Canada Regulators Order Safety Upgrades to Keystone Line

Canadian orders for TransCanada Corp. (TRP) to upgrade emergency shut-off systems on its Keystone crude pipeline are raising scrutiny in the U.S. as the company seeks to expand the system to the Gulf of Mexico.

The National Energy Board found that some emergency shut- down systems at pumping stations along the Keystone line in Manitoba and Saskatchewan weren’t equipped with sufficient alternate power sources, according to an Aug. 17 letter to Calgary-based TransCanada posted on the board’s website yesterday. The board denied TransCanada’s request for an exemption from the safety requirements.

TranCanada said in May it would build the $7.6 billion Keystone XL pipeline expansion in segments after U.S. President Barack Obama rejected an application for the full project on concerns about potential oil spills fouling water supplies in Nebraska. Opponents of the pipeline are using the Canadian action to argue for closer scrutiny of the proposed U.S. line, Carl Weimer, executive director for the Bellingham, Washington- based Pipeline Safety Trust, said in an e-mail today.

The U.S. section of Keystone XL will have 18 pump stations, and may have more depending on its route through Nebraska, according to TransCanada’s permit application to the U.S. State Department. TransCanada has already agreed to U.S. demands to install backup generators on the Keystone XL pipeline, James Millar, a company spokesman, said in an e-mail today.

Oil Sands

The board’s order shows there is increasing concern in North America about the transportation of crude from Canada’s oil sands, Susan Casey-Lefkowitz, a director at the Natural Resources Defense Council environmental group in Washington, said in a telephone interview.

“The U.S. government is finding that tar-sands oil behaves differently and there’s a hard look happening right now in the U.S. about whether we need stronger safety regulations,” Casey- Lefkowitz said.

TransCanada has until Sept. 17 to submit a plan for installing backup power to Canadian regulators and a year after that to do the work, the energy board said. TransCanada’s Millar couldn’t estimate the cost of providing the backup generators ordered by the board.

The existing Keystone pipeline runs 2,149 miles (3,460 kilometers) from Hardisty, Alberta, to the U.S. Midwest. Keystone XL would carry 830,000 barrels a day from Alberta to Gulf Coast refineries.

To contact the reporters on this story: Mike Lee in Dallas at mlee326@bloomberg.net; Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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