NCPA - National Center for Policy Analysis

TransCanada to Go Ahead with Part of Controversial Pipeline

February 29, 2012

To capitalize on the boom in U.S. oil production, a Canadian company announced Monday that it will split a controversial pipeline rejected by President Obama and start building the Oklahoma-to-Texas portion, says USA Today.

  • Calgary-based TransCanada said the southern half of the $7 billion Keystone XL project will ensure that the glut of oil produced in the upper Midwest gets to Gulf Coast refineries.
  • It said this portion, which won't need a presidential permit because it does not cross a U.S. border, will cost about $2.3 billion and be completed next year.

The initial 1,700-mile pipeline, intended to carry a heavy crude known as tar sands from Alberta across seven U.S. states, has become a political issue.  Citing rising gas prices and the need to create U.S. jobs, Republicans have criticized Obama for denying a permit last month and siding with environmentalists who say the crude's development would exacerbate climate change.

Obama said he denied a permit because a GOP-imposed 60-day deadline did not give him enough time to decide on the project given the uncertainty over its route through Nebraska.  He suggested a route running south from Cushing, Okla., and welcomed TransCanada's news.

  • Martin Tallett of the EnSys Energy consulting firm, says the southern pipeline could slightly lower gasoline prices by allowing more crude oil onto the international market.
  • TransCanada spokesman Shawn Howard says the southern pipeline will carry a light crude produced in North Dakota, Montana, Kansas, Oklahoma and Texas.
  • Howard says it still needs permits from local and state officials, as well as the U.S. Army Corps of Engineers.

Source: Wendy Koch, "TransCanada to Go Ahead with Part of Controversial Pipeline," USA Today, February 28, 2012.

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