Nebraska approves alternative route for TransCanada’s Keystone XL pipeline

CALGARY – Nebraska regulators approved passage of TransCanada’s Keystone XL pipeline Monday, clearing the last major regulatory hurdle for the controversial $10-billion project but creating a new wrinkle by choosing an alternative route for the pipeline.

TransCanada (TSX:TRP) said it was evaluating the decision by the state’s Public Service Commission, which opted not to approve the company’s preferred route and instead went for one that shifts the southern portion of the pipeline toward an existing pipeline route and away from sensitive ecological areas.

“We will conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project,” said company CEO Russ Girling in a statement.

The Nebraska panel voted 3-2 to approve the project.

In a written decision, the panel said it was in the public’s interest to put the new pipeline nearer to TransCanada’s existing Keystone pipeline already running through the state to make it easier to monitor and respond to spills, to reduce impacts on endangered species and other benefits related to reduced conflicts.

Read more: ‘We are very pleased:’ Notley says Nebraska’s Keystone OK means energy security

Commissioner Crystal Rhoades, who voted against the project, said the alternative route still did not do enough to address her concerns, arguing the company should be forced to use even more of the existing Keystone I pipeline corridor by adding about 84 kilometres to the route.

“The applicant did not refute the landowners argument that using the existing Keystone I would avoid fragile soils, reduce impacts to endangered species, and avoid widespread controversy and opposition to this project.”

The panel said in the decision that the alternative route was only eight kilometres longer than the preferred route, and that TransCanada had told the commission it was still a viable and beneficial route.

Still, those opposed to the pipeline jumped on the change by saying it could bring into doubt the future of the project.

“Today’s decision is no guarantee that this pipeline will ever be built,” said Greenpeace campaigner Mike Hudema in a statement.

“Nebraska opted not to give TransCanada its preferred route through the state, so the company now has more hurdles in front of its beleaguered pipeline.”

Environmental groups and First Nations have also vowed to continue fighting the project.

“The fight is now on,” said councilwoman Casey Camp-Horinek on behalf of the Ponca Tribe of Oklahoma in a statement.

“Keystone XL will never be allowed to cross Ponca territory. We stand in solidarity with our Northern Ponca relatives in this unified defence of Mother Earth.”

Despite the opposition, the decision gives more certainty to the 1,900-kilometre pipeline that TransCanada has been working to develop for nearly a decade, Wood Mackenzie analyst Zachary Rogers said in a note.

“Nebraska’s decision today greatly diminishes the political risk for the project, likely clearing the way for increased volumes of West Canadian heavy crude to reach the Gulf Coast.”

He said the biggest beneficiary of the project would be Western Canadian oil producers by ensuring a cheaper, more efficient route to the Gulf.

Alberta Premier Rachel Notley welcomed the news, saying the 830,000-barrel-a-day pipeline will mean greater energy security in North America.

“This is another step in our broader effort to bring more Alberta oil to the world, diversify our markets and maximize the value we as Albertans get.”

The vote came as TransCanada continued to clean up a 5,000-barrel oil spill from its pipeline in nearby South Dakota that opponents have held up as a reason not to approve Keystone XL.

The commission, however, was prohibited from evaluating safety considerations, including risk or impact of a spill, and ruled instead on issues including regulatory compliance, economic and social impacts of the project, the potential intrusion on natural resources, and whether better routes exist.

Barack Obama rejected Keystone XL in 2015 after years of review, only for President Donald Trump to give the go-ahead to the project in March, saying the pipeline will bring jobs and reduce dependence on foreign oil.

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