Delay of Keystone XL Pipeline: Statement by United Association General President William P. Hite

Dec 15, 2011

United Association General President William P. Hite made the following statement on the State Department's decision to delay the start of the Keystone XL pipeline until early 2013.

United Association General President William P. Hite made the following statement on the State Department's decision to delay the start of the Keystone XL pipeline until early 2013:
"Further delay of the Keystone Pipeline unnecessarily jeopardizes this safe, quality project that will decrease our dependence on foreign oil and create thousands of jobs – especially at a time when millions of men and women are looking for work. Nevertheless, we’re confident this project will ultimately secure final governmental approval and move forward.
Keystone is too important to our nation’s economy, energy independence and national security. This privately-funded, shovel-ready project will create thousands of jobs, pump billions of dollars into the economy and reduce our dependency on increasingly unstable oil supplies from the Middle East. It is imperative it moves forward as soon as possible.
The State Department’s decision to delay the project for purported health and safety concerns is wholly unfounded. Tons of evidence accumulated to date shows it will be the safest pipeline in the world. It will use the safest, most advanced materials, be constructed by the highest skilled, best trained craftsmen in the industry and monitored by the most sophisticated electronic-video safety system ever designed. The bottom line is that the environmental groups are way off base on this project.
On the other hand, we can tell you where there are serious, legitimate public health and safety concerns in the pipeline industry that should be the focus of both government and environmental groups -- literally thousands of miles of antiquated pipelines all across this country that are in critical need of replacement. The vast majority of these pipelines, which include oil, gas and water, are 40 or 50 years old or older and pose serious public health risks.
We’ve already seen recent explosions in old gas lines that have taken lives and evidence of dangerous toxins leaching into our water systems due to worn out pipes. These are virtual time bombs waiting to happen and should be addressed by government and those who truly care about the environment. Pipeline is a integral part of U.S. infrastructure that is in desperate need of investment and many times overlooked. This is an area where we need to act immediately to prevent real and imminent public health disasters and we can create tens of thousands of jobs for Americans in the process."
About the Project
TransCanada Corporation (TransCanada), on behalf of the Keystone Pipeline partnerships (Keystone) between TransCanada and ConocoPhillips, announced plans to expand the Keystone crude oil pipeline system and provide additional capacity of 500,000 barrels per day from Western Canada to the U.S. Gulf Coast in 2012. The expansion is expected to cost approximately US$7.0 billion. When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 barrels per day to approximately 1.1 million barrels per day and result in a total capital investment of approximately US$12.2 billion.
Plans to expand to the U.S. Gulf Coast follow successful negotiations with several prospective shippers who have agreed, subject to regulatory approvals, to make shipping commitments of approximately 300,000 barrels per day to the U.S. Gulf Coast for an average term of 18 years during a binding open season which begins today. In addition, prospective shippers have also agreed to commit another 35,000 barrels per day to Wood River and Patoka, Illinois during a future open season expected in the third or fourth quarter of 2008. With these commitments Keystone has now secured long-term commitments for approximately 830,000 barrels per day for an average term of 18 years. These commitments represent approximately 75 per cent of the commercial design of the system.
"The Keystone expansion will be the first direct pipeline to connect a growing and reliable supply of Canadian crude oil with the largest refining market in North America," says Hal Kvisle, TransCanada president and chief executive officer. "The Keystone Pipeline will be constructed and operated as an integrated system with delivery points in the U.S. Midwest and U.S. Gulf Coast."
The Keystone expansion includes an approximate 3,200-kilometre (1,980-mile), 36-inch crude oil pipeline starting at Hardisty, Alberta and extending south to a delivery point near existing terminals in Port Arthur, Texas and, subject to shipper support, will include an additional approximate 80-kilometre (50-mile) pipeline lateral to the Houston, Texas area. With the addition of incremental pumping facilities, the Keystone Pipeline system could be further expanded from 1.1 million barrels per day to 1.5 million barrels per day.
During the binding open season Keystone will seek additional shipping commitments from interested parties. Once Keystone completes the open season process it will proceed expeditiously with the necessary regulatory applications in Canada and the U.S. for approvals to construct and operate the proposed facilities. Construction of the facilities is anticipated to commence in 2010 following the receipt of the necessary regulatory approvals. As a result, the majority of the US$7.0 billion in additional capital investment required to expand Keystone to the U.S. Gulf Coast is expected to be made between 2010 and 2012.
Certain parties who have agreed to make volume commitments to the Keystone expansion have an option to acquire up to a combined 15 per cent equity ownership in the Keystone partnerships.
TransCanada is responsible for developing, constructing and operating the Keystone pipeline and has initiated outreach activities with key stakeholders including local communities and landowners along the expansion route. It is expected that deliveries to Wood River and Patoka, Illinois will commence in late 2009. Deliveries to Cushing, Oklahoma are expected to commence in late 2010 and deliveries to the U.S. Gulf Coast are expected to begin in 2012.
During the binding open season period, which expires at noon (Mountain Time) on September 4, 2008, TransCanada, on behalf of Keystone, will accept binding bids from parties for firm transportation capacity for transportation of crude oil from Hardisty, Alberta to Port Arthur or Houston, Texas. Interested parties are invited to contact Marty Heeg at 403.920.2101 or David Diakow at 403.920.6019 for more information. The Keystone expansion project web page provides additional information about the project including a summary of the open season documents and a map of the proposed pipeline corridor.
With more than 50 years' experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas pipelines, power generation, gas storage facilities, and projects related to oil pipelines and LNG facilities. TransCanada's network of wholly owned pipelines extends more than 59,000 kilometres (36,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with approximately 355 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns, controls or is developing approximately 8,300 megawatts of power generation. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP.
TransCanada Corporation, Press Release of July 16, 2008

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