Keystone XL to proceed…bit by bit

CALGARY: The Obama administration may have temporarily killed the TransCanada’s Keystone XL oil pipeline in the US, but the Calgary-based energy firm is now considering tackling the project in smaller pieces.

TransCanada says it is aiming for the US$7.6-billion, Alberta-to-Texas pipeline to come into service in early 2015 instead of its previous target of late 2014—an idea the company says customers have embraced.

It said customers have expressed support for TransCanada getting to work on the most urgently needed portions of the line instead of waiting for the entire project to be approved, which is not likely to happen before the November presidential election.

In November, a decision by the US State Department was delayed until early 2013 to work out a new route through Nebraska. Then last month, the Obama administration rejected a permit because Republican efforts to force a decision within 60 days did not allow enough time to study the new route.

An outlet for crude from the Bakken region of North Dakota and Montana is badly needed and a supply glut at a massive storage hub in Cushing, Okla., is pushing down North American crude prices.

But the need for new pipelines out of Alberta won't be felt for at least a few years.

The Keystone XL pipeline, which would extend the reach of an existing oil pipeline delivering crude to the US Midwest, has become a major political flashpoint as President Barack Obama seeks re-election.

Although backers of the project say it would create thousands of jobs and supplant crude imports from unfriendly countries, it has also come under fire from critics who worry the line will increase US dependence on “dirty” oilsands crude and cause ecological harm to the American heartland.