(Corrects the number of years Keystone XL has been under review in the sixth paragraph of a story published July 18.)
TransCanada Corp. (TRP) Chief Executive Officer Russ Girling said the timeline for U.S. approval of the $5.3 billion Keystone XL pipeline project will make the start of operations in the second half of 2015 “difficult.”
The CEO said a final environmental impact statement from the State Department may come in “weeks, not months,” after which there will be a 90-day review of whether the project is in the U.S. national interest. “I hope a decision can be made this year,” Girling said today in an interview at Bloomberg headquarters in New York.
If approved, Calgary-based TransCanada needs 24 months to build the pipeline, which would connect oil production from Alberta to refineries on the U.S. Gulf Coast. President Barack Obama initially rejected the project in January 2012, citing concerns with its path through ecologically sensitive lands in Nebraska. The company reapplied with a new Nebraska route last year and split the project in two, building the southern portion that doesn’t require a permit first.
Environmentalists oppose the project because of the potential for oil spills along its more than 2,000-mile (3,200 kilometer) route. Some opponents are also blocking it because it will transport crude from Alberta’s oil-sands projects, which generate more greenhouse gases than most conventional production.
“Keystone is not the driver of whether Canadian oil sands will be produced,” Girling said. “They will be produced anyway.”
In September, the project will enter its sixth year of review from the initial application date, Girling said. TransCanada applied for the permit to build Keystone XL in 2008. The company in April bumped back its target to complete the line to the second half of 2015, forecasting costs will rise amid delays receiving the needed approvals for construction.
TransCanada continues to incur costs to store the equipment it has already purchased and to maintain the pipe, in some cases by recoating the steel, Girling said. The company won’t update its cost estimate until after receiving U.S. approval, he said.
The U.S. State Department, which must approve Keystone XL because it crosses an international border, has told TransCanada it expects to need the full 90-day period for the national interest review, during which eight agencies weigh in on whether to approve the presidential permit. The department was 79 days into the national-interest decision when a Congressional deadline forced Obama to reject the first application, Girling said.
“There is only one rational decision here,” Girling said. “Denial of this pipeline is not in any way rational. At best, it’s symbolic.”
Halting the pipeline will make no difference on greenhouse-gas emissions, he said. “It will actually just impose greater risks on public health and safety.”
An explosion of a runaway train carrying oil in Lac-Megantic, Quebec, on July 6, which left as many as 50 dead or unaccounted for, stirred the debate over the safety of transporting crude by rail versus pipelines.
The better safety record of pipelines over rail was clear before the Lac-Megantic disaster, Girling said.
“Statistically, you can look at the history. Pipelines are the safest way to transport large volumes of hydrocarbons over long distances,” Girling said. “That’s a fact and doesn’t really need to be debated.”
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