Keystone XL Pipeline: Nebraska Panel Signs Off On Route

LINCOLN, NE — The Nebraska Public Service Commission on Monday signed off on an alternative route for the Keystone XL oil pipeline project through the state, removing the last major regulatory obstacle to building the long-delayed $8 billion project. The commission's vote can — and likely will — be challenged in court by opponents.

The alternative route would run farther north than the preferred route proposed by pipeline developer TransCanada Corp., which plans to build a 1,179-mile pipeline from Canada across several U.S. states. The vote could clear the way for the company to gain access to the property of holdout landowners who vehemently oppose the pipeline, using the state's eminent domain laws. More than 90 percent of Nebraska landowners along the route have agreed to let TransCanada bury the pipeline beneath their property, but those who oppose it have managed to thwart the project for years.

The project also faces intense opposition from environmental groups and Native American tribes. Business groups and some unions support the project as a way to create jobs and reduce the risk of shipping the oil by trains that can derail.

President Donald Trump issued a federal permit allowing for the project in March, reversing President Barack Obama administration's rejection of it. TransCanada had said that it would announce in late November or early December whether it planned to proceed with building the pipeline, taking into account the Nebraska decision and whether it has lined up enough long-term contracts to ship oil.

Opponents are expected to appeal the Nebraska decision in a state district court, and the case is likely to end up before the state Supreme Court. The commission was forbidden by law from considering a recent oil spill in South Dakota on the existing Keystone pipeline in its decision.

The proposed Keystone XL would expand the existing Keystone pipeline, which went into service in July 2010. The current pipeline network runs south through North Dakota, South Dakota, Nebraska, Kansas, Oklahoma and Texas and extends east into Missouri and Illinois.

The new pipeline would carry an estimated 830,000 barrels of oil a day from the oil sands areas of Canada through Montana, South Dakota and Nebraska, where it would connect with the existing Keystone pipeline. The pipeline would then continue through Kansas, Oklahoma and Texas to the coast.

TransCanada has said its route through Nebraska is the most direct way to transport oil from Alberta, Canada, to an existing pipeline in Steele City, Nebraska.

The five-member commission was barred by law from factoring pipeline safety or the risk of spills into its decision because pipeline safety is a federal responsibility. So, it couldn't take into account a spill of 210,000 gallons of oil on the existing Keystone pipeline in South Dakota announced on Thursday.

The simplest choice was a yes-or-no vote on TransCanada's "preferred route" through a dozen Nebraska counties. The commission had the option of including major caveats that would add years to the project's timetable. Commissioners decided to approve an alternative route that would run farther north than TransCanada's preferred route. Company officials have said their preferred route causes the least amount of disruption.

No matter what the commission decided, any group that presented arguments at an August hearing could appeal.

The commission's vote could play a pivotal role in whether TransCanada moves ahead with the pipeline. After years of lobbying for the project, TransCanada acknowledged in a July conference call that executives won't decide until late November or early December whether to begin construction.

TransCanada spokesman Matthew John reiterated that timeline last week, ahead of the Monday vote.

"We're going through the process with every intention to get this project built," John said on Wednesday. "But there are factors that we need to work out prior to making that decision," including regulatory approval in Nebraska.

John said the company also needs to finalize its contracts with shippers that want to use the pipeline.

TransCanada has been working to line up long-term contracts for the pipeline. The company has not announced the results of its open season bidding process, which ended Oct. 26.

Opponents in August vowed to stage mass protests against the pipeline if Nebraska regulators approve it, but say they will exhaust legal options first.

Pipeline opponents have lined parts of the proposed route with obstacles, including trees, solar panels, sacred corn from the Ponca Tribe of Nebraska and a barn powered by renewable energy. Some opponents may try to physically block construction and have likened their resistance to the activists who protested the Dakota Access Pipeline in Standing Rock, North Dakota.

Despite low oil prices and repeated delays, TransCanada has a strong financial incentive to keep pursuing the pipeline, said Zachary Rogers, a Houston-based analyst for Wood Mackenzie, an energy research and consulting firm.

Rogers said Western Canadian producers have been forced to ship their product by train, which is more expensive than a pipeline, and Keystone XL would reduce costs and improve their bottom line.

At the same time, Texas refineries face uncertainty because of political instability in Venezuela, one of their top oil sources, and a slowdown in Mexican production.

"Western Canada has been held captive by geography and hasn't been able to cheaply access the markets," Rogers said last week. "Any opportunity for them to get better access will buoy their margins."

Watch: Keystone Pipeline Leaks 210K Gallons Of Oil

By GRANT SCHULTE, Associated Press

Photo credit: Jeff McIntosh/The Canadian Press via AP