaucratic red tape dictate our energy policy. Montana families and communities have been waiting too long for the jobs and energy security Keystone XL will provide to our state and our nation. We’ve done enough analysis. It’s time to put Montanans back to work.”
Eastern Montana landowners who already have deals in place with TransCanada told The Examiner that TransCanada landmen had let them know a few days ago that the announcement was pending and told them the same thing media was told – it is too early to know what will become of the route through Montana.
Last week TransCanada said it will cost the company $1 million dollars per day for delays. The length of the anticipated delay could add a $500 million dollar price tag to the project. Officials also said last week that lengthy delays could lead them to build a pipeline to a Canadian shipping port instead of through the US and ship their oil to countries on other continents.
Russ Girling, TransCanada’s president and chief executive officer commented “We remain confident Keystone XL will ultimately be approved. This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed.”
Girling also acknowledged that while Keystone XL remains the best option for American and Canadian producers to get their oil to the U.S. Gulf Coast, however, the announcement by the Department of State could have potential negative ramifications, especially where shippers and U.S. refiners are concerned. He added “Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end. If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need. Oil sands producers face the same dilemma – how to get their crude oil to the Gulf Coast.”
The State of Alaska dilemma which now is entwined with TransCanada dates back to 1967 when large natural gas reserves were discovered in 1967. Through the early seventies local officials across the state of Alaska and multiple energy companies worked together while the Alaska oil pipeline was under construction to build an international gas pipeline through Canada and into Alberta. The pipeline project was stopped by a ten year moratorium development for the same reasons given this week to delay the Keystone XL: landowner claims , conservation issues and route. The companies who wanted to build the pipeline began to invest in infrastructure then called “pre-building segments” (a term used in the Keystone XL situation recently when they moved endangered beetles out of harms way). The energy companies involved were frustrated by the bureaucracy and what they considered at the time double-talk by people in office and backed off the project. Next former Secretary of Interior and former Governor Wally Hickel (perhaps a fortune teller could see former oil and gas consultant Brian Schweitzer in these same shoes in one year) headed a consortium which worked get interest in a gas pipeline by energy companies already doing business in the the State of Alaska. Alaskan Boroughs (similar to Montana county commissions) joined forces to form the Alaskan Gasline Port Authority (Similar to regional economic development authories in Montana). Despite the hard work, actions by then President Jimmy Carter prevented that pipeline attempt.
Over the forty years (think of the boom and bust waves of the Mondak region since the 1950’s) Alaska has proposed alternative routes, taken extreme measures to protect endangered species, formed and disbanned advocacy groups, seen landowner and native groups formed and go bankrupt, and watched as both Democrat and Republican politicians stopped the pipeline for their own agendas.
In 2007, at the same time TransCanada began positioning in eastern Montana, they began working with the state of Alaska to revive the gas pipeline concept. In 2008 Alaska even gave TransCanada $500 million dollars to start the process of building the pipeline which would cost $26 billion dollars to build. This time now deceased former Governor Wally Hickel (a Republican) opposed the Transcanada pipeline because the newest route would not bring gas to populated areas.
Interest in an Alaska Gas Pipeline was rejuvenated this summer just as the Nebraska issue was bubbling to the forefront. At the end of October, just as Grisling began touting possibility of re-directing Albert oil away from the US if delays in the the Keystone XL construction occurred, Alaska Governor Sean Parnell was excited about the potential to ship Alaska resources to Asia. Alaska has not yet learned from their history. Neither has Montana. With such similar battles,faced by government and business leaders in Montana and Alaska, this is an editorial call to openly work together with federal officials and energy executives in open and public forums to allow for energy independence, economic self-sufficiency, and wise use of land lest the people of both states be doomed to repeat history.
The Examiner will continue to keep you apprised as TransCanada releases impact information regarding eastern Montana.