Keystone XL needs new S.D. permits; may reignite debate

The Canadian company seeking to build the politically contentious Keystone XL pipeline plans to reapply for permits from the South Dakota Public Utilities Commission within the next two weeks.

TransCanada received permission from state utility regulators to build across South Dakota in 2010 but the original permits lapsed in June as the company continues to wait for White House approval.

Keystone XL President Corey Goulet said in an interview Thursday that the process will be procedural rather than a new, in-depth review of the project.

Should South Dakota approve Keystone's permit requests?

PUC Chairman Gary Hanson, however, said the process is not pro forma and that it could offer Keystone XL opponents "an open window here, if not a door" to reopen the debate in South Dakota.

Keystone XL foes have not formally reached out to the commission, Hanson said, but at the Central States Fair in Rapid City, "a couple of people chatted with me, asking questions as to how one might go about the process"

Hanson said once the company seeks recertification, PUC and TransCanada staff would meet.

"Certainly there would be questions that would need to be answered at the staff level... Then we would have a hearing. I'm not sure how protracted a hearing may or may not be," he said.

The pipeline is designed to carry as much as 700,000 barrels of crude oil a day from western Canada to refineries along the Gulf Coast. Heavy tar sands oil from Canada and light crude from North Dakota would move through the Keystone XL line in separate batches, Goulet said.

Keystone XL would enter the U.S. at the Montana-Saskatchewan border. It would cut diagonally across Montana and cross 314 miles of South Dakota in Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp Counties before proceeding south into Nebraska.

Additional segments from Steele City, Neb., to Cushing, OK. and from Cushing to Gulf Coast refineries are now considered separate projects.

While the U.S. has not built a new oil refinery since the mid 1970s, existing refineries have invested heavily to accommodate oil production from Canada and North Dakota. Those investments "are exactly why we are building the project," Goulet said. "We are taking advantage of existing infrastructure."

Keystone XL, he said "will be built by Americans for Americans to transport the energy they need for their system of living."

Goulet said TransCanada's case is stronger now than it was when the PUC granted its original permit four years ago.

Rail shipments of crude oil from North Dakota have increased 4,000 percent since 2010 as the Bakken field has been developed, according to Goulet. Rail is an inherently less environmentally secure way to transport oil, he said, and oil shipments are largely responsible for a year-long backlog in moving grain to market from South Dakota on the BNSF and Canadian Pacific Railway.

Also, when TransCanada originally sought a permit to build Keystone XL across South Dakota it did not have all its needed right-of-way secured. Now it does, Goulet said.

Goulet said TransCanada hopes to resolve a court appeal over its construction permits in Nebraska, and it also expects to have a Department of State permit to allow Keystone XL to cross the Canada-U.S. border after that. President Obama has declined to decide whether to issue the federal permit until the Nebraska matter is settled.

TransCanada needs all those permit issues resolved before it can begin two-years of construction on Keystone XL.

If Keystone XL is built across South Dakota, the pipeline will contribute $20 million annually in tax revenue to the state, according to Goulet.

The Keystone XL route will not cross any reservation or tribal trust land, Goulet said, and the only associated tribal land impact in South Dakota is the possibility a power line from the Big Bend Dam near Fort Thompson to Witten that will be upgraded to serve a planned Keystone XL pumping station. The utility easement crosses a portion of the Lower Brule Sioux Tribe reservation.

According to Hanson, no PUC docket has yet been opened on the power line upgrade. He expects that would not occur until TransCanada secures all the necessary permits for pipeline construction.

Even though the impact of the proposed Keystone XL on tribes is not direct, Goulet said TransCanada is eager to work with tribes near the pipeline on economic development possibilities as a result of the construction.

So far, no tribal governments have endorsed the project, and there is widespread opposition to Keystone XL in Indian Country because even though it does not touch reservations, the pipeline route crosses traditional culturally significant land.

In addition to the potential a pipeline rupture could damage critical aquifers, like the huge Ogallala aquifer that lies under a portion of south central South Dakota and much of Nebraska, Keystone XL environmental opponents also make the argument the pipeline helps enable the continued use of fossil fuels at a time when climate change makes it crucial the world transition from them.

"Lowering carbon intensity is important," Goulet said. TransCanada has invested billions of dollars in wind, solar, hydropower and nuclear power projects, he said. "We understand the importance of a lower carbon intensive future."

But demands for oil are not projected to change dramatically for decades, Goulet said, and potentially Keystone XL remains a safer, more environmentally friendly way to move crude oil than trains, trucks or even existing pipelines.

At a glance

Keystone XL pipeline

What: A proposed 1,179-mile, 36-inch-diameter pipeline that would carry up to 700,000 barrels of crude oil a day

Where: The pipeline would begin Alberta, Canada, and enter the U.S. at the Montana-Saskatchewan border. It would cut diagonally across Montana and cross 314 miles of South Dakota in Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp Counties before proceeding south to Steel City, Neb.

When: TransCanada once planned an in-service date of 2015 but the project has been delayed for several years as the company seeks approval from state and federal regulators.

What's next: The company says within the next two weeks it will reapply for permits from the South Dakota Public Utilities Commission. The orignial permits expired because construction hadn't started by June.