News Articles | Gazette State Bureau | Mike Dennison | August 10, 2010
HELENA ‚Äî State regulators have granted condemnation powers to the proposed Keystone oil pipeline across Eastern Montana, but not until its developer agreed that Montana has power to regulate local oil producers' access to the line.
Eastern Montana oil producers who want to use the pipeline to ship their product now are comfortable that the state can regulate the terms of "interconnecting" with the pipeline, one of their attorneys said Tuesday.
Continental Resources Inc. "believes that the Keystone Pipeline has recognized its obligation to comply with state law, including matters of interconnection," said John Alke, a Helena attorney representing Continental.
Continental is one of the largest oil producers in the state.
If the pipeline is built, oil producers in Eastern Montana and North Dakota plan to negotiate with Keystone and its owner, Canadian energy giant TransCanada, to load their oil into the pipeline at interconnection sites near their wells.
Montana Gov. Brian Schweitzer and Gov. John Hoeven of North Dakota have said local producers currently must sell crude oil to refiners at a discounted price because of a lack of pipeline capacity in the production area along the Montana-North Dakota border.
If negotiations on interconnection break down, producers say, Montana law gives the state Public Service Commission authority to regulate interconnection terms for pipelines that cross the state.
The PSC in June denied common-carrier status to the project, saying Keystone and TransCanada hadn't properly acknowledged the PSC's authority over interconnection with the pipeline.
The status would enable TransCanada to condemn property and cross state highways on the pipeline's 280-mile route through Montana.
Then late last week, the state Public Service Commission voted to reverse its earlier order and grant common carrier status to the Keystone Pipeline.
The change came in response to a July 23 filing with the PSC by TransCanada, which said it accepted all provisions of Montana law that governs pipeline carriers, including PSC jurisdiction over rates and terms of interconnection sites.
TransCanada said it still disagreed with the earlier PSC ruling that alleged TransCanada hadn't accepted PSC authority, but "for the sake of expedience and to avoid further dispute or delay, Keystone files this document ‚Ä¶"
Continental Resources argued earlier that TransCanada's March 3 application for common-carrier status had agreed to submit to only part of state authority, while not acknowledging other portions.
The entire $3.2 billion pipeline is proposed from northern Alberta to Nebraska, transporting crude oil from the tar sands of Alberta into the United States for refining.
The U.S. State Department is deciding whether to approve the pipeline into the United States. Most environmental groups are opposing it, while industry supporters say it will bring much-needed oil and oil infrastructure to the country.