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State presses for pipeline access
News Articles | Billings Gazette | Matthew Brown | February 05, 2010
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The company hopes to start construction this year on the 1,980-mile Keystone XL pipeline, part of Trans-Canada’s $12 billion investment in the Alberta oil sands market.
En route to Texas through the Northern Plains, Keystone will pass through the booming Bakken oil formation — an estimated 3.65 billion barrels beneath Montana, North Dakota and Saskatchewan.
The Bakken is a huge find, enough to last the entire country about six months.
But that’s still paltry compared to estimates of 1.7 trillion barrels of petroleum in the oil sands, where companies are signing long-term contracts with TransCanada to move up to 900,000 barrels a day.
The company first has to get by regulators in Montana, where Democratic Gov. Brian Schweitzer is pushing for an on ramp connecting Northern Plains producers to Keystone XL near Baker.
After meeting with Schweitzer on Friday, TransCanada Vice President Robert Jones said the company wants to stay focused on the main stem of the pipeline. Before he could commit to an on ramp, Jones said he needed to hear more from oil companies interested in using Keystone XL.
“Let’s not get ahead of ourselves. Let’s make sure that pipeline gets built,” he said.
He added that it was too early to talk about cost or who would build such a connection.
Schweitzer in recent weeks enlisted the state’s Public Service Commission in his push for an on ramp. Commissioners could condition approval for the pipeline on a Montana on ramp if they find one is in demand.
The pipeline would include a 280-mile section through the eastern part of the state near the North Dakota border.
On Friday, Schweitzer conceded that Montana oil could account for only “about 5 percent” of the pipeline’s capacity. But he told Jones that access to the line is vital for getting full value out of the state’s oil.
With existing pipeline space tight, Eastern Montana oil has in recent months sold for $8 to $12 below market prices.
“We will never be the tipping pint to build this pipeline or not,” Schweitzer said. “We want to make sure we have a dog in this hunt.”
As an interstate pipeline, Keystone XL also falls under jurisdiction of the Federal Energy Regulatory Commission.
Montana officials assert that they’ve got power under a state law that says pipeline developers must build connecting terminals as necessary for “patrons at all points on the pipeline.”
The company has not said if it will challenge the state’s authority.
TransCanada is building a sister project, the Keystone Pipeline, to move as much as 590,000 barrels of oil per day from Alberta to Illinois and Oklahoma.
That’s drawn interest from North Dakota. That state is considering a $200 million investment into a feeder pipeline that would run from the northwestern corner of the state to connect to Keystone in Saskatchewan.
Jones said his company was sorting through the competing interests before deciding if Bakken producers will get onto its pipelines.
“Unfortunately, it’s like herding stray cats,” he said. They’ve all got different ideas, in North Dakota, Saskatchewan, Montana.”
Tagged with: keystone xl, transcanada, montana
